Melbourne popular for wealthy Chinese buyers

Inquiries from wealthy Chinese buyers jumped 30 per cent in the second quarter.

Melbourne is the most popular city for Chinese buying inquiries in Australia.

Inquiries from wealthy Chinese buyers jumped 30 per cent in the second quarter with properties priced in the $3 million to $7m bracket recording the strongest double digit growth.

But Australian real estate priced from $7m to $14.5m lost popularity with a 36 per cent drop in buyer inquiries during the second quarter. The lowest-cost luxury homes also fared poorly over that period with Chinese buyer inquiries in the $2m bracket falling 20 per cent, according to Juwai.com.

Chinese buyers were responsible for two of the three most expensive purchases in the $10m-plus bracket in the Sydney suburb of Mosman last year.

But Christie’s International Real Estate managing director Ken Jacobs says there’s more of a shortage of stock than a shortage of buyers at the high end.

“The trend I have seen for the past six or seven years is international buyers from China and Europe who are not ready to buy yet but see it (Australia) as an escape plan,” Jacobs says.

“The Europeans are concerned about terrorism and the effects of possible mass immigration in Europe. They see having a home in Australia as an insurance policy. It’s similar to what you saw in New Zealand with tech industry leaders like Peter Thiel buying doomsday homes before they passed their foreign buyer restrictions.”

Of all the Australian capitals, Melbourne is the most popular city for Chinese buyers and despite heftier state foreign buyer taxes the dropping dollar means it costs $88,000 less to buy an apartment or house worth about $800,000 in Australia today than it did in 2017.

Chinese buyers are expected to return to Australian real estate from next year as the property sector improves, with Juwai’s new report out today revealing the loss of more than 11 per cent of the value of the Australian dollar compared with the yuan making local real estate more attractive.

Australian real estate industry experts believe the curtailment of China’s capital controls regime provides the biggest opportunity to boost Chinese investment in Australia.

Both NSW and Victoria now apply foreign buyer taxes at a rate of 8 per cent, according to Juwai’s report Chinese Australian Dwelling Investment Tracker.

“Melbourne is the most popular city for Chinese buying inquiries in Australia. Chinese buyers make 83 per cent more inquiries about acquiring Melbourne property than they do Sydney,” according to Juwai.com chief executive Carrie Law.

“The fastest-growing cities, in terms of Chinese buyer interest, are Hobart, Brisbane and Canberra. In Hobart, Chinese buyers made 77 per cent more buyer inquiries in 2018 than the year before. Canberra has the third-fastest rate of Chinese buyer inquiries growth in Australia, with 24.6 per cent growth in Chinese buyer inquiries. Hobart and Canberra receive significantly less buyer interest than Sydney or Melbourne,” Ms Law said.

WEB mansions lead WEB pie

Despite Chinese buyers posting two consecutive quarters of year on year growth, their activity is expected to remain flat for the remainder of the year but their activity will pick up as the Australian real estate market recovers from its two year slump.

Ms Law added that high Chinese education levels were behind much of the Chinese investment with Victoria laying claim to the biggest foreign student enrolments, with more than one third of the Australian total. NSW has about 30 per cent of all foreign students while Queensland has 13 per cent and Western Australia 9 per cent.

“Chinese demand is driven by growing wealth, a desire to store some assets ‘safely’ overseas, education, travel, commercial ties, immigration and high net worth immigration, and environment and lifestyle,” Ms Law said.

“Eighty three per cent of Chinese consumers cite education as their reason for immigration, 69 per cent cite environment, 57 per cent cite food safety, and 28 per cent cite asset security.

“Forty four per cent of Chinese investors plan to increase their investments in international property in the next three years.”