Chinese Interest in Australia’s Residential Property Cools
With the tightening of credit conditions and additional taxes, Chinese property investors have turned their attention to Southeast Asia’s real estate market.
A new report was released by the Foreign Investment Review Board (FIRB) on May 29, stating that Chinese interest in Australian residential properties has cooled off. Australian foreign buying peaked in 2016, but Chinese investment has since halved to $15.2 billion.
This is attributed to the tightening of credit conditions, higher upfront costs, and concerns of an Australian credit crunch from the fallout of the Royal Commission into the banking, superannuation and financial services. Victoria, New South Wales and Queensland have imposed additional taxes on foreign investors, and weakening market conditions are all contributing factors to the decline.
The Chinese market is now looking to Japan and Southeast Asia, namely Thailand and Vietnam, for property investment. Goldman Sachs state that the pullback in foreign demand should not be viewed as a risk to supply/demand balance. Even a large sell-off by existing foreign investors in Australia’s popular markets is unlikely to lead to a significant increase in oversupply.
The FIRB reports that China remains Australian’s biggest foreign investor overall, the United States are the second largest, while Canada is increasing its interests.