If you’re looking to sell your property in Australia, you would no doubt be eager to know about Chinese investment in Australia. After all, Chinese buyers have emerged as the biggest players in the Australian property market.
They invested as much as $24.3 billion in commercial and residential properties in Australia, mainly in the cities of Sydney and Melbourne. This represents three times the investments coming in from the United States and six times as much from Singapore.
This represents a significant jump over the last 5 years. Back in 2011-12, the Chinese investment in Australia was only $4.2 billion, much below that of the United States and Singapore. But things have changed dramatically since then. Real estate observers predict that Indian investors are likely to be the next big players in the Australian property market.
There have been some concerns among the Australian public about Chinese investors. The worry is that because of the massive investment coming from China, the property market in cities such as Sydney and Melbourne had become unaffordable for most Australians.
While it is true that the property market in Melbourne and Sydney is on the expensive side and beyond the reach of ordinary Australians, it would be grossly unfair to blame Chinese buyers for this.
While there is a lot of hype surrounding Chinese buyers in Australia and rightly so, there are a number of other groups such as Indians, Canadians, French and Indonesians who are buying properties in Australia as well.
It is absolutely untrue that Chinese investors are pricing Australians out of the market. First, it is important to understand that local Australians and overseas Chinese investors don’t even buy the same type of properties.
Chinese investors generally buy new apartments in areas with a strong Chinese community, such as Box Hill and Glen Waverley. First-time Australian buyers on the other hand buy in areas such as Prahran, Brunswick, Richmond and St Kilda.
As Jon Ellis of Investorist explains, “Australians love a scapegoat. The First Home Buyer’s Grant was blamed for driving up property prices… baby boomers were blamed for pricing first home buyers out of the market; there’s always someone to blame. And at the moment, the Chinese are getting a bit of a ribbing.”
He adds that Chinese buyers are actually helping first-time buyers as they are stimulating construction activity in Sydney and Melbourne, which is keeping the property market in these cities in a healthy state.
It is also not true that the Chinese nationals who buy properties in Australia are all multimillionaires. The truth is most Chinese who buy in Australia are business executives belonging to the upper middle class in China, buying properties worth between $500,000 and $800,000.
It is not as though they have an endless supply of money. As Esther Yong of ACProperty, a Chinese property portal says, “A lot of people think they just walk up with suitcases of money, but that doesn’t usually happen. Generally, there’s more news about people buying $5 million, $10 million and $20 million houses than just someone buying a $500,000 house … so most people think Chinese buyers are really rich.”
Chinese buyers are in fact very cautious about their purchases and never extend themselves. They take their time before deciding to invest in a property and do so after considerable research.
You certainly won’t find the Chinese buyers overpaying for an apartment. In fact, as Jon Ellis explains, most Chinese buyers are very conservative with their investments, starting off by buying properties that are valued at less than $500,000, and only later going for properties that are valued higher, between $600,000 and $1 million.