Australia is losing Chinese buyer interest to other parts of the world as tougher government regulations and new tax rules continue to bite, new data shows.
Top 10 countries for Chinese property buyers in 2017
- United States
- United Kingdom
- New Zealand
Chinese inquiries in Australian residential property was down 9.7 per cent in the first half of the year compared to the same period in 2016, Chinese international property portal Juwai.com figures reveal.
The median inquiry price also fell from about $394,000 to about $350,000.
At the same time, inquiries from around the world — including Thailand, Japan and Malaysia — grew 8.7 per cent.
The data comes as Chinese regulators formalised new guidelines restricting Chinese corporate investment overseas, that include real estate being placed on a ‘restricted’ list, which could further compound a drop-off in new developments in the Australian property market.
The Australian head of Juwai.com, Jane Lu, said Chinese buyers were still adjusting to the new regulatory and tax rules in Australia, which remained the second-most popular country in the world for investment.
“Their top goals are risk diversification and their children’s education. Australia is a very appealing destination in both these areas,” she said.
“The fact that we still have so much Chinese real estate buying in Australia shows that they still have the money. When you compare the price of similar property in China and Australia, Australia still offers good value.”
The Victorian Government axed the stamp duty concession for off-the-plan investors from July 1 and more than doubled the foreign-buyer stamp duty surcharge from 3 to 7 per cent in 2016.
NSW doubled its foreign-buyer surcharge to 8 per cent, while Queensland implemented a 3 per cent surcharge.
Chinese buyers turning away from Australia
The policy changes have prompted some China-based businesses to diversify by selling other countries’ real estate.
Investorist, a business-to-business, off-the-plan property website, surveyed 120 China-based agents for its China 2017 International Property Outlook report.
A majority 83 of the agents said they were currently selling property in Australia, but only 47 said they would sell in Australia in the next 12 months.
Investorist chief executive Jon Ellis said Chinese buyers’ motivation had also changed since the report in 2016.
“Asset protection and wealth creation was the number one reason that people were investing out of China,” he said.
“This year, it’s more child education, lifestyle and potential migration has now bubbled to the top as the key motivator.
“And it’s clear when you look at the countries they’re interested in that that shines through.”
Despite a raft of new taxes, NAB chief economist Alan Oster said its residential property survey for the June quarter showed the share of foreign buyers in new property markets increased from 10.8 per cent to 11.6 per cent over the quarter.
It was largely driven by Victoria, where foreign buyers accounted for about one in five new property sales.
“I think, ultimately, crackdowns on capital [outflow] will cause an impact, but at the end of the day, there’s a lot of money that’s already been brought out,” he said.
“I can’t see the money [will] keep coming forever, but I’m not sure, when we look at it, that we see signs that there’s sort of a big slowdown.”
Buyers shifting their sights to other countries
Juwai.com data shows the US remains the top country for Chinese buyers, while Canada and the United Kingdom are also in the top five.
Thailand has soared from sixth to third spot on Chinese buyers’ wish lists.
Ms Lu attributed the country’s rising popularity to a growing number of “lower-wealth” international real estate buyers, adding that many buyers first visited Thailand as tourists.
“Thailand receives significantly more buyer interest than any other south-east Asian country, including Malaysia — the next best South-East Asian performer,” she said.
“And the investment into Thailand is growing quickly, with Chinese buyers making 26 per cent more inquiries in the first quarter than a year ago.
“Thailand is inexpensive and easy to reach, and Chinese buyers like the relatively inexpensive luxury of the city condominiums and resort properties.”
By Christina Zhou