Chinese and Japanese Buyers Rush for Australian Property

With Australia’s housing market continuing to hold strong, Chinese buyers have purchased $3.4 billion worth of approved residential real estate, up 40% from last year, according to the Foreign Investment Review Board’s (FIRB) latest report.

At the same time, Japanese investors and their nation’s pension funds are hunting for Australian property in a big way for its safe and sustained returns. MSCI Real Capital Analytics data points to purchases in excess of $3 billion this year, compared to just $19 million a decade ago.

According to Colliers’ Chris Pilgrim, Australia’s apartment sector, including build-to-rent and student accommodation, has accounted for 39% of foreign investment this year. “Australia is one of the top 10 destinations for foreign capital,” he said.

“Australia is seen as a safe haven for foreign investors, and probably more so now than ever before,” Mr Pilgrim said. “Australia is relatively politically and economically stable”.

Singaporean and Hong Kong are also looking to deploy capital into Australian markets. Mr Pilgram said there is “more Japanese capital in the market in 2023 than for many years prior”.

Chinese buyers rush to secure a slice of the Australian real estate market ahead of other foreign investor has accelerated during 2023.

The data shows 826 approvals, valued at $1.1 billion, were granted to Chinese buyers in the June quarter, while only 606 approvals, valued at $700 million, were approved in the March quarter.

The below table by the FIRB shows the top 10 sources of investment by value of approved residential real estate proposals*.

The FIRB’s data follows the news that rich Chinese property investors are looking to Australia, with over 700,000 expected to migrate overseas in the next 2 years, with Australia ranking number one top overseas destination for Chinese property hunters.

As international travel resumes, Chinese interest in overseas property markets is expected to grow even faster.

One significant change is noted from pre-covid times, the Federal Government has imposed additional rules and higher fees for foreign investors.

Foreign buyers can only buy new or off-the-plan residential properties in Australia, they cannot buy established property so aren’t able to compete with Australian home buyers or most investors.

The idea is that if non-residents invest in building new properties, there will be more job creation opportunities in the construction industry, and the economy will grow. Additionally, any foreign investment proposal is reviewed on a case by case basis and subject to the nation interest test.

Interestingly, as New Zealand citizens are considered to be permanent residents of Australia, they are eligible for the First Home Owners Grant and they don’t need approval from the FIRB before purchasing property. However, when buying in Queensland, some lenders will add an additional 7% Foreign Acquirer Stamp Duty on top of the standard stamp duty costs.

On Tuesday 7th November, Melbourne Cup Day, the RBA will decide if interest rates will again rise. If rates hold steady, we can expect the market will continue to see significantly increases.

If you bought a property prior to 2020, you are sitting pretty! In the Redlands area, a 4 bedroom house was selling around $550,000, that same property today would be worth $800,000.

We are currently seeing a larger number of investors capitalising on their profit in this market and deciding to sell their investment properties.

Open homes numbers have increased dramatically, and mid-week open homes numbers are outstanding.

Current demand for properties has seen agents and sellers now regularly accepting back up contracts on properties. Quite often the backup contract is for equal or more money. This means sellers can feel secure knowing there is a backup contract in place should anything happen to terminate their current contract.

We desperately need more properties for sale to satisfy the large number of buyers currently in our database actively looking for their new home.

If you are thinking of selling, would like an updated property estimate, or simply need some real estate advice, remember I am just a phone call away.

All the best, Simon Salm

To view our current listings for sale, click HERE

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