Data Shows No Chinese Real Estate Invasion

March 15th, 2014

There seems to be a major story every week on the Chinese real estate invasion that is threatening local first-home buyers. Commentators warn of the rise of China’s middle class negatively impacting housing affordability in major cities such as Sydney and Melbourne. However, the data shows that there is in fact no Chinese real estate invasion.

The Foreign Investment Review Board’s 2012-13 annual report shows that total foreign investment in residential properties in Australia dropped from $19.7 billion to $17.2 billion. This was mainly due to a drop in the number of buyers purchasing off the plan. At the same time, sales of existing residential properties and land rose to $5.4 billion and $1.4 billion, respectively. Foreign buyers preferred to invest in new dwellings, with $8.64 billion in the new dwellings sector, which actually had a positive impact on affordability.

While buyers from China are the biggest foreign investors in the property sector, investing around $6 billion in the 2012-13 period, Canadian and US investors are also major investors, injecting around $5 billion and $4.4 billion, respectively. These figures include both commercial and residential real estate.

When investment totals for Canadian, US, British, and New Zealand investors are combined, the figure exceeds that of Chinese, Malaysian, Singaporean, and Hong Kong investors (‘Chinese’ investors). The total for these ‘Chinese’ investors is at around $10 billion in the residential sector, which would be less than 4% of the $264 billion total value for housing finance.