Is this why prices are already surprisingly strong?
Here’s a little thought bubble for you… what happens to Aussie property as the Chinese economy goes ex-Growth?
You don’t hear all that much about it in the mainstream press because Australia has manufactured itself a heavy (and foolhardy) reliance on China, but the Chinese economy is in a bit of trouble.
I’ve talked about how the Chinese property sector is in world’s of hurt, but it’s also getting stung by the rebalancing of geopolitical power structures.
The US in particular is going all out to reshore manufacturing, and much of the developed world is following suite. Western companies just don’t trust China like they used to.
The end result? Foreign Direct Investment in the June quarter this year went to zero.
That is, nobody is in investing in productive capacity for China.
Fast forward 3-5 years and where does that leave you?
As the property sectors collapses under a mountain of debt…
And as your demographics go down the toilet…
Now, nothing is ever certain in macro-economics, but China has some serious challenges to work through.
But if China goes ex-growth, creating all sorts of political instability, what are the wealthy Chinese going to do to protect their wealth?
Did I hear someone say buy Aussie property?
That’d be my guess.
And we’re seeing it already.
Chinese property buyers armed with $5.3 trillion in savings have set their sights set on Australia, according to research by Juwai IQI, reported in The Australian.
Australia has pipped Canada to be the number one destination for Chinese property hunters, who covet Australia’s education and migration opportunities.
“Chinese consumers have had their borders locked down for three years, and they have a lot of pending business to take care of”, Juwai IQI co-founder and group managing director Daniel Ho said.
“Whether their plans were to retire, study or just invest in Australia, they haven’t been able to do it for nearly three years”.
“Education and quality of life for full-time residency is what makes Australia and the other top countries so desirable”, Ho said.
“Unlike in the pre-Covid boom, almost all of today’s buyers intend to live in their property, even in not immediately. They are buying here because they intend to live here. They are looking at houses and townhouses and larger apartments”, Ho said.
Yep. Chinese buyers are hungry.
And I think we’re already seeing it in the data, with the surge in Sydney prices particularly surprising.
Now, there’s a lot of speculation here.
But you have to remember how small Aussie property markets actually are. Because we’re not talking about the total housing stock. We’re talking about how many properties are on the market in any given month.
Globally, it’s not many.
It doesn’t take much. Small shifts in the outlook for China could have a big impact on Aussie property values.
JG.
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