Chinese buyers were a big story five years ago. They’re back.
Chinese buyers are back.
Back in 2016/17, Chinese demand was huge, and created a big political headache, as locals were priced out by Chinese buyers with “suitcases full of cash”.
But the Chinese bid went quiet for a while. Not because Australia did anything, but because Beijing clamped down on the Chinese capital account, and made getting money out of the country harder.
But it now looks like the Chinese bid is back.
The South China Morning Post (SCMP) reports that Chinese immigration into Australia is about to top pre-pandemic levels, in part lured by the prospect of owning Australian property.
“Chinese short-term migration to Australia is on track this year to overtake pre-Covid 2019, owing to improved economic relations, a glut of white-collar jobs and a boom in real estate, according to government data and analysts”, SCMP reports.
“The top draws are real estate and renewable energy, said Stuart Orr, head of the business school at the Melbourne Institute of Technology”.
I’m sorry, what? Renewable energy? Are we sure that’s not a mistranslation of “I’m going to Australia because its sunny”?
But demand on the Chinese property portals is booming:
“In the global property market, Chinese have picked Australia as their top preference in the current quarter, according to data compiled by the real estate tech firm Juwai IQI”.
“The firm projects that third-quarter inquiries from China about Australia will be 76 per cent higher than in the second quarter, and 35 per cent higher than in the first quarter”.
“The first wave of buyers this year consisted of students who urgently needed to move to Australia to complete their studies in person [after the pandemic],” Juwai IQI said in an email to the Post”.
Juwai IQI co-founder and group managing director, Daniel Ho, said recently that Chinese buyers are cashed up and ready to buy after three years of lockdowns.
“They are buying here because they intend to live here. They are looking at houses and townhouses and larger apartments”, he said.
Interesting, while a lot of the heat in the last cycle was around apartments, preferences seem to be shifting:
Ho also said that buyer preferences have changed from smaller apartments to larger family-style homes:
“Many already live here as permanent residents or holders of two passports. That means Chinese buyers today look for larger apartments, townhouses, or single-family homes. They are less likely to purchase a one-bedroom or small two-bedroom inner city apartment”.
Juwai also said that “Chinese have lots of savings to invest. In the first nine months of 2022 alone, Chinese savings deposits soared in value by RMB 26.3 trillion (US$3.6trillion/AU$5.28trillion)”.
Yeah… that’s because the financial system is going to shit, and people are losing faith in managed funds. That’s what’s driving a surge in bank deposits.
But it’s not important. Chinese demand is as strong as it ever was.
And China is taking small steps to open up the capital account, and that will get the money flowing again:
“China is taking steps to loosen strict capital-control measures in its two most important cities amid efforts to win back foreign companies as overseas investment slumps and the economy slows”.
“In Shanghai’s pilot free-trade zone and Lingang area, foreign investors are now allowed to freely transfer their investment-related funds in or out of China without any delay should the money be “real and compliant,” authorities in the financial hub said in a set of rules that took effect on Sept. 1.”
“Beijing has also proposed similar regulations for the whole city, according to drafted rules published Wednesday that are now seeking public feedback”.
Expect more headlines about “suitcases stuffed with cash.”
JG.