Chinese Interest in the Australian Property Market Remains High

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Chinese Interest in the Australian Property Market Remains High

November 10, 2016

 If you have a property for sale in Australia, you have every reason to be excited about the Chinese interest in Australian real estate. There are reports that 60,000 wealthy Chinese nationals are planning to invest millions of dollars into Australian properties over the next 2-3 years. This could well set off a new real estate boom in Australia, just when the market had started to ebb a little.

A survey by the Shanghai based Huran Report found that over 800,000 Chinese nationals, each worth $1.5 million or more, planned to move at least a part of their assets abroad. In the survey, Sydney and Melbourne emerged as the most popular cities among Chinese nationals.

There are plenty of reasons for this renewed interest. The yuan has depreciated recently, and so there is a real need among wealthy Chinese to buy assets abroad before the yuan falls any further. Australia is a great choice to park some of their assets because of its excellent universities, hospitals, infrastructure and modern lifestyle.

Rupert Hoogewerf of the Huran Report talked about the reasons for the Chinese interest in Australia in an interview with the The Australian: “It’s mainly because you have got the depreciation of the renminbi at the moment. As immigration and house-buying destinations, Australia is still very popular. Sydney and Melbourne are still very popular.”

 “China currently has 1,340,000 high-net-worth individuals, defined as indiv­iduals with US$1.5m, so that means we are looking at a massive 800,000 individuals who want to buy property overseas over the next three years,” Mr. Hoogewerf added.

The favourite destination in Australia was Melbourne, with over 3.9 percent of Chinese respondents wanting to move there. Sydney ranked second, with 3.8 percent. The quality of healthcare in Australia has been described as the primary reason for wealthy Chinese wanting to move there. Australia also tops the list among countries favoured as top investment destinations.

But there are concerns that remain in the Australian property market, despite the Chinese interest. Real estate in Australia is at the second most overvalued point in its history. There is a risk of a housing bubble, which a lot of experts are talking about.

 Louis Christopher of SQM Research explained that the property market was overvalued by 22 percent. The only time the Australian real estate cost more was in 2003, when the market was overvalued by 25 percent.

 Mr. Christopher said that the market was largely driven by high property prices in Sydney and Melbourne. The other cities in Australia were generally insulated from the recent rise in real estate prices.

 “If we were to rip out (the figures for) Sydney and Melbourne the market would be fairly valued, quite frankly. The current tempo has picked up particularly in Sydney. Melbourne has had about 15 per cent per annum price gains, I know that is a little bit higher at what the official numbers suggest but it is our view that, that is what the market has done. And our expectation is that the current trends will continue well into next year,’’ Mr. Christopher said.

As of today, Melbourne is considered overvalued by 40 percent and Sydney by 40 percent as well. If you’re trying to sell your property in Australia fast, you will probably find this information useful.