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Why Australian property is still a popular choice for Chinese buyers
What is driving Chinese interest in Australian property in the beginning?
Chinese buyers have been an essential part of the Australian property the landscape for several years – but why has Australia been a popular choice among these buyers?
Due to China’s current housing situation, Chinese residents do not purchase a property; they decide to lease a property for up to 70 years.1 As housing in China is mostly small apartments, consisting of up to only 2-bedrooms, these apartments can be priced up to $1.6 - 2.4 million Australian dollars.
With the belief of the Chinese viewing property ownership as a status symbol, it has led them to venture to other countries for the opportunity to invest and expand their horizons, with Austalia as one of the popular choices.
While many property sectors have been heavily affected during the beginning of the COVID-19 pandemic, data from Chinese property portal “Juwai IQI” presented interest in the Australian market is growing and growing.2 With investment prices such as $500,000 to $950,000, a family from China can own an Australian property that consists of four bedrooms, a veranda, a backyard and a spacious basement.
Besides the appeal of Australian real estate’s price, what other factors is pulling Chinese property buyers?
- Hassle-free travel
The shortest air travel is 7,448 km = 4,628 miles, a 9 hour 47 minutes flight from China to Australia. With a total flight duration of over 9 hours, Australia is not too far away from China, thus ensures Chinese citizens a reasonable journey when visiting their home country or extended family members.
- Learning atmosphere
Additionally, the Australia lifestyle is drawn to Chinese families, a country where it boasts some of the best universities, colleges and training providers worldwide.3
Within the Chinese culture, education is deemed an essential factor in enhancing a person’s worth and career - where 42 per cent of Chinese citizens living in Australia are degree-educated, compared to just 14.8 per cent of the general Australian population.
Sydney and Melbourne are the most favoured cities among these investors - home to 75 per cent of the Australian population born in mainland China.
- Foreign investment opportunities
Though temporary Australian residents may be required to sell an older residential the property when they leave Australia; foreign nationals can retain, rent out, sell or live in newly constructed dwelling - a major drawcard for Chinese investment in new residential buildings.4
Other pull factors include Australia’s stable financial institution, well-regulated land title system, buoyant real estate market, high capital gains rates in major cities and lower deposit requirements.
- Small business opportunities
Chinese citizens, both in Australia and China, are very commercial-minded. More and more small businesses are opening up and being operated by Chinese people in Australia - occupying a lot of retail shops such as cafés, restaurants and grocery shops and viewing their commercial property is a second business to them.5
This ensures the security that even if their first business is not profitable; the second business in commercial real estate will give them long-term prosperity, which also means capital gains.
What is the future of these Chinese investors regarding Australian property?
In the first quarter of 2020, Chinese enquiries dropped 14 per cent, but this was only slight compared to the whopping 40 per cent drop from Australian buyers.
Nevertheless, Australia will always be a popular site for investment because the weakened dollar provides a buffer for foreign conversion. At the same time, its universities, market strength and success in containing the pandemic means the economy should get a head start on the US and UK.
