The Australian property market has received some mixed headlines of late amid concerns that some of the more popular areas are seeing reduced demand. The main cities such as Sydney, Melbourne, etc have been pushed to levels which are potentially unsustainable at this moment in time but is demand really falling? If the latest information from property auctions across Australia is anything to go by it is unlikely we will see much of a fall in property prices in the foreseeable future.
Chinese investment continues
While Chinese investors have been heavily involved in property markets around the world including the likes of Canada, UK, etc it is Australia which has seen significant investment growth. Overall Chinese investment in worldwide foreign property has increased from $5.9 billion in 2013 to a staggering $24.3 billion last year. Initial estimates suggest that at least 50% of this investment is in residential properties and Australia seems to be attracting more than its fair share. It will be interesting to see how Chinese investors react to the “improvements” in the Chinese economy and whether indeed more funds will remain onshore in the future.
As we have touched on in some of our earlier articles, many investors are sceptical about Chinese economic data which does not necessarily seem to be reflected on the ground. Is ever increasing Chinese investment in overseas property markets a sign of concerns back home?
Chinese investors dominate auctions
A number of Australian real estate agents have reported significant interest from Chinese investors at numerous property auctions across the country. Many of these investors are now recognised Australian citizens due to the very close relationship between the two countries. If you look back to the 2008/9 worldwide economic downturn Australia was one of the few countries in the world to avoid recession. Experts believe that much of this was due to significant Chinese investment in the mining sector with many investors now making Australia their home.
Only a few weeks ago there was seemingly concern regarding the impact that overseas investors were having on the Australian property market. It now turns out that many of these investors are actually Australian citizens and as such they have every right to be involved in the property market.
Education and employment
As we touched on above, there has been significant investment by Chinese companies in the Australian mining industry which has led to increased employment opportunities for both Australian and Chinese citizens. It is also worth noting that the high standard of education available across Australia has attracted a growing number of students many of whom are from China.
The Australian immigration system works very differently to that in the UK for example where full-time employment is required in order to stay in the country after further education finishes. In many ways the system allows corporate Australia to cherry pick the best students offering them employment positions. At this moment in time there are significant attractions for talented students especially those specialising in areas of the Australian employment market where there are currently skill shortages.
There are many reasons why Chinese investors still favour Australia over and above many of the more recognised worldwide property markets. There is the perceived “safe haven” status during these troubled economic times in China, there are some excellent employment opportunities and the overseas student system works perfectly for all parties. As a consequence, Chinese appetite for Australian property is unlikely to fall in the foreseeable future.