From the Wall Street Journal (WSJ) comes analysis from Citigroup showing that Chinese immigration is having a large impact on Australian property values, with changes in immigration levels typically impacting property prices with a three-year lag:
Wealthy Chinese are now among the biggest buyers of real estate in Australia, picking up properties ranging from modest suburban homes to waterfront mansions with views across Sydney Harbour…
Now the influx of Chinese money is starting to skew Australia’s real-estate data, which is closely watched by policy makers including the nation’s central bankers. Economists at Citigroup Inc., retooling the computer model that churns out the bank’s predictions for house prices, found a previously unknown connection: Shifts in levels of Chinese migration were consistently echoed, three years later, by changes in property prices. So strong was the relationship that Citigroup has now worked it into its equations…
The bank said the reason for the correlation isn’t clear. It didn’t find a similar relationship between total immigration and property prices.
“It could be that Chinese immigrants have the income capacity and desire to buy property, more so than other nationalities,” said Paul Brennan, chief economist of Citigroup’s Australian operations…
Interestingly, SBS News last week produced a report on South Africa, where the chinese population has balooned, hitting some 500,000 in Johanesburg. The SBS crew interviewed some of the recent arrivals who were asked why are were going to Johannesburg rather than Australia. The interviewee stated that it was primarily because of Australian restrictions on buying property and immigration. You can listen to the audio here starting from the 15 minute mark, with the comment on Australia at around the 17.10 mark.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
