From the Sydney Morning Domain today:
Around 10 million of the wealthiest Chinese families, or around one in seven, are interested in migrating to Australia, according to a survey conducted by the broker [CLSA]. And home ownership in a desirable destination country is “a key reason” for the flood of money coming into the Sydney and Melbourne property markets, conclude the broker’s analysts.
Not all of those 10 million households will have the financial wherewithal to ultimately act on their desire to relocate Down Under, but it is representative of a powerful trend.
China is already the number one source of source of foreign money in the local real estate market, and anecdotal evidence suggests that that position has only strengthened this year. Sydney and Melbourne have overwhelmingly been the destinations of choice.
Chinese investors are lured by the prospect of one day moving to a country with clean air, a good education system and a strong legal system. Indeed, the only country Australia ranks behind as a desirable destination for Chinese immigrants is Canada, where new restrictions have been put on foreign investment and immigration.
Bring it on! So long as it is in new properties.
This is a strong enough trend to have macroeconomic implications, as we are already seeing in our overly high dollar.
However, I do not think that it is anywhere near as risk free as represented. The three big risks are that the locals get so jumpy about being priced out that political action becomes inevitable. The second is that China shuts it down, given so much of the dough is dodgy in nature. And, when the cycle turns, I expect this will make it worse, not better, as money floods back out, as happened in the GFC.
