Chinese property buyers are gone!

One interesting aspect of the current boom in Australian property prices is the absence of overseas buyers, especially Chinese.

During the 2013 to 2015 house price cycle, Chinese buyers made up a significant proportion of demand, especially across Sydney and Melbourne.

However, over the past several years, this demand has waned, as illustrated by the next chart from NAB’s December quarter property survey:

The role of foreign buyers in Australian housing markets remains well down on the highs seen in 2014-15 in both new and established housing markets – and the coronavirus impact on the economy and international borders is likely to have added further impetus to the downturn in buyer numbers. In Q4, the overall market share of foreign buyers fell to a survey low 4.0% in new housing markets (survey average level 9.8%) and was unchanged at 2.6% in established housing markets (less than half the survey average (5.7%).

New data from REA Group’s latest Property Outlook report supports the view that Chinese buyers have abandoned Australia; albeit with some offset by increased interest from other nations:

Interest from China in Australian property continued to plummet, dropping by 39 per cent over the past 12 months. At this stage, the only thing that could potentially bring back Chinese investment would be better performing unit markets, which is unlikely especially in Sydney and Melbourne. While Chinese buyers don’t look to be coming back anytime soon…

This is a very unusual property price boom in that:

1. It is being driven primarily by owner-occupiers;
2. Overseas buyers are largely absent; and
3. It has occurred against the backdrop of negative net overseas migration.

The re-emergence of both investors and migrants in 2022 could give the boom a second wind.