Earlier this week, prominent Sydney real estate agent and auctioneer, Tom Panos, claimed that the prevalence of Chinese buyers across Sydney’s property market was grossly understated.
“Look it’s probably bigger than what that [FIRB] report says because often what you’ll see is at an auction is, you’ll have an international buyer and they’ll be on the phone talking to someone else”, Panos said.
“Chinese people love Australian real estate… I can tell you, when I do auctions on a Saturday, I often have the vendor say to the agent in front of me ‘have we got any Chinese buyers'”?
Panos’ comments follow a recent report from The SMH claiming that “cashed-up Chinese buyers have re-entered Sydney’s property market with gusto”.
Real estate firm Juwai IQI also claimed that Australia was the top overseas destination for Chinese property purchasers in the first half of 2023, based on the number of buyer inquiries it received on its platform.
An investigation by the Daily Telegraph also suggests that the prevalence of foreign buyers across Sydney’s property market is far greater than claimed by the Foreign Investment Review Board (FIRB).
The number of buyers who paid the state’s foreign purchaser surcharge in 2020-21 was more than double the number of NSW approvals issued by FIRB, at 2107 versus 974.
NAB’s survey of real estate agents also shows that foreign purchases accounted for 2% of established home sales during that financial year and 4% to 8% for new homes. This rate of purchasing has since increased, as explained by The SMH report above.
NAB chief economist Alan Oster told The Daily Telegraph that “the FIRB is only getting legal ones whereas the real estate agents are saying what they have actually sold to people”.
“We are a big lender”, he said. “Sometimes we doubt what we are seeing in the official statistics”.
Leading real estate agent John McGrath also believes the FIRB number of 0.74% of homes selling to foreign buyers is too low.
“I would have thought that percentage could have been doubled”, he said.
The increased foreign buyers helps to explain why Sydney home values have rebounded so rapidly despite soaring interest rates:
Most foreign purchasers would buy without a mortgage. Therefore, the RBA’s aggressive interest rate hikes would have no effect on them.
Given the scarcity of available listings, rising Chinese buyer demand would be having a larger-than-normal impact on Sydney home values.
