Chinese Investment in Australian Property Market | Chifley Securities

For most first time home buyers in Australia property prices are extremely high and unaffordable, however it’s completely a different story for Chinese investors. In their eyes property values are at an all time low which is credited to the Australian dollar depreciating. A staggering 15% of the national housing supply is being purchased by overseas money mainly from Chinese investors.

If we were to look closely at Melbourne and Sydney, overseas investors are purchasing around 25% of the new housing market in these well sought after cities. Dominic Lambrinos, Business Finance Expert, says that “According to Credit Suisse in the next six years Australia can expect an additional $60 billion in real estate purchases from Chinese Investors”.



How do the Chinese investors generate enough funds to make such substantial investments?


China’s stock market has reached an all time high and for the first time has topped $US10 trillion. Investors are taking profits from their domestic  share markets and are moving them into “tier-one” cities such as Melbourne and Sydney. When housing prices were represented in US dollars and Chinese yuan the prices don’t look as intimidating. This is largely thanks to a depreciating Australian dollar which recently hit a 6-year low against the US currency.

“Looking at Melbourne property prices adjusted for the strength in US dollar or Chinese yuan, one can see that property prices are actually at multi-year lows” said Mr.Weston of IG Chief Market Strategist. This is echoed also by Dominic Lambrinos, founder of Chifley Securities, Lambrinos says “for example in the last few years for a Chinese investor who purchased a $1 million property in Melbourne would have made around $200,000 on the currency trade since the Australian dollar depreciated against the yuan”.

Most investors don’t buy property with a two year view in mind and it’s definitely safe to say that there will be many twists and turns in the currency market especially when the Reserve Bank of Australia comes to raising rates. The Australian real estate market is looking promising to Chinese investors but we must mindfully watch the rise and fall of currency.