Properties investments by immigrants in Australia growing

by Ray Clancy on March 7, 2014

in Australia, Australia Immigration, General Information, Property in Australia

It is well known that the lifestyle attracts immigrants to Australia but now it seems that property is proving a big hit with expats too.

A new report from investment bank Credit Suisse says that newly arrived immigrants have spent about $24 billion on property in Australia over the past seven years.

property market

Data shows 18% of new homes in Sydney and 14% in Melbourne being bought by Chinese nationals

It reckons that property is set to become particularly popular with immigrants from China and suggests that Chinese buyers are currently purchasing around 12% of new homes in Australia.

The report goes on to say that it expects Chinese nationals to invest around $44 billion into Australian residential real estate over the next seven years.

Combining data from the Foreign Investment Review Board, Department of Immigration and Bureau of Statistics, it also estimates the Chinese residential property investment is currently more than $5 billion per annum.

The most popular places for immigrants buying property are Sydney and Melbourne with 18% of new homes in Sydney and 14% in Melbourne being bought by Chinese nationals. The level of Chinese buyers in other markets is estimated to be 7% or lower.

Immigrants who are not permanent residents are limited to buying new homes and the impact is likely to push up prices in the new home sector. ‘While Australia has some of the most unaffordable housing in the world, further strong Chinese demand can push prices even higher,’ the report says.

It raises concerns that prices could rise beyond affordable levels for others. ‘A generation of Australians are being priced out of the property market. Many face a lifetime of renting,’ it adds.

Sydney, for example, could mirror what has been happening in London where wealthy expats are pushing up prices faster than in other parts of the country and many properties are owned by individuals from the Middle East, North Africa and other parts of Europe.

The Credit Suisse report warns that Sydney may be heading in this direction. ‘While the differences in recent house price and wage inflation in Sydney has not been as extreme as London just yet, we think the two cities have plenty in common,’ the report explains.

‘In both cities property rights are protected. Both cities are in transparent democracies and within an overnight flight away from less democratic countries with less transparent governments. And both the UK and Australia have their borders open to new immigrants, especially if they are rich,’ it adds.

Developers of new homes have also noted an increase in overseas buyers. Australand and Mirvac have reported that 10% to 20% of new homes are being bought by foreigners, mostly Chinese. Meriton reckons it is 12% to 15% and again most are Chinese buyers.

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