️ Highlights:
1. Chinese buyers are spending billions of dollars each year on Australian real estate, driving up prices for the average person.
2. It is estimated that one must earn around $300,000 to afford a home in Sydney.
3. Many Chinese investors are either laundering their money or buying properties as investments without renting them out, further exacerbating the housing affordability issue.
4. The share of Australian homes sold to foreign purchasers, particularly from China, has risen significantly since the reopening of Australia’s borders.
5. Australia has weak anti-money laundering laws related to residential real estate, making it an attractive destination for illicit funds from China and other countries. Without stricter regulations and restrictions on non-permanent residents buying existing homes, the housing market will continue to favor foreign buyers over Australians.
Examining the Influence of Overseas Buyers on the Australian Property Market
Lincoln Parker, the Liberal Party’s Defence and National Security Policy Chair, has raised concerns about the significant impact of Chinese investment in the Australian housing market. According to Parker, Chinese buyers are investing approximately $3.4 billion annually, equating to about $65 million each week. This substantial influx of foreign capital is contributing to escalating property prices, making it increasingly challenging for the average Australian to afford a home. In Sydney, for instance, an income of around $300,000 is now required to purchase a home.
Concerns Over Housing Accessibility and Investment Practices
Parker also expressed concerns about the priorities of the Australian government, emphasizing the need to focus on the welfare of Australian citizens rather than profiting from Chinese investors. He highlighted issues such as money laundering and the practice of purchasing properties for investment purposes without renting them out, leading to a rise in housing prices and a decrease in availability for locals. This situation results in average Australians struggling to afford homes, while many properties remain unoccupied.
Data Indicating a Rise in Foreign Purchases
Since the reopening of Australia’s borders in late 2021, there has been a notable increase in the proportion of Australian homes sold to foreign buyers, as indicated by National Bank of Australia (NAB) survey data. Additionally, realestate.com.au has reported record-high levels of foreign interest in Australian properties, predominantly from China. The Australian Treasury revealed a 40% increase in approvals for foreign acquisitions of Australian residential properties in the fourth quarter compared to the previous year, with China leading this trend.
Chinese Buyers and Australian Real Estate
Juwai IQI, a property portal, has identified Australian residential real estate as the top destination for Chinese purchasers. Inquiries from Chinese buyers surged by 158% in the third quarter of 2023, marking the second consecutive quarter of double-digit growth. David Morrell, director of Morrell and Koren, described the market as being disproportionately influenced by Chinese buyers relative to the rest of the population.
Migration Trends and Money Laundering Concerns
Visual Capitalist projections indicate that Australia is set to experience a significant influx of wealthy migrants in 2023, while China is expected to see a large outflow. Many of these affluent migrants are likely to invest in Australian real estate. Furthermore, Australia’s lenient anti-money laundering laws, particularly concerning residential real estate, have made the country an attractive destination for illicit funds, primarily from China. It is estimated that billions of dollars have been laundered through Australian homes over the past two decades, predominantly from China.
Conclusion
The increasing influence of foreign buyers, especially from China, on the Australian housing market raises critical questions about housing affordability and market accessibility for Australians. The government faces the challenge of balancing foreign investment with the need to ensure affordable housing for its citizens. Tightening anti-money laundering regulations and reconsidering the policies on property purchases by non-permanent residents could be crucial steps in addressing these concerns and maintaining a fair and accessible housing market for Australians.