Chinese interest in Australian real estate has pulled back over 2015 according to the head of a major real estate franchise.
John McGrath, chief executive officer of McGrath Real Estate, this week said economic factors within China and conditions of the Australian property market had taken their toll on the demand among Chinese buyers for Australian real estate.
“[They] are still there, but it is probably back 10 or 15% from where they were a year ago,” McGrath told Bloomberg.
“I think there is a whole combination of things there. The Chinese stock market and so forth,” he said.
McGrath said the Chinese buyers who remain active in the Australian market are turning towards Brisbane and other areas of south east Queensland as prices there are “compelling” compared to locations such as Sydney and Melbourne.
McGrath’s prediction of an increased focus by Chinese buyers on Queensland real estate is backed by Simon Henry, co-CEO of Juwai.com, but Henry believes Victoria still holds plenty of attraction to Chinese buyers.
“We have seen two big Chinese buyer trends in 2015: a shift in momentum out of New South Wales and into Victoria and especially Queensland, and stronger growth in demand for new apartments in the $300,000 to $1.2 million range,” Henry said.
“Chinese buyers may come from another country, but they are also acutely sensitive to price and value, especially below $2 million. Melbourne and – even more so – Brisbane are offering the best value at this point,” he said.
Over 2015, Melbourne proved particularly popular with Chinese buyers looking to break into the premium market, which includes properties valued at or above $5 million.
“This year, Sydney lost some premium buyers to Melbourne. These buyers simply found more to like in the properties available in Melbourne, especially in September. Melbourne captured the majority of the growth in buyer interest at this price range,” Henry said.
“While Sydney started the year with more premium property buyer interest, as measured by views of those properties on Juwai.com, Melbourne showed the strongest growth. Melbourne ended the period with more than 700% growth, while Sydney finished September roughly back where it started.”
For 2016, Henry said he would be “interested” to see the effect a price correction in Sydney would have on Chinese buyers, but he believes the year ahead will see buyers continue to target the premium market.
“Our forecast is for continued growth in the premium Chinese buyer market. New data from China shows that the country now has more billionaires than any other, even the United States. Its ranks of multi-millionaires is also growing rapidly.
“China is also considering the complete removal of all limits on capital exports by 2020. The Bank of England expects that to result in a 600% increase in Chinese ownership of overseas assets, including real estate."
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