There are concerns that foreign interest in Australian residential property is pushing up prices, making it harder for local first home buyers to enter the market.
Chinese interest in Australian residential property is booming, with chief executive of McGrath Estate Agents John McGrath describing it as the biggest surge from an offshore market in his 30 years in real estate.
“In some suburbs 90 per cent of new product will sell to Chinese buyers,” he said.
Cashed-up buyers are snapping up everything from luxury harbour-side properties in Sydney to apartments bought off the plan in Sydney, Melbourne the Gold Coast and Perth.
Monika Tu from Black Diamondz Concierge Service in Sydney saw an opportunity at the high end of the market.
Ms Tu finds properties for wealthy Chinese clients and helps them settle in to Australia. She will look after everything from housing, to finding schools, to buying investment art.
Ms Tu invited the ABC’s 7.30 program along as she showed client Amy Wong a property on Sydney’s lower north shore, on the market for $13 million.
“I decided to move family here for the education and for the lifestyle,” Ms Wong said.
“This is just a beautiful place to be.”
But not everyone welcomes the new buyers. Buyer’s agent Patrick Bright says he refuses to help non-residents find property.
“Why should we sell off the farm if you like, or sell off the city,” he said.
“It’s not like we are struggling for people to buy these properties, because we’ve got an undersupply, [that] is what all the associations keep telling us.”
Foreign investors ‘only part of the equation’
Financial analyst Martin North agrees there is a shortage of residential property, which is forcing up prices and making it even tougher for first home buyers.
But he says foreign investors are only part of the equation.
“First home buyers find they can’t afford to buy because prices are too high,” Mr North said.
“Also when you attend an auction you discover that investors from overseas, local investors and baby boomers are all also trying to buy the same property.”
When 7.30 attended the second-stage release of a new apartment complex in Sydney’s south, there was a long queue of would-be buyers waiting for the opening of the sales office.
CBRE Real Estate’s Tim Rees says they sold 250 units in the first release in three hours.
“Today, we sold another 50,” he said.
“We have got first home buyers strong in the market, there are investors, 60 per cent owner-occupiers, 40 per cent investors.”
Under Foreign Investment Review Board guidelines, if a developer has pre-approval from the Foreign Investment Review Board, 100 per cent of apartments in a new development can be sold to foreigners.
According to Mr North some developers target the international market.
“In some cases there are developers who are essentially building directly to sell to China and they are advertising on websites over in China and using Chinese connections to sell off the plan,” he said.
Mr McGrath believes the business is good for the market.
“I think it is quite centralised in certain pockets, so I don’t think it is doing great damage or harming local buyers’ opportunities to buy here still,” he said.
Mr North believes the key problem is the shortage of residential property in Australia and says there need to be policy changes to ensure that a large group of Australians do not become life-long renters.
“We have five trillion in property in Australia, it is a massive economic engine for us,” he said.
“But we need to be clear about how we are going to manage that effectively for the greater good of Australia.”