Let’s look at the data
Chinese investors have been at the receiving end of the blame especially with driving prices up in the Australian market. The scale of Chinese investment across Australian residential property market has prompted a more polarised public view. However, amidst the affordability crisis at hand, the recent numbers of Chinese offshore purchases are interestingly low.
According to the data from the Foreign Investment Review Board (FIRB) approval figures and ABS data shows on Chinese investment in commercial real estate, only 2% can be attributed to Chinese residential real estate investment. The figure is determined by “dividing estimated Chinese investment volume in residential real estate by the total volume of residential real estate transactions” (via ABC).
In the 2013 financial year, based on the FIRB statistics, Chinese property investment was estimated to be at $258 billion. However, the results can be contested to a certain extent because the $5.8 billion investment in the financial year 2013-14 is only an estimate based on FIRB data for each country listing only the total value of approved real estate investment without specifying residential versus commercial real estate.
This raises concerns about the availability of more detailed information regarding Chinese investment in Australia’s residential property. Nonetheless, considering the facts just established, this also emphasises that Chinese investment in Australian residential real estate only totals to 2%. Further, Chinese applicants for residential real estate investment approval only totals to around 16% of all possible foreign real estate investors.
The concerns about the data provided also highlights an important thing. The housing affordability crisis cannot be addressed by implementing a clamp-down on just one type of buyer. This is not to mention recent news stating that Chinese purchases in the Australian real estate market has gone down – as a result of Beijing’s efforts to tighten capital controls.
The latest initiatives have also been taking a toll on some Australian property businesses with no signs of easing up immediately.
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