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Chinese property buyers to return to Australia

Chinese property buyers are likely to head back to Australia sooner than expected as Australia emerges from COVID stronger than many other countries, according to an expert.

Juwai IQI Co-Founder and Group CEO Kashif Ansari said the recovery in Chinese demand for Australian property may happen quickly, even as soon as the end of this year, and it could follow a trend seen in the US.

Mr Ansari noted a new report from the National Association of Realtors found that international buyers, led by China, purchased $59 billion worth of US residential properties from April 2021 to March 2022, up 8.5 per cent from the previous year.

“The US data shows that the pandemic had a more benign impact on Chinese buying than expected,” Mr Ansari said.

“In many ways, Australia has emerged from the worst of the pandemic in a better position relative to the US than it held in 2019. 

“Australia has done better at retaining Chinese student demand and remained a popular destination for education, commerce, and ex-pat residency.”

Mr Ansari said there is still a large appetite for property from Chinese buyers both in the US and Australia.

“Buyers from Greater China spend more on US real estate than every other nationality, and buy a greater number of homes there than almost any other nationality,” he said.

“Even with China’s closed borders and the US visa roadblocks of the past year, they remain the globe’s biggest spenders on cross-border property. 

“Chinese buyers acquired $6.1 billion of US homes in the past year, up 27 per cent over the prior year.”

Tight supply has been one reason many Chinese buyers haven’t been as active as they could have been, according to Mr Ansari.

“The roaring American market and limited supply kept foreign buying from increasing even higher,” he said.

“Fifty-seven per cent of foreign buyers who didn’t complete a transaction failed to do so because they could not find a property to purchase. 

“That’s up from just 46 per cent last year.”

Mr Ansari said Chinese buyers increased their investment in the US by 30 per cent in the past year, despite all the obstacles. 

“The $10-billion question for 2022 is whether their spending will continue to climb. 

“It remains to be seen if the almighty US dollar, which has appreciated more than 6 per cent against the Chinese yuan, can stem the investment flow.”

Mr Ansari said Chinese buyers are also looking to pay cash for properties.

“Chinese buyers are more frequently cashed up, with 58 per cent of Chinese buyers in the US paying in all-cash,” he said.

“Twice the share of Chinese buyers pay all cash compared to existing buyers.” 

A greater portion of Chinese buyers in the US paid in all cash than in any year since 2018, Mr Ansari continued.

“What’s really fascinating is that foreign buyers living overseas are twice as likely to make an all-cash purchase than those living in the United States. 

“Overseas buyers of US homes are seeking diversified investments and second homes.

“They tend to be very wealthy. Only 30 per cent of US resident buyers pay cash.

“When you add together both overseas Chinese and those who reside in the US, 52 per cent are purchasing a primary residence, 25 per cent a rental, and 8 per cent for student use.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.