Chinese Australian apartment buyers forced to sell as economic troubles hit back in China
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Chinese buyers are being forced to sell apartments in Australia because of the economic turmoil in their home country, a leading economic commentator says.
The real estate crash and other economic turmoil in China have led to a rush in apartment sales, particularly in Sydney and Melbourne, according to leading economic commentator Robert Gottliebsen.
An estimated 20 percent of the apartments of Chinese people living on the mainland have already been sold, Gottliebsen claimed in The Australian.
Chinese investors are being forced to sell inner city apartments in Sydney and Melbourne (photo of high-rise apartments in Kent St, Sydney). Daily Mail Australia asked Meriton if there had been a major apartment sale in Sydney, but refused to answer the question
“A large number of Chinese who bought apartments in Australia wanted assets outside of China, in case the Communist Chinese government made life unbearable,” writes Gottliebsen.
“Chinese families who sell Australian apartments don’t want to sell, but they have no choice.”
Gottliebsen said the main reason for the sale was the property crisis in China, which has put many Australian apartment owners under pressure as they had to pay off vacant investment properties in China that were collapsing in value.
In China’s major cities, real estate has fallen in value by three-quarters after a property boom fueled by buyers borrowing heavily to buy ‘off-the-plan’ apartments was shockingly halted by the government over fears of a ‘bubble’.
“Many never expected to complete the purchases of (Chinese apartments) and intended to sell quickly and make a profit,” Gottliebsen writes.
China’s slowing economy has sparked mass unrest, including protesting factory workers in Chengzhou, central China (pictured)
“But the depreciation of apartments makes trading almost impossible, so other family properties, such as Australian apartments, have to be sold.”
The crash of cryptocurrencies and the lingering impact of Covid’s harsh measures also contributed to Chinese buyers needing some cash quickly, Gottliebsen said.
The harsh Covid measures and the disintegration of China’s real estate market are driving protesters onto the streets as the economic turmoil presents a rare challenge to the iron grip of President Xi Jinping and the ruling Communist Party.
Chinese buyers mainly bought inner-city apartments in Sydney and Melbourne, but according to Gottliebsen, there was a significant difference between the two cities.
He said Sydney’s largest apartment seller, the Meriton group, had been asking buyers to rent their apartments, meaning they had an income stream.
Economic commentator Robert Gottliebsen says an estimated 20 percent of overseas Chinese’s apartments in Sydney and Melbourne have already been sold
However, apartments in Melbourne usually remain empty.
According to financial giant Credit Suisse, Chinese buyers bought about a quarter of new homes coming onto the market in NSW in 2017, while buying about 17 percent in Victoria and 8 percent in Brisbane.
Meriton was asked by Daily Mail Australia if there had been a major apartment sale in Sydney, but refused to answer the question.
Apartment sales may increase downward pressure on the Australian property market, which fell 1.2 percent in October.
This continued the dampening of the property market as Reserve Bank rate hikes, representing a 2.5 percentage point increase since May, applied the brakes in a bid to curb Australia’s runaway inflation.
The crash of cryptocurrencies and the continued impact of tough measures against Covid also contributed to Chinese buyers needing to make some quick cash by selling Australian real estate
Property prices fell in all major capitals, with Brisbane seeing the biggest fall at 2 percent, while Sydney homes lost 1.3 percent and Melbourne properties lost 0.8 percent.
House prices fell faster than apartment prices, according to real estate data firm CoreLogic.
Westpac has warned of an 18 percent fall in home prices and more interest rate hikes are expected next year, leading to value falls of more than $200,000.
Sydney and Melbourne are expected to experience the sharpest declines in late 2022 and 2023.
Falling real estate prices have so far not translated into lower rents.
Chinese buyers bought large percentages of new homes in Sydney and Melbourne in 2017, according to financial giant Credit Suisse
The national rental vacancy rate fell from 2.1 to 1.3 percent during the pandemic and rents rose by 14.3 percent.
Adding to the shortfall is the influx of temporary visa holders re-entering the country since Australia reopened its borders after the Covid pandemic.
On average, rents in Australia have risen 10.3 percent since the start of 2022, with low housing supply and the reopening of borders contributing to the tightness.
The national rental vacancy rate is at a record low of 0.9 percent, according to research data from Domein.