Cashed-Up Chinese Buyers Swarm Australia’s Housing Market As the Collapse of Evergrande Looms
By Stephen Johnson
- Juwai IQI says Chinese investors are increasingly eyeing Australian properties.
- Co-founder, managing director Daniel Ho says China price drops worried them.
- Evergrande has kept delaying debt repayments with Fitch saying it’s defaulted.
Chinese investors are increasingly eyeing Australian properties as apartment building giant Evergrande looks more likely to collapse, a real estate group says.
Evergrande owes international creditors more than $400billion and has repeatedly failed to meet interest repayment deadlines to bondholders.
This has seen it seek a series of extensions since late 2021 and will do so again on Friday, stirring fears of a broader Chinese property market slowdown in 2022 as oversupply issues bite.
Financial markets are widely expecting China’s Communist Party government to let it fail to send a message to other building giants about unsustainable debt levels.
Credit ratings agency Fitch says Evergrande has defaulted on its debts.
Juwai IQI, which markets real estate to wealthy investors across Asia, is expecting Chinese investors to take more interest in Australia as they brace for property price falls in China this year.
The group’s co-founder and managing director Daniel Ho said Chinese investors were particularly interested in Melbourne, Sydney and Brisbane and to a lesser extent Perth, the Gold Coast and Canberra.
‘Some Chinese developers are struggling in the slowing market, and some buyers think it’s a good time to buy in Australia, instead,’ he told Daily Mail Australia.
‘Chinese are used to much faster price growth than we expect to see in 2022, and the weaker forecast for property in China is raising buyer’s horizons and encouraging them to look overseas for real estate investment.
‘Chinese who can afford overseas property have also accumulated savings during the pandemic.’
In Australia, foreigners are only allowed to buy brand new properties instead of existing ones, which means off-the-plan apartments and occasionally house and land packages are regarded as attractive investments.
Perth, despite being cut off from the rest of Australia, was increasingly regarded as an attractive option.
‘Perth has gained a lot of attention from Chinese investors due to it attractive infrastructure, well-structured education and lower property price,’ Mr Ho said.
‘Chinese buyers are amazed at the quality of home they can obtain in Perth for under $750,000.’
Juwai IQI is expecting Chinese property prices to fall by one per cent in the first half of 2022, which while only small, is troubling to Chinese investors.
This would see them look to Australia, where house and apartment prices are expected to rise in 2022, albeit at a slower pace compared with 2021.
‘When the tide is falling in one place, it is rising in another. Chinese investors are seeking real estate markets where the tide is rising,’ Mr Ho said.
Across Australia, house and unit property last year increased by 22.1 per cent to $709,803, CoreLogic data showed.
But Brisbane had the biggest increase of 30.4 per cent, taking median house prices to $782,967.
Sydney’s median house price rose by 29.6 per cent to an even more unaffordable $1,374,970.
The Commonwealth Bank, Australia’s biggest home lender, is expecting Brisbane property prices to rise by a more subdued 9 per cent in 2022, compared with 6 per cent in Sydney and 8 per cent in Melbourne.
More than a third, or 37 per cent of Chinese people, own more than one home, Financial Times data showed.
Last month, ratings agency Fitch downgraded Evergrande Group’s rating to restricted default, also applying this categorisation its Hengda Real Estate Group and Tianji Holding.