The decline of the economy since mid-2017 and the failure to withdraw money from China has caused many investors to withdraw from Australia. This makes the Australian real estate market plummet.
Mr. Wong’s business is primarily at Chatswood – a suburb north of Sydney Harbor. Here, a third of the residents are Chinese. Wong said that an estimated 90% of the company’s sales at Chatswood were collected from Chinese people. Chinese withdrawal also accounts for about a quarter of the Chatswood home discount.
The data released by the Australian government recently showed that China is no longer the largest foreign investor in the country’s real estate market. Two factors that have led to a sharp decline in Australian house prices are also due to the inability to withdraw money from China and the Chinese economy’s decline since mid-2017 until now.
Within the last 5 years to mid-2017, Sydney housing prices have increased by 75%. Notably, the Chinese captured most of the apartments and villas in Chatswood. This helps real estate on the east coast explode vertically. As a result, protests due to increasing house prices are a consequence of limited supply, rapid population growth and low interest rates.
However, from mid-2017 until now, prices in Australia’s major cities have fallen by 13%. This shows that Chinese buyers have inflated Australia’s real estate bubble. Therefore, it is impossible to stabilize the number of previous buyers.
On the other hand, Chinese authorities are strictly controlling the flow of capital abroad, so the issue of raising capital from China is becoming more and more difficult.
In a recent speech, Mr. Philip Lowe – Governor of the Central Bank of Australia (RBA) said, the withdrawal of foreign investors is the cause of the decline of the real estate market. Currently, RBA is still closely monitoring the decline of the real estate market, especially the impact of this situation on household spending and slowing economic development.
In addition, Australia’s house prices may continue to fall, stemming from other domestic factors such as the fact that Australian banks have been reluctant to lend after the investigation found many mistakes in credit. Real estate use and housing supply are also on the rise.
Currently, the Australian government is beginning to tighten regulations for foreign investors due to the people’s disgruntled reaction to skyrocketing house prices in Sydney and Melbourne.
It is known that Chinese investment in Australia has increased sharply since the beginning of the 21st century, when they were particularly interested in property from the mines to the kangaroo farm. In recent years, Chinese people have accelerated the acquisition of real estate, mainly because Australia has an advantage in the clean environment, attracting many Chinese students to study at university and buy houses here.
Not only in Australia but also in many other countries, the demand for investment in Chinese real estate has led to soaring housing prices, such as high-end Canadian apartments to Hawaii resorts, even to the skyscrapers in London.