New research questions impact of Chinese buyers on Australian house prices

18 September 2017

A Deakin University study casts doubt over the notion that Chinese investors are pushing up house prices in Australia.

The Deakin Business School survey about the purchasing motivations of more than 300 Chinese property buyers in the Australian market found most were buying as a residence and not solely for investment.

Researcher Dr Mona Chung said her study cast a vastly different light on the nature of Chinese property ownership in Australia.

“This research is long overdue and timely as there is little analysis which is based on evidence to provide an objective picture Chinese investment in residential real estate,” Dr Chung said.

“This lack of evidence has allowed space and opportunity for the speculation and scapegoating that has seen the finger being pointed at Chinese investors in attempts to explain the problems of housing affordability in Australia.”

Dr Chung’s study examined the criteria and factors that migrants from China use to purchase real estate in Australia through a survey completed by 367 Chinese individuals from China, Singapore, Malaysia and Australia.

Of those surveyed, more than 60 per cent of the respondents had migrated to Australia, with another 14 per cent planning to migrate.

For those who had purchased property their choices were mostly influenced by access to public transport, house price and location.

Properties under $1million and within the $500,000—$800,000 range collectively accounted for just over 50 per cent of purchases, with 24 per cent paying in the $1-2million price range.

“These figures also align with the price expectations of potential purchasers,” Dr Chung said.

“These prices are consistent with the price ranges in Melbourne and suggest that the Chinese are indeed paying market value rather than inflated prices.”

When it came to location and types of property purchased, the respondents tended to buy in areas popular with other Chinese residents and had a preference for houses rather than apartments or units.

“This finding is inconsistent with the common view that Chinese buy most of the units/apartments built in the recent years,” Dr Chung said.

“That around 78 per cent of the respondents had either migrated, or were planning to migrate, to Australia also highlights the inaccurate assumptions that Chinese students mostly buy property while studying in Australia. This is consistent with the finding that 26-35 year olds are the largest group of respondents.

“The perception that the majority of Chinese make a once off payment when purchasing properties was also not confirmed by the study, with some 76 per cent of respondents indicating they would have a mortgage.”

Dr Chung said that the study results helped separate fact from fiction in relation to Chinese investment in Australian residential property.

“While this study fills a gap in the evidence around Chinese housing purchases it does not answer all the questions around the multidimensional nature of Chinese investment and the real estate market,” she said.

Dr Chung will continue the next stage of the research thanks to a grant from the Australia Chinese Workers Association. Together with her team, they will further investigate from all other angles whether the Chinese have had any influence on the market price of Australian real estate sector.

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Media release Deakin Business School

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