Chinese property buyers have limited impact on Sydney home prices, study suggests
By Ryan General
September 13, 2023
A recent study sheds light on the minimal influence Chinese investors have on the housing market in Sydney, Australia.
Housing market impact: The research, conducted by the University of Technology Sydney researchers Xunpeng Shi and Song Shi and published in the Journal of Housing Studies, analyzed the consequences of China’s currency control policies implemented in 2017. Prior to these restrictions, it was relatively easy for Chinese investors to move their money abroad, leading to substantial investment in Australian real estate, particularly in Sydney.
Methodology and findings: The researchers divided Sydney into “Chinese” and “non-Chinese” suburbs based on population data from the 2016 Census. In “Chinese” suburbs, which had higher concentrations of Chinese residents, property prices experienced a 3% decline following the introduction of China’s currency control measures. However, this decline was not observed in other suburbs, indicating that Chinese investment had a localized impact.
Important implications: In 2021, a separate survey found that 82% of Australians believed “foreign buyers from China” were “driving up Australian housing prices.” In a statement, Song Shi highlighted that their findings suggest that concerns about Chinese capital inflow causing housing affordability issues in Australia may have been overstated.
“Foreign investment should be welcomed to the extent that it helps boost Australia’s housing supply,” she said. “Our study found its effect on housing affordability is marginal and limited to particular suburbs.”
Other findings: The study also found that these tighter controls on currency transactions significantly reduced Chinese investment in Australian property, with Chinese overseas direct foreign investment plummeting from $11.5 billion in 2016 to just $2.4 billion in 2019. This decline marked a stark departure from the dominance of Chinese buyers in the Sydney property market between 2013 and 2017.
The study also offered insights which are the most popular suburb properties for Chinese buyers. Sydney Central Business District (CBD) topped the list, followed by Sydney Olympic Park, Parramatta, Edmondson Park, Chatswood, Macquarie Park, Epping, West Ryde, Potts Point and Mosman.
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