Perceptions of Chinese buyers not “backed up by facts”

by Miklos Bolza31 Mar 2017
Claims that Chinese buyers are pushing up Australian property prices are not rooted in reality, says one industry leading foreign real estate specialist.
“There is a lot of resistance at the grassroots level among lots of everyday Aussies,” said CT Johnson, managing director of Cross Border Management at the Australia-China Property Finance Conference in Sydney yesterday (30 March).

Pulling up the comments section of an article about foreign buyers, Johnson said that there was enormous negativity amongst those voicing their opinions. Some examples mentioned the Chinese “enslaving” Australian kids or called for a “10-year moratorium” on foreign investment.

“There are a lot of issues around the perception of what Chinese buyers are doing to the market but it’s not significantly backed up by fact,” he said.

He mentioned the Credit Suisse freedom of information report last week which showed that 77% of foreign buyers were Chinese and which suggested that a substantial proportion of new properties built in NSW were purchased by Chinese.

“That’s kind of a loose correlation: I can show you all of these guys that are buying and therefore it’s them that are behind the increase in price and the fact that my kid cannot buy a house.”

One issue here is that there is no real data on the effect of foreign buyers on the Australian property market, Johnson told the audience. This even included the government report released five months ago which, although mentioning no effect by foreign buyers, did not have much data to back it up, he added.

From this, Cross Border Management in conjunction with Oxford Economics did a quick analysis of census data, comparing price growth of units in certain post codes and the number of residents in those areas that spoke Mandarin.

“What you find is that it’s a pretty flat line. There’s a modest, modest correlation between more Chinese folks buying and a higher price growth in the market.”

But, the impact of how much Chinese buyers were affecting the price of units in NSW was actually below the average median house price growth in the state.

“The conclusion that I have so far is that I’m still not seeing a massive correlation between tonnes of Chinese folks here and high property growth.”

Cross Border Management will be doing a larger study on this using the new Census data once it is released.

Speaking with Australian Broker during the conference, Johnson said he had yet to see a good analysis of the data and that any facts now used were circumstantial.

“It’s not that the facts don’t show [a correlation]. I’d say we don’t have the facts to show that.”

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