By Sophie Song - Wealthy Chinese may be buying up too much land Down Under, at the expense of middle-class Australians who are finding properties increasingly unaffordable.
The Australian Parliament’s House Economics Committee will investigate whether foreign investment in real estate is making housing prices unaffordable to its middle class, said Kelly O’Dwyer, the chairwoman of the committee, the Wall Street Journal reported on Tuesday.
The concern is not unfounded, as a new report from HSBC said that Australia is now China’s top destination for overseas property, and a report from the Australian government published in February found that Chinese investors spent almost 6 billion Australian dollars ($5.4 billion) on real estate in the 12-month period ending in June 2013.
The investment coming from China accounts for 12 percent of new property purchases in Australia, especially in the metropolitan cities of Sydney and Melbourne, and the investment is expected to keep up. A Credit Suisse report forecast that Chinese investment will amount to 44 billion Australian dollars in the next seven years.
At a time when the European countries are trying to lure Chinese investors with cheap real estate prices and residency rights, Australia is worried that the Chinese are driving up prices so much that its citizens are unable to afford houses. One of the main concerns is Chinese investors’ habit of not living in or renting out the properties they purchase.
“I think what there’s concern about is whether or not apartments are being occupied,” O’Dwyer said, according to the Wall Street Journal. “So whether or not it’s fulfilling the original mandate to provide additional dwellings that can be purchased, in the end, by other Australian investors and home owners.”
Despite the concerns, Chinese investment in the Australian real estate market actually dropped in the 2013 fiscal year, and accounted for less than one-sixth of the total $37.5 billion foreigners spent on Australian properties during that time period, according to the Foreign Investment Review Board.