More than 80% of Australians mistakenly believe Chinese investors are driving up house prices
More than 80% of Australians blame Chinese investors for rising house prices, even after a year of closed borders, when data shows foreign property investment has fallen to record lows.
A recent survey of Australian attitudes towards China, conducted by the University of Technology Sydney, found that 82% of people believed “foreign buyers from China” were “driving up Australian housing prices” and making it harder for first-home buyers to enter the market.
House prices have surged in the past year, after a slight dip at the start of the Covid-19 pandemic. In Sydney, house prices rose a record 8.5% between January and March 2021, and overall capital city house prices rose 10% in the year to March 2021.
Analysts and economists say this is due to domestic Australian buyers and record low interest rates, not foreign and Chinese buyers.
Eliza Owen, the head of research for Australia at CoreLogic, said foreign investment had actually fallen to a record low during March 2021 – the same month the survey was taken.
Of those surveyed by UTS, 82% agreed that “foreign buyers from China drive up Australian housing prices”, 69% agreed that “Chinese investors in Australian real estate have made it difficult for first home buyers in Australia to enter the market” and 78% said Australia should “restrict the amount of investment in residential real estate that is permitted from Chinese investors”, even though restrictions already apply to all foreign investors.
The survey of 2,000 people, weighted according by age and gender, was conducted between March and April 2021.
Data compiled by the National Australia Bank shows foreign investors made up only 3.7% of new home sales and 2.2% of established homes in the March quarter.
“These statistics on foreign investment are for total foreign buyers – including the UK, the US and Canada – so presumably Chinese foreign investment would be even less,” Owen said.
Owen said foreign investment had been trending downwards since 2014.
“The overarching story is that the numbers [of foreign investors] are not significant enough to contribute to most of the housing price increases we have seen. The current upswing is a function of low interest rates, high levels of owner-occupier demand, and relatively low levels of supply.
“We just haven’t had new migrant arrivals, or it’s been at record lows since
the onset of Covid,” she said.
Non-Australian residents are prohibited from buying existing houses, and the Foreign Investment Review Board says foreign investment should be restricted to new properties that “create additional jobs” and “increase Australia’s housing stock”.
Exemptions for existing houses are made if the building will be redeveloped and “will genuinely increase Australia’s housing stock”, or if a foreign company is purchasing a dwelling for Australia-based staff.
The lead author of the report, Elena Collinson, said sensationalist media headlines could explain why Australians continued to blame Chinese investors, even though the data did not support it.
“Despite evidence to the contrary, the idea of Chinese investors as the main driver of a difficult to break into housing market remains a convenient scapegoat,” she said.
“[It has been] fanned by headlines – persisting even this year – about ‘cashed-up’ Chinese investors ‘swarming’ Australia.”
Collinson said the survey results, even after a year of closed borders, were not surprising.
Sign up to receive an email with the top stories from Guardian Australia every morning
“The disconnect between statistical evidence and public perception was unsurprising given the subject of Chinese investment in the Australian property market has been a historically emotive issue, ever since the emergence of a new generation in China with the means to invest overseas.”
She said this perception might shift over time, because younger people had more favourable views of foreign buyers, and because Chinese investment in Australia was unlikely to return to previous heights thanks to stricter regulation in both countries.
Survey respondents over the age of 55 were more likely to agree that Chinese investors were driving up prices, as were people who voted for the Coalition at the most recent federal election.
Only 33% of those surveyed said “Chinese investment in Australian residential real estate brings a lot of benefits for Australians” in construction, new dwellings and jobs.