Bilateral friction damages Australia’s property market

House prices in Australia fell slightly in June amid a new virus outbreak and its deteriorating ties with China, as more Chinese choose not to buy properties there due to an increasingly unfriendly atmosphere.

According to data released by property data provider CoreLogic Inc, property values in major Australian cities dropped 0.8 percent last month, the sharpest decline since February 2019.

“A decline in the range of 0.5-1 percent is within expectations, mainly because of the COVID-19 outbreak. Recently, the number of Chinese coming to buy properties in Australia has also dropped for reasons such as Australia raising the threshold for foreign buyers and China tightening supervision over capital flight,” Huang Kun, a partner at Melbourne-based property development consultancy firm Mezzanine Property Group, told the Global Times on Thursday.

Australia’s souring diplomatic ties with China and unfriendly domestic atmosphere are playing a role in the decline in property investments made by Chinese as well as bilateral trade, Ruan Zongze, executive vice president of the China

Institute of International Studies, told the Global Times.

A Brisbanebased real estate agent servicing Chinese buyers who asked for anonymity told the Global Times on Thursday that Chinese had snapped up properties in Australia primarily so their children could attend school there or as a safe haven for capital, but worsening ties between the two countries may see a downturn in the trend.

The market is unlikely to recover in the short term.

According to a survey by Chinese property portal Juwai in July 2018, of the 1.2 million Chinese tourists visiting Australia annually, a quarter could be looking to buy a property.

However, “a surge of racism in Australia toward Chinese may frighten Chinese from studying in or traveling to Australia and therefore impact the local real estate market,” the agent said, noting that many Chinese students that planned to study in Australia may shift to other destinations such as the UK and the Hong Kong Special Administrative Region.

Australia’s economy shrank 0.3 percent in the first quarter of this year, and economists expect a negative growth in the second quarter.