Chinese website reaction to Victorian State Budget’s new taxes on foreign buyers

Will the higher taxes announced this week make a tremendous difference on the market? The answer is no. They are dispiriting but not too damaging. There is an old saying to the effect that those who can't vote, pay. 

Victoria is the number one destination for Chinese buyers in Australia, leading Sydney with a wide margin. The fact that prices and Victoria are lower than in Sydney has helped to drive Chinese purchasing.

The foreign buyers' tax that was until now 1 per cent lower than in New South Wales also contributed to support demand.

The other big political news lately is the recent national election. The election outcome will have a positive impact on Chinese real estate investment.

The research we conducted just before the election found that a significant share of the industry believes the Coalition victory will mean more Chinese investment, while a Labor victory would have meant Chinese investment would fall. Will Chinese buying triple overnight just because Scott Morrison is in The Lodge? No, but there will be a real impact.

Our core case for 2019 is for Chinese investment to be flat, after two years of falling far and fast from the peaks we saw at the end of 2016. Chinese buyers are still the most important foreign buyers in the market. They just are not buying with the same hyperactivity as three years ago.

The top Australian cities in 2019 are Melbourne, Sydney, Brisbane, Adelaide, and the Gold Coast, followed closely by Perth in sixth.

Melbourne and Sydney together in 2019 account for 52.3% of buying enquiries. 

The cities with the fastest growing levels of Chinese buyer interest are Hobart, Brisbane, and Canberra.

Hobart has the fastest rate of Chinese buyer growth, with 77% more buyer inquires in 2018 than the year before. Brisbane has the second fastest rate of Chinese buyer growth, with 30.8% more Chinese buyer inquiries in 2018. Canberra has the third fastest rate of Chinese buyer inquiry growth in Australia, with 24.6% more Chinese buyer inquires than the year before. 

Remember that all three of these smaller cities receive significantly less buyer interest than do Sydney or Melbourne. That’s especially true of Hobart and Canberra. Brisbane is fast becoming a real alternative for the two traditional gateway cities of Melbourne and Sydney. Hobart and Canberra, however, still account for only a small share of Chinese buyer interest.

Carrie Law is the CEO of Juwai, a Chinese website for buyers of overseas property.