What can we expect from Chinese property buyers in the next 12 months?

Since the historic days of the gold rush, Australia has become a go-to destination for Chinese migrants. The early days of 1855 saw more than 11,000 Chinese embark on a journey to the land down under. According to statistics from the Museum of Victoria, the number of Chinese-born nationals in Victoria more than doubled to 20,000 from 1986 to 1991.

At the moment, Australia is home to approximately 400,000 Chinese Nationals and 900,000 Australian- Chinese,

Needless to say, Chinese buyers have played a significant role in the Australian property market, to the extent that people perceive the term ‘foreign buyer' to mean ‘Chinese buyer'.

In a survey conducted in April 2014 by GiFang.com among Chinese property seekers online, 1 in 3 Chinese willing to buy offshore want to buy in Australia. In 2004, that number was 1 in 20.



Not only has the ratio increased six-fold, the actual transaction volume also jumped by a whopping 4500 per cent in the last 8 years. Much of that can be attributed to sales in CBD properties and apartments in Melbourne, Sydney and Brisbane city-fringe areas.

The reality is, fewer Chinese have bought properties in Australia in the past 12 months than originally thought. However the Foreign Investment Review Board (FIRB) is unable to determine how much money Chinese nationals have transferred to their families, friends or partners in Australia for them to purchase properties.

 This may change in the next 12 months as more Chinese purchase property in Australia. Here are the top four reasons why:

1. Downfall in the Chinese property market.


The property market in China has just experienced another decline, with 79 out of 80 first-tier and second-tier cities experiencing a downfall (the city of Xiamen being the only exception, according to the China Daily). Chinese people have become cautious of buying property there and will be increasingly seeking offshore investments.

2. The introduction of a taxation system in China.

It is expected that in 2015, a new taxation system will be introduced nationally in China. For high-income earners the tax rate could be as high as 45 per cent and with no possibilities for any tax deductions or concessions whatsoever. There's also been talk of the establishment of an ‘inheritance tax', which will clearly be a disadvantage to wealthy families.

3. Australian property is becoming increasingly popular.

Due to the cessation of Immigration Policies from China to Canada and amendments to the US EB5 scheme, nearly all China-based real estate agents and migration agents have experienced a noticeable increase in calls, searches and email enquiries regarding Australian properties in the last 5-6 months. The safety, environment, education and stability that Australia has to offer are the strongest advantages in attracting wealth from countries such as China. It's likely that in over the next couple of years, one in two Chinese buying offshore will invest their money in the Australian property market.

    

4. Chinese officials and businessmen fleeing to avoid corruption investigations.

According to Caijing.com.cn, China's leading news website on the Chinese economy, an estimated 1.18 million Chinese officials have moved their families offshore. In the past 30 years, at least 4000 high-ranking officials have fled China taking an average of RMB100 million (A$18.5 million) with them. Although we do not want Australia to be seen as a safe haven for corrupt Chinese officials, it's likely they're still managing to gain entry.

These are just some of the many reasons that may lead to an increase of up to 20 per cent in Chinese buyers entering the Australian property market over the next 12 months. It is estimated that around 10 per cent would be investors willing to buy and add value via renovation or through re-development.

Michael Yang is the CEO of GiFang.com, the largest Chinese language property site in Australia.