Chinese investors from overseas are rapidly buying up Melbourne’s new properties. Picture: Thinkstock Source: Supplied
INVESTORS in China are buying 14 per cent of Melbourne’s new housing supply and driving up prices, according to a new report.
Just days ago the Foreign Investment Review Board revealed Chinese investment in Australian property for the 2012-13 financial year amounted to more than $5.9 billion, and that Victoria had the nation’s highest number of approvals for proposed real estate investment.
The value of all foreign residential investment approvals in Victoria totalled $5.78 billion in that period.
Figures out on Wednesday revealed Melbourne is the capital for Significant Foreign Investor applications, attracting more than half of Chinese applications, which make up 90 per cent of the total.
An Australian investment strategy report from investment advice group Credit Suisse estimates the figure for total residential investment by Chinese in Australia, based on FIRB, Immigration and Bureau of Statistics figures, could be $5.4 billion.
Underpinning the claim is an evaluation of offshore Chinese buying new developments, Chinese living in Australia as temporary residents, Chinese-based developers and recent Chinese settlers.
The report warned a “generation of Australians are being priced out of the market” after $24 billion was invested in Australia by Chinese over the past seven years.
Credit Suisse research analyst Damien Boey, who co-authored the report, said his firm had been unable to quantify the price impact on property, but said “it would have to have a meaningful impact”.
Mr Boey said the affordability problem for local home buyers was being exacerbated by overseas buyers who do not see our property prices as high.
He said this figure was likely an underestimate and did not include those who buy through local friends or intermediaries, which is a breach of FIRB regulations.
The report estimates $44 billion will be spent in Australia by offshore Chinese investors in the next seven years.
The rush into Melbourne’s bricks and mortar from China comes as new figures show Victoria is the destination of choice for cashed-up Chinese seeking to fast-track residency by investing $5 million.
The Garden State accounts for 49 of the 88 Significant Investor Visas (SIVs) issued in the first 12 months of the controversial program. Nine in 10 went to Chinese investors.
Visa recipients do not need to pass the usual points tests for skills and language, and become eligible for a permanent visa after four years.
nathan.mawby@news.com.au
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