Foreign investors buying in to the Australian property market boomed a couple of years ago, with interest dipping significantly in 2017. Chinese investors represent the largest proportion of overseas buyers, but will they return to the market in 2018?

Last year, both Victoria and NSW—the two states with the highest numbers of foreign investors—tightened their regulations for overseas buyers, resulting in higher property prices for these investors. 

The Victorian Government cut stamp duty concessions, subsequently introducing stamp duty charges of between 1.4 and 5.5 per cent. Additionally, a vacant property tax of 1 per cent was also introduced.

Those investing in the NSW property market fared even worse, with the state government doubling stamp duty charges from 4 per cent to 8 per cent, and increasing land taxes to 2 per cent from 0.75 per cent.

But despite the changes in regulations making it more difficult to buy in to our property market, Chinese investors are looking to spend in 2018.

“The reality is, in 2017, more Chinese buyers held onto their money and are looking to spend in 2018, particularly after the 19th Congress of the Chinese Community Party at the end of 2017,” said Michael Yang, CEO of Chinese investor property portal, Gifang.

“The Congress gave more signs of ‘shaking up’ the real estate market in China, making property investment [there] even harder,” he continued.

A survey by the portal showed many buyers are ready to invest in the Australian market this year. Of those surveyed, 85.2 per cent of investors believed capital growth was more important than cash flow, and 72.1 per cent were looking to invest in properties with upside potential.

“All of [the respondents] said they will most certainly invest in Australian property in 2018,” said Yang, with one respondent believing “2017 wasn’t a fantastic year for property growth so 2018 will most likely bounce back.”

Sources: ABC | Gifang