Fri. Nov 22nd, 2024
Occasional Digest - a story for you

When China cracked down on money leaving the country in 2017, some Sydney home prices fell 3 per cent, while in other suburbs the restrictions had next to no impact.

This finding — from research Xunpeng Shi and I recently published in the journal Housing Studies — shows Chinese investors have had some effect on local house prices. However, our research also shows the impact has been much less — and less widespread — than many Australians think.

We found the only Sydney suburbs in which Chinese buyers appeared to have had a strong impact on prices were those with large concentrations of Chinese residents.

Getting money out of China used to be easy

Australia’s rules make it harder for foreigners to buy Australian homes, among other things limiting purchases to new dwellings and vacant land.

But until 2017, it was fairly easy to get money out of China.

Among the channels commonly used were AliPay, WeChat, UnionPay, credit cards and underground banks specialising in foreign exchange and holding properties on behalf of Chinese citizens.

A bird's eye view of dozens of homes in a suburb, with a frame of one house being constructed.
Foreign investment should be welcomed to the extent that it helps boost Australia’s housing supply.(ABC News: John Gunn)

On December 30, 2016, the People’s Bank of China published an order entitled Administrative Measures on Reporting for Large-Value Transactions and Suspicious Transactions, limiting foreign currency conversions to US$50,000 per person and explicitly banning the purchase of foreign properties.

It came into effect on July 1, 2017.

Tighter controls made buying Sydney property harder

Before the order, in 2016, Chinese overseas direct foreign investment in Australia totalled US$11.5 billion.

By 2019 it had slid to US$2.4 billion.

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