As Chinese buyers snap up Aussie properties and price locals out of the market a crafty rule prevents the same thing happening in the Chinese property market.

According to NAB’s latest quarterly Australian Residential Property survey, foreign investors now account for 10 per cent of the market – a five year high.

Chinese buyers make up the greatest proportion, some figures suggest they are spending, on average, a cool $8 million a day.

Associate Professor Chyi Lin Lee from the University of New South Wales told news.com.au that there are key difference in rules between China and Australia in terms of government regulations around foreigners purchasing property.

Prof Lee said foreigners could only purchase property in China to live (owner-occupation only), and they also have to have lived in China for at least 12 months, working or studying on a valid permit.

He said specific regulations vary depending on the region.

However, in Australia Professor Lee said foreigners could purchase multiple properties including as investments.

The only drawback is they can only purchase new dwellings instead of established dwellings, require approval from the Foreign Investment Review Board, and need to pay an additional Foreign Citizenship Stamp Duty.

Prof Lee said while Chinese have a “preference for Australian property” he cautioned whether they were to blame for the rise in prices describing the housing market as “complex” and “impacted by a variety of factors”.

“It is crucial to ensure we have a mechanism to monitor and control foreign investments … but we do not have solid evidence to support the claim that rapid housing price growth was solely due to foreign investments,” he said.

Prof Lee’s comments come as a Melbourne buyers advocate called on the federal government to follow New Zealand and Canada and ban foreign investment on residential properties to stem sky-high property prices.

David Morrell, director of Morrell and Koren told news.com.au Chinese buyers were “coming in busloads”, describing the situation as “nuts”.

We are seeing jumps of $2-3 million dollars on properties,” he said.

“We have a market place that is disproportionately being sold to Chinese buyers, relative to the rest of the population.”

Mr Morrell uses an example of a recent luxury property on the market for $9.2 million dollars.

“There were five Chinese parties biding and it sold for $12 million,” he said.

“They have paid a $3 million dollar premium. It wasn’t just one of them there are now four wounded underbidders.”

Mr Morrell said all Australians should be worried – not just the rich.

“What’s happening in places like Toorak is only a look at what is happening under the blankets, across the country,” he said.

Mr Morrell said foreign stamp duty tax was “just the cost of doing business for the Chinese” and urged the federal government to “go a lot harder” and institute a ban on foreign investment.

“Anything I have seen done is like a slap over the face with a wet lettuce,” he said, comparing some areas of Melbourne to a “mini Hong Kong”.

However, Charles Sturt University Professor of Economics John Hicks said while foreign investment was “absolutely” increasing prices by increasing demand he argued immigration rates was a more pressing problem to fix.

More Coverage

“The immigration intake is too large and that is pushing up prices,” he said.

“The solution should not be to prevent the Chinese from buying but rather to reduce the immigration intake, which perhaps would have the impact of reducing the demand for housing and other areas which we don’t want pressure because it is inflationary,” he said.

carla.mascarenhas@news.com.au

ncG1vNJzZmivp6x7r7HWrGWcp51jrrZ7xaKlmqaTmnyzscClZJ6rpJbBpnvSnqOloZ6cfLPBy55krKyfpb2qusZmmK6ro56ybq7Uspyrq12ou6K8z6KloGWlpXqktMinnKydXaW%2FsLzEq6uinaNku6bD0maqraeirnx4fphqb5twlGiGpoOSm21uaWJqfnmylnGbm22Uaq5zhQ%3D%3D