In the financial year that ended in June, people from China were the largest foreign investors in Australian residential properties

Mainland Chinese demand for Australian real estate is surging and investors are buying more expensive properties, according to agents.

If the first five days of the Lunar New Year were any indication, more mainland Chinese investors would complete home purchases this year than they did a year earlier, said Peter Li, the general manager of Plus Agency in Sydney.

"Inquiries from mainland Chinese buyers increased by 20 per cent during the holiday period," he said. "In the past five days, we have secured 12 deposits for properties in the Sydney suburbs and they were for bigger homes."

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Li's agency has an overseas office in Shanghai. He said mainland Chinese buyers were looking at homes priced above A$1 million (US$627,000), higher than what they had budgeted previously.

One of his clients is "a wealthy family in mainland China that bought a A$5 million home with five bedrooms in Chatswood", a suburb that is about 15 minutes away from Sydney's central business district.

"Their initial budget was A$3.5 million for a duplex house, but they changed their mind and bought a more expensive home," Li said.

There are plenty of reasons for mainland Chinese buyers to acquire property in Australia, Li said.

One is cultural familiarity and family ties. Chinese people, including those from Hong Kong, comprise the second-largest immigrant group in Australia, according to recent government data. As of June 2022, around 600,000 China-born people were living in Australia, up 47 per cent from a decade earlier.

"Members of their extended family are buying homes in Australia because they want to live together, especially in their retirement years," Li said.

In the financial year that ended in June, people from mainland China were the largest foreign investors in Australian residential properties, snapping up about 2,000 units worth A$2.6 billion, followed by Hong Kong-based investors with 409 homes worth A$400 million, according to the latest official data. Investors from Taiwan were the third-largest group of foreign buyers, purchasing 395 units worth A$400 million.

A neighbourhood in Sydney. Photo: EPA-EFE

In the commercial real estate segment, mainland Chinese citizens bought 200 units worth A$4.2 billion, making them the seventh largest group of foreign investors in terms of value.

"Australia is also attractive because you can easily travel back and forth to China and you are in a relatively similar time zone compared to other popular countries like the US and the UK," Li added.

Beyond lifestyle considerations, Australian property would also offer some protection to Chinese investors looking for a safe haven amid geopolitical tensions and economic worries at home.

"Australian property is seen internationally as a very safe option due to the heightened geopolitical tensions across the world," said Ken Jacobs, who manages a property agency in Sydney. "We are seeing increased interest here due to the uncontrolled immigration in Europe, the war in Ukraine, higher taxes in the UK as well as some concerns in the US due to the recent election."

The Reserve Bank of Australia was expected to cut interest rates at its next meeting, the first time since 2020, which would potentially boost demand for homes.

"Australian house prices have nearly doubled over the past 10 years to an average of A$986,000 as of last September and rental rates are near record highs," Li said. "So there's good reason to believe buying makes sense."

Sydney's prime capital value of homes is likely to grow by about 6 per cent this year, one of the highest in the world, following Dubai's 8 per cent to 9.9 per cent increase, according to Savills. In 2024, Sydney luxury homes recorded a capital value growth of 3.9 per cent.

"Sydney is [expected] to see strong growth, but driven by a lack of supply rather than new supply," said Kelcie Sellers, an associate director for world research at Savills. "The persistent scarcity of luxury properties is expected to limit buying opportunities, [which will continue] to drive prices upwards.

"Coupled with sustained demand from domestic and international buyers and a relatively weaker currency, prime residential prices are anticipated to increase between 4 per cent and 5.9 per cent during 2025."

In January, mean home prices in Australia rose 0.7 per cent from December and 5.9 per cent from a year earlier, according to data tracked by real estate agency Ray White Group.

Colliers tempered expectations for a surge in house-price growth in Australia this year.

"House price growth is likely to be muted through 2025 with many buyers, particularly across east coast markets approaching their respective affordability ceilings, following significant increases through the preceding years," said Jonathan Mayes, an associate director of research at Colliers.