Han Fantong, an accountant, beat almost 60 other bidders to buy a three-bedroom home in Melbourne in November for A$930,000 ($709,000). He had an advantage â€” full funding from his parents back in China.
Han, 32, an Australian permanent resident, bought the house on 688 square meters of land in Ringwood East, about 30 kilometers east of Melbourneâ€™s business district, after a five-month search. His parents sold a 23-year-old two-bedroom apartment in Beijing for 8.1 million yuan ($1.2 million) to help pay for the property, he said by phone.
â€œIt comes as a tradition in China to buy a home for a son to establish a family,â€ said Han who lives in the house with his 29-year-old wife Chen Junyang. â€œWithout my parents, it would still be difficult for us to bear the large mortgage loans.â€
Han is among scores of buyers who with the backing of relatives in China are underpinning a housing market in Australia thatâ€™s coming off the boil. More than half the buyers of Chinese origin are supported financially by relatives residing in the worldâ€™s second-largest economy, according to McGrath Ltd., Australiaâ€™s only listed real estate agency.
Such demand, whether from permanent residents or overseas buyers, has triggered community concern that locals are being priced out of Australiaâ€™s property market. The government has responded to the unease with tighter scrutiny of foreign investment that critics say may deter much-needed offshore capital.
â€œChinese buying in Sydney and Melbourne has stepped up from say where it was five years ago, but publicity around that has created a perception which has run ahead of reality,â€ said Shane Oliver, chief economist at AMP Capital Investors Ltd. in Sydney. â€œThe Chinese demand â€” both from mainland China and Chinese Australians â€” is propping up the market and boosting construction.â€
Leo Yu, 31, an Australian citizen, last year bought a two-bedroom apartment in the inner-Sydney suburb of Surry Hills, known for its cafes and restaurants, with the help of his parents from Qingdao. They gave him A$73,000, part of it from China, toward a 20 percent deposit on the unit, which cost A$835,000. The rest of the money was through a bank loan. Yu, an accountant, is renting out the property.
â€œThe property can protect my parentâ€™s money from inflation and foreign-exchange risk,â€ he said. â€œOne day when they come to Australia for family reunion, I can sell the property to repay the deposit so that they can buy their own retirement home.”
Purchases by foreigners, many with a connection to China, helped drive an almost 55 percent jump in home prices across Australiaâ€™s capital cities in the past seven years as mortgage rates dropped to five-decade lows. The median Sydney home price reached a record A$800,000 in October, according to research firm CoreLogic Inc. data. It has since fallen after a regulatory clampdown led to a slowdown in mortgages to landlords and the first increase in borrowing costs in five years.
Global financial market turmoil after China unexpectedly devalued the yuan last August, sending the benchmark Shanghai Composite Index more than 40 percent lower from a June peak, doesnâ€™t seem to have put a dent in demand.
And channels to get money out of China, where top-tier city homes prices have been surging, remain open, even amid a crackdown by Beijing on capital outflows. As Bloomberg reported in November, Chinese nationals can break down cash into small amounts to avoid official scrutiny, and enlist friends, relatives and even employees to send out the money on their behalf.