Young Australians hoping to buy an affordable home after the coronavirus crisis may have their dreams crushed by bargain-hunting Chinese buyers.
An unemployment surge and COVID-19 business closures were expected to trigger a plunge in house prices.
Economists surveyed by Finder forecast Sydney house prices would fall 10.2 per cent by next year, Melbourne by 9.2 per cent and as all other capital cities suffered declines of at least eight per cent.
Apartments in central Sydney, Melbourne and Brisbane were also expected to suffer from sharp price drops, as border closures cut off international students and deprived landlords of potential tenants, NAB and SQM Research predicted.
But such big drops would not happen if a large number of foreign buyers swooped in to capitalise on a temporarily depressed market – a situation that didn’t happen during Australia’s early 1990s recession.
Real estate industry adviser Robert Klaric feared this would occur.
‘A lot of the mainland Chinese are seeing this as an opportunity to exploit a great deal. That’s what they’re going to see in the property market in the next six months,’ he told A Current Affair.
‘What we’ll see is the wealthy mainland Chinese will look towards Australia now to secure their wealth, and secure their health.’
Juwai IQI chairman Georg Chmiel said Australia’s avoidance of large numbers of COVID-19 deaths had created an image of it being a healthy place to live, which is also appealing to foreign buyers looking to move and not just invest.
‘That makes it even more appealing to foreign buyers,’ he said. ‘Marketers in China are already using Australia’s good performance to persuade parents of children who have been studying in the US and the UK to look at Australia instead.’
Melbourne is regarded as the most popular city in Australia for Asian buyers, followed by Sydney and Brisbane, with Australia considered a stable place to invest money.
Mr Chmiel said Chinese buyers particularly liked places close to schools and universities that weren’t particularly expensive by Australian capital city standards.
Michael Pallier from Sotheby’s International Realty in Sydney’s eastern suburbs said he had also experiences an uptake in interest from Asian buyers.
‘They can’t get enough of it. Clean air, clean food, great education, safe environment – it’s paradise for them,’ he said.
‘There is always demand and the Chinese people will always like Australia,’ Mr Pallier’s wife, Lulu, said.
The Australian dollar, which has also taken a hit during the pandemic, is also enticing to international buyers, who can factor that into their budgets.
The survey of 25 economists by financial comparison website Finder predicted sharp drops in every state and territory, with a majority of the experts declaring now was not the time to buy property.
Sydney was expected to suffer a 10.2 per cent slide – slicing $104,695 off the median house price back to $921,723, based on CoreLogic’s April data.
Melbourne was forecast to suffer a 9.2 per cent decline, which would see mid-point house prices fall $75,330 to $743,476.
CORONAVIRUS CASES IN AUSTRALIA: 15,583
New South Wales: 3,718
Western Australia: 661
South Australia: 448
Australian Capital Territory: 113
Northern Territory: 31
Despite the big drops forecast in Australia’s biggest cities, Hobart was shaping up to take the biggest hit in percentage terms, with a forecast 10.5 per cent drop reducing values by $53,832 to $458,855, wiping out gains made since 2018.
Brisbane was also predicted to be hit, with median property prices dropping 8.4 per cent, or $46,903, to $511,469.
Perth is forecast to suffer a 8.3 per cent slump while Darwin could see median values fall by 9.5 per cent.
Adelaide could cop a 8.1 per cent drop, causing prices to slip by $38,576 to $437,673, while Canberra, Australia’s capital and the home of federal bureaucrats who have been largely insulated from job and wage cuts, was expected to suffer the least severe decline of 6.4 per cent.
Even so, that would still see median house prices fall by $44,983 to $657,878.
The Finder survey found 58 per cent of economists declared now was not the time to buy a house, and those seeking a home should wait for the market to reach its bottom next year.
National Australia Bank expected apartment prices to fall at a faster pace than houses by 2021 as landlords struggled to find tenants, with border closures stopping international students from coming to Australia.
NAB forecast a 12.8 per cent plunge in Sydney’s median unit price and a 14 per cent plummet in Melbourne by next year.
SQM Research data showed a record surge in vacancies of inner-city apartments.
In Sydney’s city centre, 13.8 per cent of units are empty, with 13 per cent vacant in central Melbourne.
SQM Research chief executive Louis Christopher said the loss of hospitality jobs, from the COVID-19 shutdowns, and international students was devastating for landlords.
‘The blow out in rental vacancy rates for the major CBDs suggests a mass exodus of tenants occurred over the course of March and April,’ he said.
‘This might be attributed to the significant loss in employment in our CBDs plus the drop off in international students.
‘We are well aware of a surge in short term accommodation now being advertised for long term leasing.’