SYDNEY • Mr Han Fantong, an accountant, beat almost 60 other bidders to buy a three-bedroom home in Melbourne in November for A$930,000 (S$962,660). He had an advantage - full funding from his parents back in China.
Mr Han, 32, an Australian permanent resident, bought the house on 688 sq m of land about 30km east of Melbourne'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 (S$1.7 million) to help pay for the property, he said by phone.
"It comes as a tradition in China to buy a home for a son to establish a family," said Mr Han who lives in the house with his 29-year-old wife Chen Junyang.
"Without my parents, it would still be difficult for us to bear the large mortgage loans."
Mr Han is among scores of buyers who, with the backing of relatives in China, are underpinning a housing market in Australia that is coming off the boil.
More than half the buyers of Chinese origin are supported financially by relatives residing in the world's second-largest economy, according to McGrath, Australia's only listed real estate agency.
The firm's China desk has assisted in sales worth A$140 million since it was established in September 2013.
Such demand, whether from permanent residents or overseas buyers, has triggered community concern that locals are being priced out of Australia'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.
"Chinese 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," said Mr Shane Oliver, chief economist at AMP Capital Investors in Sydney.
"The Chinese demand - both from mainland China and Chinese Australians - is propping up the market and boosting construction."
Purchases by foreigners, many with a connection to China, helped drive an almost 55 per cent jump in home prices across Australia's capital cities in the past seven years as mortgage rates dropped to five-decade lows.
Global financial market turmoil after China unexpectedly devalued the yuan last August, sending the benchmark Shanghai Composite Index more than 40 per cent lower from a June peak, does not seem to have put a dent in demand.
And channels to get money out of China, where top-tier city home prices have been surging, remain open, even amid a crackdown by Beijing on capital outflows.
Capital outflow restrictions are expected to be short-term and while they may have some impact on overseas investments, there are still enough buyers in China who can afford overseas properties, chief executive officer G.T. Hu of the Australian unit of Country Garden Holdings said in an interview.
Amid community concern, Australia announced a crackdown on unlawful home purchases last year, and has forced sales of 27 properties, worth more than A$76 million.
The authorities in Canada have also been grappling with the issue.
BLOOMBERG
