sign up log in
Want to go ad-free? Find out how, here.

How much did Chinese investors drive up Sydney home prices? It’s less than you might think

Property / opinion
How much did Chinese investors drive up Sydney home prices? It’s less than you might think

By Song Shi*

When China cracked down on money leaving the country in 2017, some Sydney home prices fell 3%, while in other suburbs the restrictions had next to no impact.

This finding – from research Xunpeng Shi and I recently published in the journal Housing Studies – shows Chinese investors have had some effect on local house prices. However, our research also shows the impact has been much less – and less widespread – than many Australians think.

We found the only Sydney suburbs in which Chinese buyers appeared to have had a strong impact on prices were those with large concentrations of Chinese residents.

Getting money out of China used to be easy

Australia’s rules make it harder for foreigners to buy Australian homes, among other things limiting purchases to new dwellings and vacant land.

But until 2017, it was fairly easy to get money out of China.

Among the channels commonly used were AliPay, WeChat, UnionPay, credit cards and underground banks specialising in foreign exchange and holding properties on behalf of Chinese citizens.

On December 30 2016, the People’s Bank of China published an order entitled Administrative Measures on Reporting for Large-Value Transactions and Suspicious Transactions, limiting foreign currency conversions to US$50,000 per person and explicitly banning the purchase of foreign properties.

It came into effect on July 1 2017.

Tighter controls made buying Sydney property harder

Before the order, in 2016, Chinese overseas direct foreign investment in Australia totalled US$11.5 billion.

By 2019 it had slid to US$2.4 billion.

A real estate agent specialising in the Sydney CBD high-end dwellings was quoted in 2020 as saying Chinese buyers dominated the market between 2013 and 2017, but bought only one or two in 2018.

Our study used this rare natural experiment to estimate the effect Chinese buyers had had on Sydney home prices.

We did this by comparing what happened to prices in the suburbs with a high concentration of Chinese owners to what happened in those with few Chinese owners.

To do so, we split Sydney’s 678 suburbs into “Chinese” and “non-Chinese”, based on their populations in the 2016 Census.

Prices fell 3% in these suburbs – with little impact elsewhere

We compared prices 18 months before and 18 months after the change, using a number of different cutoff points to define “Chinese” and “non-Chinese” suburbs.

We found China’s restrictions pushed down prices in what we defined as Sydney’s “Chinese” suburbs by around 3%. In contrast, the restrictions had next to no impact on prices in other suburbs.

This remained the case when we checked our results against the ten most “Chinese” suburbs identified by the publication Sydney Suburb Reviews: Haymarket, Carlingford, Chippendale, Zetland, Chatswood, Ultimo, Eastwood, Rhodes, Burwood, and Hurstville.

It also remained the case when we took into account other changes in Australian foreign investment rules during the period.

Overall, Chinese buyers had a limited impact

Our findings have important implications. They suggest ongoing concerns about Chinese capital and Chinese investors driving up Australian home prices and exacerbating affordability problems are overstated.

Foreign investment should be welcomed to the extent that it helps boost Australia’s housing supply. Our study found its effect on housing affordability is marginal and limited to particular suburbs.The Conversation

*Song Shi, Associate Professor School of Built Environment, University of Technology Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Seems more accurate than the research our Labour Party came up with in 2015. 


It’s a bit like musical chairs. You only need to take one chair to create a shortage, you don’t need to take all of them.

The ripple effect is huge. 


And even the fear of foreign buyers (or hope for, depending on your perspective) is enough to drive higher prices a little


It is well known and documented that Chinese migrants have been used as scapegoat through New Zealand's history and nowadays as well.



How about minority groups in China?


My observation while living in Sydney is that there is an almost religious desire among Australians to continually re-leverage and buy property. Foreign buyers are part of it for sure, but the amount of Aussies with 2-20 investment properties is astounding. 


So normal Kiwis elected to pay 2x or 3x the going rate for housing in certain school zones. Ok.....


This is somewhat deceptive. 

Capital flight out of China cannot be tracked through 'traditional money' channels. For example, money / capital doesn't even have to leave China's borders to finance property purchases in Aussie or countries such as Nu' Zillun or Canada. F'more, we know that S'pore is a conduit for capital flight through various legal structures. 

While I agree that Chinese capital is not necessarily a primary driver of house prices in Sydney or the other Anglo desirable urban areas, suggesting that it is benign would be wrong.   


Well put, exactly my thoughts.

More significant than the authors make out, but less significant than some make out.

Perhaps of moderate significance.


Foreign investment should be welcomed to the extent that it helps boost Australia’s housing supply. Our study found its effect on housing affordability is marginal and limited to particular suburbs.

reading the fine print reveals study sponsored by The Australia-China Relations Institute (ACRI)

thanks for the CCP propaganda article


Ditto for Airbnb's…

"A report claims there is no evidence that short-stay houses are responsible for Queensland's rental hikes"

"Brisbane City Council had hiked rates for short-stay providers by 65 per cent on the grounds it would alleviate the city's housing crisis.

The ABC asked whether the report invalidated the council's reasons for increasing rates on short-stay providers." ROFL 


An analysis found "no alignment" between areas with an increased saturation of short-stays and areas that had experienced the biggest rent hikes.

Why would there be?  Do the authors not realise some renters will move suburb and therefore lower demand in the higher saturation of short-stay areas?  I'm pleased they found 'little evidence' to support their poorly thought-out hypothesis.

The report found significant evidence that a rising rental shortage combined with more people moving to Queensland were the primary causes of market disruption.

If a house/apartment moves from normal rental to short-stay then that reduces supply. If population grows then that increases demand just like immigration driven population growth in NZ.  Expected result is that rents will rise and that's what they found 'significant evidence' for.