The Australian property market is linked to economic performance, and Australia’s economic performance linked closely to the Chinese economy. Source: Tom Fisk from Pexels.
  • China foreign investment in Australian real estate has fallen over the years
  • Iron ore imports have risen, supporting Australia's economy and property market
  • Property prices are still on the rise due to low interest rates and government stimulus

Australia’s economic performance has been tied to China for decades.

In fact, WA’s $1.2 billion budget surplus can be almost entirely attributed to higher than forecast iron ore prices, driven by China’s increased demand during COVID-19, and a contraction in Brazillian supply.

China relies heavily on Australia’s natural resources. The country imports 63% of Australia’s iron ore to power their steel plants and economic growth.

And despite some tension between the two nations leading to tariffs on goods such as wine and barley, iron ore remains untouched.

Research from NAB‘s report into China’s economy confirms this is continuing to occur –  iron ore imports rose 2.7% year-on-year, and overall imports rose by 22.2% year-on-year.

So long as China continues to import Australia’s iron ore, this will help to improve Australia’s economic conditions, and in turn the domestic property market.

China’s domestic investment in real estate also rose strongly in the first two months of 2021 – up by almost 28% year-on-year.

This goes against a general trend over the past years of a decline in foreign investment in Australian real estate.

Foreign investment from China in Australian real estate peaked in 2015-26 at $31.9 billion and then plummeted to $6.1 billion in 2018-19. Chinese search activity also fell in Sydney and Melbourne during mid-2020, according to

Factors that have contributed to this decline more recently include smaller Chinese student numbers (due to international border restrictions), the aforementioned diplomatic tensions and a stronger Australian dollar.

Although foreign investment is set to continue its fall, it looks to have had a negligible effect on the housing prices, due to high domestic residential demand outstripping supply in a lot of areas.

With such unprecedented central bank stimulus (ultra-low interest rates are set to continue for some time) and significant government intervention (such as the HomeBuilder grant scheme), property prices have continued to soar.

In fact, the majority of experts forecast that property prices will increase by 12% by 2023.

With international borders still closed and an appreciating Australian dollar relative to the Chinese Yuan, property prices are set to continue being less affordable for Chinese investors.

It will be interesting to see if they will flock back in stronger numbers once we return to ‘normal’.


Before making any investment decisions, please do your own independent research, taking into account your own situation. This article does not purport to provide financial or investment advice. See our Terms of Use.

You May Also Like

New laws attract overseas investors for build-to-rent housing

Laws lowered to incentivise foreign build-to-rent deals, growing Australia’s rental stock.

Japanese capital dominates Australian property investment

Japanese investment surged to over $2 billion as top Australia offshore buyers in 2023.

Australian property investing: Know when to hold them, know when to fold them

There are a wide range of factors to consider.

ATO to crack down on property investors through data-matching

Nine in ten rental property owners are getting their tax returns wrong

Top Articles

PropertyGuru Asia Property Awards (Australia) returns for its 7th edition, including several brand new award ...

This year's awards include several brand new categories, with entries closing 2 August 2024.

Rentvesting in Australia: A deep dive

Rentvesting offers an alternative path into the property market for priced-out first-time buyers.

Housing crisis survival guide: How to buy your first Australian property

Three property experts give the low down on how to nab a home in this tough housing market.