Chinese buyers have disappeared from the Sydney trophy home market and Melbourne could be to blame.

As Sydney’s prestige agents scratch their heads at a baffling lack of inquiry among offshore buyers this Spring, data shows China’s cashed-up house hunters are increasingly showing a predilection for a Toorak mansion over a Point Piper waterfront.

Australian property searches by Chinese buyers in the $5 million-plus range spiked in September at seven times higher for Melbourne homes compared with Sydney, according to Juwai, the largest international property website for Chinese buyers.

Juwai co-founder Simon Henry said: “While Sydney started the year with more premium property buyer interest, as measured by views of those properties on Juwai.com, Melbourne showed the strongest growth.

“Melbourne ended the period with more than 700 per cent growth, while Sydney finished September roughly back where it started.”

The latest Department of Immigration figures also reflect a preference for Melbourne over Sydney among applicants for the Significant Investor Visa. In the three months to October there were 14 applications lodged for Melbourne compared with less than five to Sydney.

Melbourne prestige agent Marshall White director John Bongiorno said he wouldn’t be surprised if inquiries from Chinese buyers for properties in the $5 million-plus range had doubled on last year.

RT Edgar director Mark Wridgway​ said his agency sold six properties in the $10 million-plus range this year, double the amount they sold in 2014.

He said about seven in 10 buyers in the $10 million-plus bracket would be Chinese.

“Canterbury has been a really strong performer among the Chinese this year,” said Melbourne Deluxe Property director Paul Pfeiffer​. “It started with a $12.08 million sale of a mansion on Monomeath Avenue in February and was followed by a handful of sales to buyers from China for more than $10 million.”

The penthouse of Melbourne’s tallest tower, Australia 108, sold for a Chinese national this year for $25 million.

In April, a China-based businessman set a metropolitan Melbourne price record when the level 100 penthouse of Southbank’s Australia 108 building sold for $25 million.

Mr Wridgway said Chinese buyers might now also be looking at Melbourne after the forced sale of the $39 million Point Piper mansion Villa del Mare in Sydney by former treasurer Joe Hockey.

Sydney’s anti-climactic market performance this spring is all the more surprising given the record $70 million sale of casino mogul James Packer’s home in Vaucluse to Australian-Chinese businessman Chau Chak Wing was expected to prompt a spate of trophy sales.

Chinese billionaire Xu Jiayin was forced to sell his $39 million Sydney mansion Villa del Mare in May this year. Photo: domain.com.au

Sydney’s prestige agents were also expecting a bumper Spring thanks to foreign buyers given the Aussie dollar is down to US70.5 cents and shaky global markets traditionally heighten the appeal of Australian property as a safe investment.

“This is the quietest spring in terms of the number of inquiries and stock levels I’ve seen in years,” said Bill Malouf, of LJ Hooker Double Bay.

Richard Simeon, of Simeon Manners, said it’s been a similar story on the Lower North Shore. “Golden Week in early October was expected to see a huge number of buyers coming here because it’s an auspicious time for shopping in that culture but as it happens not a lot happened,” he said.

“What Asian buyers there are have been looking for some time. There’s not the busloads of new buyers that we were seeing a few years ago.”

Sydney’s lack of supply in the prestige market is a likely explanation for the growing discrepancy between the two cities, said AMP Capital chief economist Shane Oliver.

“If there’s no new supply of housing, then there’s nothing new to click on. But the prestige market is a small one, and it can be quite patchy, which means it’s likely that things could change overnight.”

CBRE chairman Justin Brown said Melbourne was a bigger market in terms of its Chinese buyers than Sydney thanks to more affordable off-the-plan apartments and because their universities have been far more pro-active in terms of marketing themselves to China.

“That impacts up the price chain because as people educate their families in Melbourne they are more likely to follow that through and trade up within the city they know,” said Mr Brown.

Anecdotal reports from agents that buyers are increasingly struggling to get their funds out of China coincides with the Chinese government’s moves to tighten controls over the flow of capital out of China.

“China’s move to tighten controls over the flow of capital out of China seem to be working,” said Dr Oliver.

“The foreign exchange reserves don’t directly reflect capital inflows but are a good indication of it, and figures from August show outflows were at an estimated US$200 billion and dropped to about US$50 billion in September.

“Now those flows look set to have reversed slightly in October so that China could actually be looking at capital inflows,” said Mr Oliver.

“And that’s going to impact on the Australian property market.”

Kay and Burton’s Ross Savas​ said inquiries from Chinese buyers in the top-end had been very consistent, with strong activity also from expatriates on the back of the weaker Australian dollar.

“A lot of them are wanting to educate their children in secondary schools, and with the impetus of the Australian dollar sliding against the basket of currencies … it’s a great motivating factor for them to come in and buy a Melbourne property,” he said.



