Foreign investment in Australian property falls sharply as Chinese buyers remain dominant

Foreign investment in Australian residential real estate continued to decline in 2025-26, with approved proposals falling to $4.7 billion as the number of approvals dropped to its lowest level in at least three financial years.

The latest Quarterly Report on Foreign Investment from the federal Treasury shows the value of approved residential investment fell 4 per cent from $4.9 billion in 2024-25 and 29 per cent from $6.6 billion in 2023-24.

The number of approved proposals also fell sharply, from 5,581 in 2023-24 to 3,922 in 2024-25 and 2,979 in 2025-26 – a reduction of almost 47 per cent over two years.

The figures point to a shrinking pool of approved investment from buyers subject to Australia’s foreign investment rules, although they do not capture the full extent of property demand from overseas-born residents who have since obtained Australian permanent residency or citizenship.

Chinese investors lead despite sharp decline

China remained Australia’s largest source of approved residential foreign investment in 2025-26, accounting for $900 million across 785 proposals.

Taiwan was the second-largest source by value, at $500 million across 387 approvals, followed by Vietnam at $300 million, Indonesia at $200 million and India at $200 million.

Chinese investment nevertheless recorded a substantial decline, falling from $2.6 billion in 2023-24 to $1.4 billion in 2024-25 and $900 million in the latest financial year.

Tighter restrictions and rising costs are changing how overseas-linked buyers enter the market.

Daniel Ho, Group Managing Director, Juwai IQI, said Chinese buyers accounted for more residential investment than buyers from the next two largest source countries combined.

“Chinese buyers acquired more residential real estate than buyers from the next two biggest source countries combined,” Mr Ho told API Magazine.

He attributed the broader decline partly to Australia’s foreign investment restrictions, duties and fees, arguing that the costs have become prohibitive for many prospective overseas buyers.

“Investment by those who don’t have residency or citizenship has hit a multi-year low,” he said.

Restrictions reshape the buyer pool

Mr Ho argued that falling approval figures should not be interpreted as a complete picture of demand from buyers with overseas backgrounds.

He said many prospective buyers, particularly those from China, are choosing to wait until they obtain Australian permanent residency before purchasing property. This can remove the need for approval under the foreign investment framework and avoid the associated application fees and foreign buyer charges.

“Most now wait until they hold permanent residency, which removes the FIRB process, the foreign buyer fees, and the FIRB application fees,” he said.

The report measures investor intentions for transactions subject to Australia’s foreign investment legislation, rather than providing a comprehensive count of property purchases by people born overseas.

As a result, the declining figures do not necessarily indicate an equivalent fall in demand from all overseas-born buyers.

Mr Ho also pointed to Australia’s restrictions on foreign purchases of established homes, which he said had been extended until June 2029.

“With the ban on buying established homes now extended to June 2029, new housing is the only door left open to foreign buyers,” he said.

He argued that foreign buyers can help developers achieve presale targets and progress new residential projects, making this segment of demand relevant to development feasibility as well as property sales.

Education and migration underpin demand

Education is a major driver of Chinese interest in Australian property, with Australia presenting appeal through its universities, lifestyle and stability.

There were 192,225 Chinese students in Australia in October 2025, accounting for 23 per cent of the 833,041 international students recorded at the time.

Mr Ho highlighted the contribution of migration to the potential buyer pool.

In 2024-25, 165,193 people became Australian citizens, including more than 5,000 Chinese citizens. Among applicants granted places through skill-based or family-based permanent migration pathways, Chinese applicants accounted for 20,405 of 185,001 places, behind India.

These figures provide context for the potential demand from people who may eventually purchase outside the foreign investment approval system. They do not, however, establish how many students or new migrants go on to buy property.

Latest quarter shows little improvement

The June quarter offered little indication of a turnaround in approved residential investment.

Treasury recorded 656 approved proposals worth $900 million in April-June 2026, compared with 661 proposals worth $1 billion in the previous quarter.

China remained the largest source by value at $200 million, followed by Taiwan and Indonesia at $100 million each, with reported values rounded to the nearest $100 million.

For property investors and developers, the figures underline the difference between demand from foreign investors who require approval and demand from overseas-born buyers who have established residency in Australia.

While the former has contracted significantly, the available data cannot establish the extent to which the latter has offset that decline.

Despite the data limitations, it’s clear that approved foreign residential investment remains well below its level two years ago, leaving developers reliant on a narrower pool of buyers who can purchase under the current foreign investment rules.