Chinese investors are offloading thousands of Australian residential properties, with a 5.4 per cent decline in holdings recorded over the 2024 financial year. As Chinese capital retreats amid domestic property woes, Japanese investors have emerged as a growing force, marking a 46 per cent surge in their Australian residential ownership.
Chinese Divestment and the Shift in Foreign Ownership
The landscape of foreign residential ownership in Australia is undergoing a notable transition. As of June 30, 2025, investors from the People’s Republic of China held 22,272 residential properties nationwide. While they remain the most dominant foreign cohort—accounting for more than 55 per cent of all foreign-owned homes—the trend is decisively downward. According to data from the Australian Taxation Office and the Foreign Investment Review Board, the number of residences held by Chinese investors fell by 1,278 in the 2024 financial year alone.
This sell-off coincides with significant economic challenges within China, particularly a well-documented oversupply in its domestic housing market. Industry observers suggest that the retreat is a direct consequence of these international pressures. It’s got a little bit more challenged economy, and property in particular isn’t as good of an investment given what’s happened in China,
said Nerida Conisbee, chief economist at Ray White Group, as reported by the outlet.
While Chinese and Hong Kong-based investors scale back their portfolios, Japan-based landlords are rapidly increasing their footprint. Data shows the number of Australian homes owned by Japanese investors rose from 1,168 to 1,711 over the recent period. This growth has propelled Japan to the fifth-most prolific owner of Australian residential property, overtaking both the United Kingdom and the United States.
Tax Incentives and the Housing Ecosystem
Despite the exodus of specific foreign investor groups, the broader reliance on offshore capital remains a point of contention and economic debate. Federal budget changes introduced in May have tightened negative gearing and capital gains tax (CGT) benefits for domestic investors, yet these reforms have left the benefits available to super-wealthy offshore landlords largely untouched.
According to reporting on Australian Taxation Office figures, non-residents claimed net rent losses totaling millions in the 2024 financial year. Over the last decade, the cumulative value of rental losses, interest deductions, and capital works deductions claimed by non-residents has reached billions of dollars. John Storey, tax counsel at the Tax Institute, noted that these budget adjustments primarily affect local participants rather than institutional or ultra-high-net-worth international entities. It’s one of the budget changes where the wealthier you are, the less relevant they are,
Storey told the source.
The persistence of these tax advantages for foreign entities has sparked concern regarding the pub test
—a metric of public sentiment. However, industry leaders argue that removing these incentives could exacerbate the current rental supply crisis. Jacob Caine, president of the Real Estate Institute of Australia, emphasized that the housing market functions as a complex ecosystem.
Market Uncertainty and Future Outlook
For the Australian housing sector, the primary challenge remains the disconnect between rental demand and the availability of new builds. As foreign investors remain restricted to purchasing only new construction, their role in funding development is viewed by some analysts as a necessary, if controversial, stabilizer.
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