A surge in Australian home purchases by Chinese buyers has led Credit Suisse to predict that mainland investors will put A$60 billion ($47.6 billion) into housing down under over the next six years.

The projection is a major upward revision of the investment bank’s forecast from just a year ago, when the European financial institution projected that Chinese buyers would pick up $39 billion in Australian housing from 2014 through 2020.

Credit Suisse figures were included in a report released on Thursday, and came just one week after Australia’s Foreign Investment Review Board (FIRB) revealed its own report indicating that Chinese purchases of Aussie homes had doubled in 2014.

Deals Concentrated in Sydney and Melbourne

So far Chinese buyers seem to be focussing their purchases on Australia’s biggest cities, with Credit Suisse finding that mainland buyers now account for 23 percent of new home sales in Sydney and 20 percent in Melbourne. Australian regulations limit foreign buyers to purchases of newly-built homes and officially forbid acquisition of existing housing stock.

Together Sydney and Melbourne accounted for 80 percent of all Chinese purchases of new housing down under, totalling $5.55 billion of the $6.9 billion invested by mainlanders last year, or 80 per cent of Chinese purchases

While the investment bank’s tally of Chinese home purchases nationwide comes in lower than the Investment Review Board’s report of $9.76 billion in housing sales, it shows a similarly rapid record of growth. According to Credit Suisse, purchases of Aussie housing by Chinese in 2014 were equivalent to nearly 25 percent of the total sold from 2009 through the end of 2014, and accounted for 15 percent of new home sales nationwide.

Chinese Purchases Driving Up Housing Prices

Credit Suisse was clear that Chinese demand was driving up Australian home prices, but predicted that this would be positive for the local economy so long as purchases were confined to new housing projects.

According to Credit Suisse’ analysis, home prices in Sydney rose 13.9 percent in the last 12 months, with Melbourne climbing at 5.6 percent on the back of the highest volume of transactions since 2010.

Public concern over illegal purchases of existing homes by Chinese buyers has led Australia’s government to get tough with overseas investors who skirt the existing rules.

In February the country’s Treasurer, Joe Hockey, announced the stricter rules, which call for a fee of A$5,000 (US$3,900) on purchases of existing homes valued at less than A$1 million ($781,000), and further fees of A$10,000 for every additional A$1 million in home investment by non-Australians.

In the most celebrated case of illicit home purchasing to date, Australia earlier this year forced China’s Evergrande Real Estate to sell off an A$39 million (US$33.4 million) mansion in Sydney that had been illegally acquired through a shell company. Evergrande’s billionaire boss, Xu Jiayin is said to have successfully sold off his short-lived Aussie pied a terre at the end of April.

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