War in Iran has caused a seismic shift in foreign demand for Australian real estate after years of countries such as China and Singapore frequently buying up our newly-built apartments.
The biggest change: demand from China has been falling, while demand from the Middle East, including Iran, has risen.
Overseas-based investors spent a total of $3.7 billion on Australian properties over the 2025 financial year, the latest with available data, but there are indications new activity is plummeting.
The most notable drop has come from China and Hong Kong, which had accounted for nearly 67 per cent of foreign purchasers of Australian homes over 2016-2024, according tax office estimates.
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China-based purchasers spend a total $1.1 billion on Australian real estate over the first three quarters of the last financial year alone, according to analysis of Foreign Investment Review Board figures.
The latest official figures have yet to be released, but prominent agencies who specialise in sales to foreign investors have told The Daily Telegraph that Chinese buyers have turned away from Australia due to the war.
Fuel prices have continued to remain high while ships wait to navigate the Strait of Hormuz, putting pressure on the local housing market via inflation. Picture: Getty Images
Peter Li, co-founder of Sydney-based Plus Agency, which has sold numerous units in new developments to China-based buyers, said the Chinese had less money to throw into Australian property.
“The majority of Chinese are losing confidence in real estate because of the weak market in China,” he said.
“The Chinese real estate market is bad, and that undermines their trust in the whole asset class, even in Australia.”
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With the collapse of the property boom in China, many would-be Chinese investors have much less equity in their properties.
“I’ve seen data showing that prices are off by 10 per cent to 50 per cent in Chinese cities. Some Chinese real estate prices have dropped back to the levels of 2016, so all the capital gains of the past 10 years have been wiped out.”
Property demand from China has historically been the highest among foreign investors in Australia.
The trend of declining Chinese interest in the Australian property market has been accelerated by the global uncertainty caused by the Iran War, Mr Li explained.
“The war … has made everything uncertain. This feels exactly like the beginning of Covid. If people don’t know what to do, they’d rather not do anything.
“The last bit is the additional fees and taxes, all the costs that the Australian government has introduced on overseas buyers. It’s working. It’s keeping them out.
“Overseas Chinese don’t consider Australia as a primary investment spot at the moment.”
Mr Li said a distinction should be made between overseas-based investors and recent migrants hailing from China who are settling in Australia permanently.
“People with a Chinese background who live here are still buying, because they have a real need for property to live in and their costs are lower.”
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Plus director Peter Li (left), and agent Fiona Yang, who have observed a drop in demand from China-based investors. Picture: Tim Hunter
Mr Li is also co-founder of a sister project marketing agency known as Plus Notable, which has exposure to buyers from Middle Eastern countries.
The group’s agents reported that demand from buyers in parts of the Middle East has increased, particularly demand from Iran and Lebanon.
“The people inquiring about property are the ones trying to get themselves or their money away from conflict,” Mr Li said.
He noted that buyers from other Asian countries that have historically been more frequent buyers in Australia do not face the same pressure.
“The people who have not had a war break out on them are holding back. They will not make such a significant decision as buying home during the conflict. They are putting their transactions on hold because of the economic uncertainty.”
Under current rules, overseas-based investors can only buy new homes or those under construction.
Plus Notable associate director Adam Hosseini revealed that he recently helped an Iranian buyer place an offer in Sydney suburb Box Hill.
The buyer was an Australian resident but was purchasing with family from Iran.
Mr Li said the experience from this and other transactions suggested buyers who were part of the Iranian diaspora, buying with or for family directly in Iran, generally had two motivations.
“The first reason is that they know the war will affect prices of everything here in Australia, especially construction materials,” Mr Li said.
“It has pushed fuel prices up, and that will cause inflation throughout the economy, even in the months after the war is over.
“These buyers are more aware of the impact of the war and know that buying a new or near new home down the track will be more expensive than it is now.
Some members of the Iranian diaspora have been trying to get their family wealth out of Iran, Plus claims. Picture: Majid Saeedi/Getty Images
“The second thing is that they know that, right now, sellers are happy to offer deals.
“They believe this war will probably finish in a few months’ time, one way or the other. When it does, the real estate market will return to normal, and the bargains will disappear.
“These are common states of minds with people whose countries are at war. They see things more clearly than those who aren’t affected.”
Under current regulations, foreign buyers are barred from purchasing anything but newly built homes and are typically charged higher property taxes.
Foreign ownership rates appear to be back in the spotlight, with One Nation leader Pauline Hanson this week calling for a total ban on foreigners buying Aussie Homes.
The Albanese government has overseen a period of high immigration. Picture: Alexi J. Rosenfeld/ Getty Images
“Foreigners who aren’t Australian citizens shouldn’t own Australian homes,” she wrote on X.
“We’re often told that foreigners own barely 1 per cent of private residential property in Australia,” she previously told parliament.
“The implication is that it’s not a problem, but, in real numbers, it’s estimated there are more than 108,000 dwellings in Australia that aren’t owned by Australians.”
Liberal leader Angus Taylor vowed this week to deport 65,000 visa overstayers in a major speech, warning that overseas students and asylum seekers are exploiting the system.
Mr Taylor said that, if elected, the Coalition would stop non-citizens from accessing and using taxpayer funded legal aid to appeal a visa cancellation.
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