SYDNEY — Recently in this city's trendy Darling Harbor district, a new high-end housing project of 581 apartments sold out in just five hours. One third of these flats — costing from 800,000 Australian dollars ($611,000) for a one-bedroom unit to more than 10 million ($7.6 million) for a luxury penthouse loft — were sold to buyers from China.

In recent years Chinese buyers have become a torrent in Australia’s real estate market, and the top real estate agencies all hire Chinese speakers to cater to these customers. Since last year, China has surpassed the U.S. as Australia's largest investor, which is largely due to real estate, which accounts for 84% of Chinese total investment in the country.

News about new rich Chinese spending big bucks buying luxurious properties are regular fodder for the Australian press. Investors from China’s booming coastal provinces, such as Zhejiang and Jiangsu, most often find these houses cheaper than those back at home. For instance, a luxurious house of between five to ten million Australian dollars (AUD) will cost more than twice as much in China.

The Significant Investor Visa policy set forth by Australia’s Federal government in the last three years has largely promoted these high-end property transactions, with investors able to obtain a right to permanent residence with a five million AUD investment. According to Australia’s Immigration Ministry, since the policy was launched in November 2012, 802 persons have acquired the special visa, of whom 90% come from China. In just the past three years, their investment in the country totaled 19.2 billion RMB ($3.1 billion).

UBS Suisse predicts that in the next six years, Chinese investment in Australia should reach 288 billion RMB. “The demand from Chinese people is equivalent to 23% of Sydney’s new housing supply, and 20% that of Melbourne,” says UBS analyst Hasan Tevfik.

Cracking down

As a result Chinese demand has pushed up the two cities’ property prices. While the Australian economy is sluggish and unemployment is high, Sydney’s average property prices have gone up 12%, while those of Melbourne have risen 5% over the last year.

It's not hard to understand why house prices are rapidly outstripping wages, if one-fourth of new houses are bought by Chinese people. Tevfik notes that in order to meet Chinese homebuyer demand, Australia’s new housing supply must grow at a pace of 4% annually.

Investors, students, and new immigrants make up the bulk of Chinese buyers in Australia. As the country’s Immigration Ministry’s annual report showed, between 2013 and 2014, China has overtaken Britain as the country’s second largest immigrant source country with 26,000 newcomers.

Sydney's Darling Harbour — Photo: Jim Holmes/Axiom/ZUMA

As Chinese parents attach great importance to their children’s education, quiet middle-class residential communities with good schools most often see their property prices soar once Chinese families start to settle in. Melbourne’s Balwyn district is a perfect example. Thanks to the neighborhood’s well-reputed public high school and Chinese buyers’ speculation, the district’s property prices have soared in the past couple of years.

Meanwhile nearly 90,000 Chinese come to Australia to study in its universities, with many expecting to stay after finishing their studies; which often leads parents to buy houses for them.

Many also suspect that corrupt Chinese officials and their families make up a significant part of China’s property buying force. For example, out of the 100 corrupt officials wanted by China’s Central Discipline Inspection Commission, ten of them are believed to be hiding in Australia, including five with luxurious homes in Sydney and Melbourne. People have every reason to believe that the disclosed information represents only a tiny part of the graft.

The Chinese “invasion” has now aroused a lot of opposition from ordinary people as well as politicians. Even a fund company executive complained to me that he can no longer afford the housing prices. Recently he has searched several residential areas but each time he fancies a house, a Chinese buyer offers a higher price to snap up the house he wanted.

This week, the mayor of the city of Monash, a university town near Melbourne, urged the national government to tighten control over foreign investors buying local properties in order to allow locals to still afford to live there.

Last February the Australian government announced that it will henceforth enforce supervision over foreign investments. According to the country’s law, foreigners are not allowed to buy second houses. When buying new houses foreigners have to obtain approval from the Foreign Investment Review Board, though the commission’s review is relatively loose. Between 2011 and 2012, only 13 foreigners were refused, making up only 0.01% of all applicants.

While purchasing costs have gone up, the Australian government is also combating, in a high profile way, the illegal sale of second houses to foreign buyers. A special action team was formed by the Australian Taxation Office to trace illicit purchases. Xu Jiayin, a real estate tycoon who also owns one of China’s biggest football clubs, was the first target of the government’s new policy. In a press conference, Australia’s Finance Minister requested that Xu sell his 40 million AUD ($30.5) house as soon as possible.

It would not surprise anyone if his buyer turns out to be someone else Chinese.