There’s clearly a lot of Chinese demand for houses in Australia right now, particularly in Australia’s eastern states.

According to new research from Credit Suisse, Chinese investors currently account for nearly 80% of all foreign purchases in New South Wales and Victoria, scooping up properties at an annualised pace of $4.9 billion and $3.1 billion respectively.

It’s clearly a lot, and far higher than levels seen only a few years ago.

The question many are asking, particularly given the enormous price gains recorded in Sydney and Melbourne, is why?

To Hasan Tevfik and Peter Liu, research analysts at Credit Suisse, the answer is simple: prices are still relatively cheap to what they would pay for similar properties at home.

“It is hard for many Australians to think of property as a cheap asset, but from a Chinese investor’s perspective, there could be plenty of value in Aussie housing,” they say.

“The median price for a two-bedroom apartment in Shanghai is around $900,000 which is 25% more than the median apartment price in Sydney.

“Yes, our property is expensive when we compare it to our own history, but it is cheap when compared to Chinese property.”

Along with relative prices, Tevfik and Liu also note that current rental yields — already plumbing record lows in both Sydney and Melbourne — are still well above the levels seen in many major cities in China.

“The gross rental yield in Shanghai is a paltry 1.5% and is less than half the gross rental yield for the equivalent property in Sydney.”

This chart from Credit Suisse puts those figures into visual form.

While housing prices and rental yields may partially explain the demand, it’s likely that some purchases are being driven by Chinese investors as a store of wealth rather than for occupation purposes, encouraged by persistent downward pressure on the yuan heightening the risks of tighter capital outflow restrictions being introduced.

And while Chinese regulators have introduced tougher restrictions in late 2016 and again in early 2017, there’s certainly no shortage of wealth that currently exists within the nation.

According to estimates from Credit Suisse, there are currently 1.6 million millionaires in China at present, up from just 800,000 in 2010.

The bank estimates that figure could grow to more than 2.5 million by the year 2021.

Given that level of wealth, and that Australia is a favoured investment destination, it will clearly remain a supportive factor for house prices should the current trend persist.

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