The worsening diplomatic rift between Beijing and Canberra has prompted Chinese property buyers to look elsewhere, data from an international industry firm has revealed.

The latest figures from Juwai IQI showed that Chinese enquiries for Australian homes plunged by more than 65% from April to May, the lowest in almost three years. This comes after enquiries surged at the height of the coronavirus pandemic, with many Chinese buyers drawn by the country’s handling of the crisis.

The drop coincided with Canberra’s push for an investigation into the origins of the novel coronavirus – a move strongly opposed by Beijing. The virus was first detected in China late last year.

Experts believe that a prolonged dip Chinese interest will adversely impact Australia’s property sector, which has been among the country’s strongest industries in recent years.

Last year, foreign real estate investment from Mainland China generated $1.6bn, mostly coming from residential and commercial construction, and home auctions.  

“If the situation doesn't escalate further things will stabilise,” said Georg Chmiel, executive chairman of Juwai IQI, in an interview with the Sydney Morning Herald. “So long as it isn't prolonged, as long as it isn't systemic.”

Juwai IQI’s latest data showed that Mainland China has slid below the US and Canada as the top international investors in Australia’s property market.

Experts are worried that the rising tensions will potentially have a negative effect in Australia’s slowing housing market.

Already, the Reserve Bank of Australia (RBA) has expressed concern about the outlook for dwelling investment, with housing and construction activities slowing, and rents falling.