Chinese buyers now account for 12 per cent of Australia's new housing supply and are tipped to increase their buying power as China becomes wealthier.
New research released yesterday by Credit Suisse says Chinese purchases of Australian residential property are running at $5.4 billion a year, concentrated in Sydney and Melbourne.
But the investment bank warned that the buying spree risked increasing Australia's already inflated property prices.
"While Australia has some of the most unaffordable housing in the world, further strong Chinese demand can push prices even higher," it said.
While a new generation of Australians are being priced out of the housing market, the country's most expensive cities are now within the reach of a growing number of Chinese buyers, both investors and residents.
According to Credit Suisse, Chinese buying already accounts for 18 per cent of Sydney's new housing supply and 14 per cent of Melbourne's.
Having poured an estimated $24 billion into Australia over the past seven years, purchases to the end of the decade are tipped to nearly double to $44 billion as China continues to expand and the population becomes richer.
Credit Suisse said the increased investment would benefit property developers with large residential exposures, including Stockland and Australand, and it did not discount a Chinese takeover of an Australian developer.
Other beneficiaries would include building material stocks (Boral, CSR), banks and Bunnings owner Wesfarmers.