In Australia, where China this year surpassed the US as the biggest source of foreign property investment, officials are worried wealthy Chinese investors will pour more money into an already overheated market.

Chinese investors are “looking for safe, stable, secure investments”, Treasurer Joe Hockey told The Wall Street Journal this week. “Australian real estate is very attractive for them in that ­regard,” he said, singling out ­“skittish Chinese investors”.

China’s currency devaluation this month sparked a global sell-off of stocks amid concern over the nation’s economic health. After dropping by nearly a quarter, the Shanghai Composite Index recovered sharply on Thursday. Any rise in Chinese investment would come despite the yuan’s diminished buying power abroad.

“If wealthy Chinese feel that the recent devaluation is the beginning of a much longer and deeper depreciation, they may be motivated to move liquid assets overseas before that happens,” said Andrew Taylor, co-chief executive of a Chinese website that helps people search for overseas homes.

In the US, where Chinese buyers this year surpassed Canadians to become the biggest foreign property investors, at least one broker describes a sudden surge in Chinese interest in buying high-end residential properties in New York. “I have never seen demand be so strong for top-tier properties in Manhattan,” said Carrie Chiang, from Corcoran, a US real estate firm. “Yuan devaluation will make Chinese clients think they should put some tangible asset in New York, because that’s stable.”

During the first half of this year, Chinese investment in overseas commercial properties, a proxy for outbound residential investment, totalled $US6.5 billion ($9bn), well on track to surpass last year’s total of $US10.5bn, according to CBRE.

Chinese investors are drawn to the US for its stability, with low interest rates and moderate economic growth during a time of global uncertainty, according to Cushman Wakefield, a property consultancy. Australia and Britain were the second and third most popular destinations for Chinese property investment.

Chinese investment in Asia plummeted because buyers were shunning Hong Kong and Singapore, where prices had risen significantly, in favour of the US, said Michael Cole, an analyst at Mingtiandi.com, a website that tracks Chinese real estate activities.

Chinese foreign property investments may get a further boost from Beijing’s plan to loosen its capital controls with a new trial program in six cities allowing wealthy individuals to invest ­directly in overseas assets.

A fresh surge into Australian property worries policy-makers, who believe prices in Sydney and Melbourne have in the past two years risen to levels that are pushing many middle-class families out of the market.

This year, Australia’s foreign investment review body said China had overtaken the US as the country’s biggest source of investment from overseas, with a total of $US27.6bn last year. Residential and commercial real estate accounted for almost half that. House prices in Sydney are 48 per cent higher than they were at the start of the current growth cycle, in May 2012, and 32 per cent higher in Melbourne, according to data from CoreLogic RP Data.

With soaring prices putting home ownership out of reach of many Australians, the government is under pressure to make housing more affordable. The bank regulator has adopted measures to curb bank lending for the purchase of investment property.

Mr Hockey said officials were monitoring overseas interest since the turmoil of recent days on global equity markets.

The government isn’t concerned with overseas purchases of newly built property. But officials believe many people, including from China and Southeast Asia, are abusing the system through loopholes to illegitimately buy existing homes and have recently began cracking down on them.

“Provided (the Chinese investment) goes into new real estate, creating the jobs in the construction industry that we want, that’s welcome,” Mr Hockey said.

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