CHINA has become Australia's biggest source of approved foreign investment for the first time after a $12.4 billion splurge on real estate in the last financial year.
Chinese investors planned to spend $27.7b here, according to the Foreign Investment Review Board (FIRB) annual report, issued on Thursday, overtaking United States investors who were approved to spend $17.5b.
Investments in real estate accounted for almost half China's total, with its $12.4b approved investment more than twice the amount spent by the Americans on real estate.
The Abbott government has proposed tough new rules on foreign investment in residential property and ordered one Chinese buyer to sell a $40 million mansion that was bought illegally.
The FIRB figures tally approved investment rather than actual investment and may understate US investment due the higher threshold that exists for US investment compared with China under the existing trade rules.
While China has topped the US for annual approvals, the US, Great Britain and Japan still have greater accumulated investment in Australia than China.
The statistics did not give a breakdown of the residential investments by country but did reveal the number and value of property transactions almost doubled from 11,668 transaction to 23,054 in 2013-14.
The value of proposed investment in residential real estate increased to $34.7b, up from $17.2 billion.
Investment in newly developed homes was up 200 per cent to $25.8b, while investments in existing homes - that can only legally be bought by temporary residents in Australia - was up 32pc to $7b.
The report showed a substantial increase in the number and value of foreign investors buying existing residential properties, up almost $3 billion. Commercial real estate investment also increased to $39.9 billion from $34.8 billion.
The government is close to finalising proposed new fees for foreign investors buying Australian property, which Mr Hockey had described would "restore confidence" in the foreign investment system which had not prosecuted anyone for breaching the rules since 2006.
The proposed new rules would impose a $5000 application fee on any foreign investors looking to buy a property under $1 million, rising $10,000 for every extra $1 million in the purchase price.
There would also be a new register to track the origin of foreign investment in residential and agricultural property.
If foreign investors breach the rules, the government has flagged fining them up to 25pc of the value of the property and forcing them to sell.