Australian house prices remain overvalued, according to at least two sources - Moody's and The Economist - despite a correction over the past two years.

The person in the street agrees. At grass-roots level, just about everyone in Australia concurs that property is becoming out of reach for the average worker. Yet to wealthy Chinese, who are snapping up city apartments in record numbers, its real estate is a bargain. Compared with prices in Hong Kong, Singapore and Beijing, it probably is. And city apartments are firmly in their sights.

In the Business Spectator, analyst Robert Gottliebsen writes of a "dramatic event" in the Australian property sector, whereby mainlanders are buying off-the-plan apartments in inner Sydney, Melbourne and Brisbane at record levels. He quotes Harry Triguboff of Meriton, Australia's largest apartment developer, as saying the level of buying over three weeks in April as being "without precedent".

James Sialepis, Meriton's national director of sales, says Chinese account for 80 per cent of the approximately 1,500 apartments Meriton builds and sells each year. Of these, about one-third are overseas buyers, while the rest are Chinese living in Australia.

All of Meriton's apartments are Foreign Investment Review Board approved and Asians, unlike some nationalities, are willing to buy off the plan. A change of government policy removing the restrictions on the number of properties overseas investors may buy has been a boon for developers such as Meriton.

Meriton routinely sells five or 10 units to one Chinese family, Sialepis says. Consortiums are also emerging, buying a similar number in one hit.

Why? "Australia has always been an attractive property market for Chinese buyers and, at the moment, with development approvals at a 40-year low, when there is an opportunity, they will take it," Sialepis says.

"Australia is probably the most stable economy in the world at the moment - its stability is stellar. Falling interest rates give [overseas Chinese] hope of more buying power and, later down the track, they can send their children for education here."

When Meriton launched Macquarie Residences in Macquarie Park, Sydney, early this month, 60 units were sold in the first hour, the majority to Chinese.

Sialepis says they have all the wanted criteria, being 200m from Macquarie University, close to a shopping centre and train station, and being 12km from the central business district (CBD). Prices start at A$525,000 (HK$4.096 million) for a one-bedroom unit with parking. In Hong Kong, Australia property specialist Citylife International Realty, says Chinese buyers account for about 40 per cent of the group's luxury projects in Melbourne and Brisbane.

Lauren Chan, senior associate: private clients, expects this continued buying will push prices up, from the present very low per-square-foot rates in first-class areas of about HK$5,000 in Brisbane, to about HK$7,000 in Melbourne. "Even with the higher Aussie dollar, new-build prices of Australian property remain very low on world standards, and that's without even any price falls during the global financial crisis, so a lot of upside remains," Chan says.

She agrees that "many Chinese buy apartments for their children while they study in Australia, and they also see Australia as being a safe haven, with a strong economy and good building and legal standards".

Units they like include Ecco Apartments in Brisbane, 2km from the CBD with a rooftop pool and barbecue, selling from A$495,000 for a two-bedroom design of 980 sq ft. In Melbourne, a boutique development of architect-designed apartments in trendy South Yarra, with rooftop entertaining areas and spectacular views, start at A$320,000 for one bedroom and A$599,000 for two bedrooms.

Latest research from Colliers International confirms the trend. It found that foreign investment in Australia's property markets increased 51 per cent last year, with Asian buyers leading the charge. The firm's Global Capital Investment in Australia Research & Forecast Report for the first half of 2012 has found there was about A$7.7 billion worth of foreign investment in Australian property last year, up from A$5.1 billion in 2010, on the back of the country's stable economy and high-yielding assets.

Foreign buyers made up 42 per cent of all commercial property transactions in Australia last year, with 58 assets valued at A$2.8 billion purchased by overseas parties in the second half of the year alone.

John Marasco, Colliers International managing director, investment services, says offshore investors are increasingly looking for higher yielding investments outside the low-growth economies of Europe and the United States.

The report found foreign buyers had targeted property portfolio sales, direct property transactions and company, fund and real estate investment trust takeovers and mergers.

Asia displayed the greatest appetite for Australian commercial property, accounting for 34 per cent of all offshore capital inflows into Australian property markets in the second half of last year. Buyers from Singapore accounted for the lion's share of Asian investment in Australia, at 19 per cent, followed by Malaysia (13 per cent).

James Quigley, Colliers International national director, institutional, says the comparative strength of the Australian economy, combined with continuing economic uncertainty in Europe and the US, has motivated Asian investors to redirect funds that would normally be bound for these markets.