staringclown

Bubble trouble for RBA

83 posts in this topic

I get google alert for Australian property and I received a link to an article in the SMH, Age, Brisbane Times etc (Fairfax)

When I went to the link it was gone - just a blank page.

The hook line from the link said

Bubble trouble for the RBA

Sydney Morning Herald

When the Investor Pulse panel was asked if they thought such forces had already created an Australian housing bubble, 47 per cent agreed...

That's all she wrote. I wonder why they pulled the article?rolleyes.gif

Bubble trouble for the RBA | Investor Pulse | Interest rates
  • 3 Feb 2010 ... Investor Pulse (a joint venture between marketing research group Colmar Brunton and Business Day) asked a panel of investors a range of ...
    www.smh.com.au/business/bubble-trouble-for-the-rba-20100203-ncv7.html - 3 hours ago -

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Here's the original article, copied and pasted from CC. Slappi must of got in there early.

Very strange why they pulled it though.

Bubble trouble for the RBA

February 3, 2010 - 3:28PM

The Reserve Bank's surprise decision to keep a lid on interest rates put currency markets into a spin but left investors counting the days until the next rise.

The RBA’s resolve came despite evidence that that the economy is gaining momentum, unemployment has peaked and the so-called housing bubble continues to inflate.

Whatever the case, the decision to delay has prompted heated debate, particularly given the latest ABS figures for national house prices - long criticised as being too conservative - registered a 13.6 per cent rise in the year to December, with a rise of 5.2 per cent happening in the December quarter alone.

Investor Pulse (a joint venture between marketing research group Colmar Brunton and Business Day) asked a panel of investors a range of questions about property, interest rates, the RBA and the broader economy.

The resounding conclusion is that Australia’s love affair with housing as an asset class is undiminished. Eighty three per cent of investors are convinced house prices will continue to rise over the next 12 months. Of those, 56 per cent considered a 5 per cent rise likely, while 44 per cent thought 10 per cent or more likely.

The reasons for this bullishness are consistent with national trends over the past 18 months. Most investors believed the main reason property prices would continue to rise is high levels of immigration combined with a shortage of housing stock.

Second was low interest rates and third government stimulus. Other upward influences that attracted support were liberalised foreign investment laws for housing which, interestingly, was considered more significant than low unemployment. These figures should suggest strongly to policy-makers that the current aggressive programs of immigration are significantly underpinning confidence in asset prices.

A growing population and “bigger Australia” is becoming a self-fulfilling prophecy as population pressures are being built into asset valuations. Any reversal to the inflow could be damaging.

On the other hand, tensions may already be brewing. One BusinessDay reader suggested the relaxation of foreign investment laws in respect of housing was worth investigating. “I live in Box Hill North and have been trying to purchase a family home for my wife and 12 month-old daughter. We've attended numerous auctions without success and now I know why. An agent from Fletchers Balwyn office told me that 75 per cent of all their sales last year were to foreigners. This is a staggering figure - just think about it - out of every four auctions - only one was purchased by an Australian. No wonder we've been attending auction after auction without success. The story is the same across Melbourne's eastern suburbs with agents claiming anywhere between 33 per cent and 75 per cent of sales are now to foreign investors - predominantly Chinese.”

When the Investor Pulse panel was asked if they thought such forces had already created an Australian housing bubble, 47 per cent agreed. Of these, 83 per cent believe the RBA should continue to raise interest rates to prevent the bubble from growing further. A small minority wanted the RBA to burst a house price bubble. But 43 per cent did not consider house prices at bubble levels.

These are serious results for the RBA and become even more so with the question of whether or not the Reserve Bank should routinely address asset prices. A whopping 71 per cent of investors believe that they should.

Forty one per cent of investors believe the RBA should always use interest rates to prevent bubbles forming. Another 15 per cent thought the RBA should only do so for housing. And 15 per cent thought the same about the stockmarket.

The difficulty in diagnosing a bubble beforehand, the defence championed by Alan Greenspan, led 29 per cent of investors to conclude the RBA should stay out of asset prices.

So, as far as investors are concerned, there is ample room for the RBA to continue raising rates. This was confirmed by an even split on the panel when asked if the RBA should do just that. And for the remainder of the year, that is what investors think will happen: 41 per cent consider interest rates to hit between 4.5 per cent and 5 per cent, while 33 per cent expect official rates to be above 5.5 per cent within 12 months.

Some of these figures would have dropped after the RBA decision, adding even more strength to investor sentiment, which already sees projected rate increases having little effect on rising asset values.

As for who is to blame for home loan rates moving higher than official rates, investors were split over whether the banks were passing on an increased cost of borrowing for oversees funds, or whether they are the result of bank greed and lack of competition. The result may suggest that less damage was done to Westpac by its banana video than generally considered. Indeed the video may even have gelled with a significant portion of investor views.

Also reflecting the general bullishness about housing, further rate rises led an eye-popping 88 per cent of investors to see rents rising with them.

When it came to the stockmarket, rising rates are considered most likely to cause corrections in the retail, manufacturing, LPT and transport sectors. Mining and telcos are seen as immune.

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Here's the original article, copied and pasted from CC. Slappi must of got in there early.

Very strange why they pulled it though.

Surely not very strange - this is the Fairfax press!

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Here's the original article, copied and pasted from CC. Slappi must of got in there early.

Very strange why they pulled it though.

Did you bold that bit to show how the journalist managed to squeeze in re agent lies without having to say he thought they were true?

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Here's the original article, copied and pasted from CC. Slappi must of got in there early.

Very strange why they pulled it though

Thanks Chimerica.

I dunno why they pulled it having read it. Maybe it was the 47% of investors think there's already a bubble in property. They're the ones who are supposed to be charging into the market. They might convince the others. smile.gif

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Well if you look in any sydney Casino or RSL club, you'll see the Asians are big gamblers - even when the actual odds are terrible.

If the market goes south, it won't be a little bump... it's going to very likely to be a land slide.

Mind you, regardless of the figures, I'll point out that not even John Howard was so callous and rude as to open the flood gates for foreign investment on Australian residential property.

Let's see Rudd go to the polls next time with THAT little blurb... I'm sure it'll go down lovely indeed with the average locked out FHB...

Reckon when it all goes to hell Rudd will be sorry for that too>?

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Well if you look in any sydney Casino or RSL club, you'll see the Asians are big gamblers - even when the actual odds are terrible.

i'm not sure where that analogy is supposed to take you. how many people do you see lined up for lotto tickets on big payout weekends? the odds can't get any more terrible than that.

but yeah, i like the way they said "a reader said a real estate agent said..." so basically they are using anonymous reader comments as "research" now? that's really scraping the bottom of the barrel...

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...but yeah, i like the way they said "a reader said a real estate agent said..." so basically they are using anonymous reader comments as "research" now? that's really scraping the bottom of the barrel...

Especially after the discussion here a few weeks back where it became patently obvious that non australians buying existing houses were obviously not investors in any numbers due to the laws saying they can't.

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i'm not sure where that analogy is supposed to take you. how many people do you see lined up for lotto tickets on big payout weekends? the odds can't get any more terrible than that.

Considering how badly screwed the game is at the moment and a lottery win is the only sure ticket to house ownership for many now, that doesn't surprise me.

But the reason for the analogy was because it's a known fact that the asian community have a strong gambling ethic and rolling the dice on Aus property is just another 'all or nothing' gamble for them to a path of wealth and respect.

This isn't just a racial passing remark either, it's a well known and established/discussed cultural problem that's permeated through many aspects of that society that has also managed find a comfortable home in the wider population of gambling Australians.

Mind you, it's not like the discussion on local investment from Chinese Sources is anything new... and will no doubt form up quite a rally point against the government leading into the next election.

People won't forget...

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...Real estate agents say overseas-based bidders are increasingly common at auctions around the country, with the resulting additional demand stoking already rising clearance rates and prices...

Oh please. You are quoting Real Estate agents as a source of truth now? I thought you hated those guys as lying cheating scum? I would like to have heard the RE agents explain exactly how the furriners are getting around the laws.

..."Foreign non-residents are still prohibited from owning existing dwellings in Australia," he said. "They can only purchase a new dwelling or build one from scratch."...

This can only possibly increase supply. Even the change in the law was just to cover the meritons of the world who in the early 2000's started becoming landlords and renting out their unsold apartments. Previously I believe an apartment which had been built but never sold or rented could be sold to foreign investors. If it had been rented out by the developer however that avenue was closed. The change allowed renting the apartment out to cover holding costs until the apartment could be sold.

...Keeping tabs on the size of inbound property investment is difficult. But looking at the most recent data from the Foreign Investment Review Board in Canberra, covering the 2003-04 to 2007-08 period, China-sourced investment approvals rose to a share of 3.3 per cent of the total foreign investment, up from just 0.4 per cent at the start....

At least the journalist had the integrity to mention this quite important aspect. China sourced foreign investment is not even 4%.

4%.

Not 4% of the total market, 4% of the foreign investment (which by definition I think will be less than 50% of the total market). Let's go out on a limb and say someone else must be making up the difference.

Firefly, I think you might want to drop that article from your list of links to refer to.

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That article seems to be trying to scapegoat asians for the bubble, 'it's them foreigners making houses too expensive for good honest aussies...'

Much easier to pin the blame on an external minority, than to admit that poor housing affordability is entirely of our own creation, and an RE agent is not likely to admit to his own part in creating this.

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i'm not sure where that analogy is supposed to take you. how many people do you see lined up for lotto tickets on big payout weekends? the odds can't get any more terrible than that.

but yeah, i like the way they said "a reader said a real estate agent said..." so basically they are using anonymous reader comments as "research" now? that's really scraping the bottom of the barrel...

Yes the article is pretty crap, which is probably why it got pulled instead of some RE conspiracy.

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Considering how badly screwed the game is at the moment and a lottery win is the only sure ticket to house ownership for many now, that doesn't surprise me.

But the reason for the analogy was because it's a known fact that the asian community have a strong gambling ethic and rolling the dice on Aus property is just another 'all or nothing' gamble for them to a path of wealth and respect.

This isn't just a racial passing remark either, it's a well known and established/discussed cultural problem that's permeated through many aspects of that society that has also managed find a comfortable home in the wider population of gambling Australians.

Mind you, it's not like the discussion on local investment from Chinese Sources is anything new... and will no doubt form up quite a rally point against the government leading into the next election.

People won't forget...

A lot of issues getting mixed together here...

1. do "asians" gamble (define asian?)

2. is property investment gambling

3. did the rudd gov't irresponsibly loosen for investment laws

4. are chinese investors causing housing affordability to worsen.

i don't see a strong, logical or empirically supported connection linking each of those four points, whereas you seem to assume that they are naturally connected.

1 this doesn't apply to all asian cultures. if you want to say chinese have a stronger culture of gambling--well i don't know enough to say anything one way or another but i am happy to go along with the assertion for the moment. however my point was, do they gamble more than "aussies" (whoever they may be). given the prominence of pokies, scratchies, lotto, the fanfare surrounding the melb cup, the omnipresence of TAB, casinos, etc. i would say probably not. aussies love to gamble. if you see a lot of asians in casinos... perhaps its because they are illegal in their home country so it is a novelty when they go overseas? I know that is the case for me (as a yank), for japanese, for Sth Koreans (they have casinos but koreans aren't allowed to gamble in them--foreigners only). I haven't researched china but i have never heard of mainland casino gambling - macau, sure but are casinos allowed on the mainland? doesn't sound like something the communist party would be particularly receptive to.

2. thats a matter of subjective opinion and depends on how the investment is being carried out. you could say that some pi is gambling and some is long term investment. don't see any merit in broad generalisations asserting that its one or the other.

3. they took away limits for students and made a few changes enabling companies etc. to purchase existing houses to house employees. eliminated the need for temp residents to file reports for purchasing a ppor, did away with max price for students to buy ppor. they did not enable for. investors to buy existing houses, though they did change the definition of a new house to be one that has been rented for less than 12 months and to eliminate the requirement that x% of new developments be aussie-owned. the focus is still firmly on the creation of new housing stock and this is something that people who complain about high prices would presumably applaud. the more stock, the more supply, lower rents, lower prices. i don't see the problem.

4. i still haven't seen any data supporting this claim. The FIRB hasn't released its 08-09 annual report yet so its impossible to say how the changes have effected investment, but since people are talking about percentage increases, it is worthwhile establishing a baseline by looking at 07-08.

From the 07-08 report we see that the top countries for foreign investment were as follows:

The United States of America was the largest source country for foreign investment in 2007-08, involving proposed investment of $49.5 billion representing 26 per cent of total investment approved. The United Kingdom, Germany, Singapore and Switzerland were the other major source countries of investment approved in 2007-08, with 17 per cent, 7 per cent, 6 per cent and 5 per cent, respectively.

It's worth noting that the PRC doesn't show up anywhere in the top 5. So it cannot have contributed to more than 5% of total For. investment. Your article says china accounted for 3.3% of for. investment for 07-08. $191.1 billion of applications were approved, meaning that at the absolute most chinese investment--in all fields, not just RE--could have accounted for no more than $6.3 billion. And I seem to recall a number of big deals being arranged with mining companies around this time....

Reading a bit further we see the following breakdown of property investment:

Residential property approvals increased by $6.9 billion from $13.5 billion to $20.4 billion. Of the increase in residential real estate approvals, $1.1 billion was for existing dwellings which increased from $2.3 billion in 2006-07 to $3.4 billion in 2007-08. Of the remaining $5.8 billion increase, $3.9 billion was for newly constructed dwellings, comprising increased individual approvals of $0.2 billion and developers’ approvals of $3.7 billion. The former are single dwelling sales to foreigners while the latter represent approvals provided to developers to sell up to 50 per cent of the dwellings in a multi-unit development. The value attributed to this category substantially overstates actual acquisition expenditure because it represents the value of all dwellings constructed in the development, not the generally small proportion (generally less than 10 per cent) later bought by foreign persons.

3.4 billion for existing residential buildings (students, people on temporary visas, companies buying housing for employees, etc.) - NOT investment properties and NOT all Chinese but for all countries.

17 billion for new buildings, with 0.2 billion of that going to single dwelling and the rest to developers.

This is old data, I freely acknowledge that things--particularly people buying PPOR--may have changed with the changes in the laws. But there is nothing to indicate that Chinese buyers are pushing up the market. China represents a tiny portion of total investment in Australia, foreign investment in real estate is a tiny part of the total real estate market, and while there may be some law breaking going on presumably the illegal purchase of existing dwellings as inv. properties, in turn, represents a tiny portion of all foreign investment in real estate. so we have a tiny portion of a tiny portion of a tiny portion. this is not enough to make a significant difference in the market as a whole.

If people can provide solid data to back up claims that the chinese are swamping the real estate market, i am happy to debate the numbers, but as it stands the numbers--and the laws--seem to be saying the exact opposite. Chinese are not & cannot become a major force in real estate--at least in terms of the purchase of existing dwellings.

This is typical REA scare tactics. If they had replaced "Chinese" with "FHBs" (which would be far more accurate) then we would be saying "more of that 'get in now or you'll never be able to buy bullsh*t'" but by playing on biases and fears inherent in the aussie they get a much bigger reaction with the chinese, despite the fact that--according to the numbers, not my uncle's girlfriend's brother's aunt's boss' friend) they are a marginal player at best in housing.

Edited by urchin

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read a little further in the report. basically, in 07-08, Chinese investment in real estate (residential AND commercial) constituted a whopping... $1.491 billion.

The US accounted for 12 billion - 8X that of the chinese. perhaps they were all chinese americans and that is the source of the confusion?

Germany, the UAE and the Swiss all have higher levels of real estate investment than the Chinese.

The numbers don't support the claims. which makes one wonder why people are so quick to believe the claims.

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read a little further in the report. basically, in 07-08, Chinese investment in real estate (residential AND commercial) constituted a whopping... $1.491 billion.

The US accounted for 12 billion - 8X that of the chinese. perhaps they were all chinese americans and that is the source of the confusion?

Germany, the UAE and the Swiss all have higher levels of real estate investment than the Chinese.

The numbers don't support the claims. which makes one wonder why people are so quick to believe the claims.

In the 1890s The Bulletin liked to run a cartoon showing an eight armed chinese octopus that was about to enslave Australia with drug addiction, VD, gambling, bad stir fry, etc. The white punters in Melbourne in 1890 were quick to believe all that stuff too. It looks as though the newest tentacle is real estate disenfranchisement.

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...The numbers don't support the claims. which makes one wonder why people are so quick to believe the claims.

3 or 4 (depending on definition) of the top 5 selling albums of all time are bogan music.

Edited by tor

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Whether the figures are debatable or not, it still doesn't replace the obvious and factual point that Rudd opened up our residential market to foreign investment.

The actual figures of what this represents is mostly irrelevent in the face of the fact this shouldn't have been allowed to happen at all - it was done in order to help maintain the asset bubble.

For this reason alone, the bastard should be shot.

'nuff said.

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Whether the figures are debatable or not, it still doesn't replace the obvious and factual point that Rudd opened up our residential market to foreign investment.

The actual figures of what this represents is mostly irrelevent in the face of the fact this shouldn't have been allowed to happen at all - it was done in order to help maintain the asset bubble.

For this reason alone, the bastard should be shot.

'nuff said.

CHANGES TO THE FOREIGN INVESTMENT SCREENING ARRANGEMENTS

  1. Accommodation facilities such as resorts and hotels will be treated as commercial real estate rather than residential real estate. As a result, rather than all purchases of short term accommodation units being subject to the residential real estate rules, notification will now only be required where the value of the property exceeds the commercial property thresholds ($50 million or $5 million for heritage listed properties).
  2. Temporary residents will be exempted from notification of proposed acquisitions of established residential real estate for their own residence, new residential real estate and vacant residential land. Further, the restriction preventing student visa holders from purchasing a property valued at over $300,000 will be removed. The rule preventing temporary residents from purchasing more than one established dwelling will be maintained.
  3. The definition of temporary resident as a person with a visa of at least 12 months duration will also be updated to cover temporary residents with shorter term visas and long term bridging visa holders. Short term visitors, for example, with tourist or certain classes of business visas will continue to not be considered as temporary residents.
  4. Streamlined administrative procedures will be established to facilitate non‑resident foreign persons notifying and receiving approval for acquisitions of vacant residential land and new dwellings. Streamlined notification arrangements will replace the current administrative system which takes up to 30 days for approval.
  5. The conditions on acquisitions by non-resident foreign persons of single blocks of vacant residential land will be removed except for a requirement to begin its development within 24 months. Currently development must commence within 12 months (this period is often extended) and at least 50 per cent of the value of the purchase price of the land must be spent on construction of a dwelling.
  6. The condition that no more than 50 per cent of new dwellings be sold to foreign persons will be abolished provided developers market locally as well as overseas.
  7. The definition of "new dwelling" will be extended to include those that have not been sold but that have been rented for no more than 12 months. This will provide more flexibility to developers to temporarily rent out units until buyers are found.
  8. Foreign companies will be allowed to purchase established dwellings for the use of their Australian based staff.

The bolded bits are the only changes. the rest are administrative.

2. students - are they going to sway the market? i dun think so.

5. changes to encourage development by providing a longer development period. 2 years is not "land banking" imo

6. same as 5 encouraging development.

7. same.

8. i think there were 13 instances of this happening in 2007.

Your argument is self-contradictory. The numbers don't matter, they shouldn't open the market because it will prop up the asset bubble. But the numbers show that it is NOT a significant factor in the property market and that, if it is doing anything, it is relieving pressure by providing more supply....

Seriously.... if you just don't want foreigners to buy aussie land, just say so (and recognise that it won't make a bit of difference in bringing down the property bubble). don't link it to an unsupportable economic argument--present it as your opinion and be done with it.

Edited by urchin

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The bolded bits are the only changes. the rest are administrative.

2. students - are they going to sway the market? i dun think so.

5. changes to encourage development by providing a longer development period. 2 years is not "land banking" imo

6. same as 5 encouraging development.

7. same.

8. i think there were 13 instances of this happening in 2007.

Your argument is self-contradictory. The numbers don't matter, they shouldn't open the market because it will prop up the asset bubble. But the numbers show that it is NOT a significant factor in the property market and that, if it is doing anything, it is relieving pressure by providing more supply....

Seriously.... if you just don't want foreigners to buy aussie land, just say so (and recognise that it won't make a bit of difference in bringing down the property bubble). don't link it to an unsupportable economic argument--present it as your opinion and be done with it.

Urchin my only counter arguement is that with the current state of the laws - even with the changes - if people want to invest here, they will anyway.

If you can name me one person in the last 20 years who was publically prosecuted for engaging in illegal activity concerning these laws or the laws before this, I'd love to see it.

When a government has a vested interest in propping up an asset bubble like this, much of the flouted laws are merely for show. They'll turn a blind eye to what's immoral and even illegal until they are reigned in publically to act.

These so called 'laws' are a sham with loopholes you could drive a truck through and if you'd like to take a walk through a number of Sydney PPOR suburbs LONG ago established and look at the local demographics and try to tell me they're all renters, I'll just laugh at the absurdity of your claim.

You can quote any figure that you like, but anyone with two eyeballs and half a brain who lives in a place like Sydney is WELL aware of what a croc of sh*t that is.

Think for a moment mate. How hard is it for someone from OS use a family member here who has already got residency to buy and hold for them until THEY can get residency here as well?

You can't possibly live in a place like Sydney and think that the established housing market here is being bid and bought up by locals. That's absurd thinking in all honesty mate. I can quote a dozen suburbs where Australians are being systematically pushed out by PPORs or Investors from specific backgrounds.

The government calls is 'cultural diversity' but really it's a foreign takeover when it really comes down to it.

But semantics aside, the underlying question really is, what purpose does promoting foreign investment in Australian residential real estate when it's in the largest remaining asset bubble in the entire world serve?

If the Australian residential property market was a bleeding swimmer, Rudd just went to every shark abroad and rang the dinner bell with these so called 'changes' to local law.

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Urchin my only counter arguement is that with the current state of the laws - even with the changes - if people want to invest here, they will anyway.

If you can name me one person in the last 20 years who was publically prosecuted for engaging in illegal activity concerning these laws or the laws before this, I'd love to see it.

Well, your argument was that rudd should be shot for opening up the doors for foreign investment but you want data going back 20 years? I don't have the data--perhaps it will be in the 08-09 report. The 07-08 report talks about applications getting kicked back and people being forced to sell when their application is rejected. it also mentions that they strengthened the sharing of data with the ato and other relevant bureaus, but i doubt that this is front-page materia

When a government has a vested interest in propping up an asset bubble like this, much of the flouted laws are merely for show. They'll turn a blind eye to what's immoral and even illegal until they are reigned in publically to act.

These so called 'laws' are a sham with loopholes you could drive a truck through and if you'd like to take a walk through a number of Sydney PPOR suburbs LONG ago established and look at the local demographics and try to tell me they're all renters, I'll just laugh at the absurdity of your claim.

What loopholes are you referring to? Your sentence belies your earlier assertion that people are flouting the law. The law prohibits non-resident purchase of established dwellings. if you have suburbs full of "non-locals" *LIVING IN PPORs* there is nothing legally wrong with that, provided they are on a temporary resident or resident visa. You reckon that all non-residents should have to rent? Fine, but that has nothing to do with Rudd's changes in property and does nothing to dispute the minimal effect such investment has on the property market.

You can quote any figure that you like, but anyone with two eyeballs and half a brain who lives in a place like Sydney is WELL aware of what a croc of sh*t that is.

What precisely are you saying is a crock of sh*t? I'm not "quoting any figure i like" i'm quoting official figures that show precisely how (in)significant foreign investment is in the larger picture of the australian housing market. Dare i say that you might be the one who is allowing subjective impressions to cloud the big picture?

Think for a moment mate. How hard is it for someone from OS use a family member here who has already got residency to buy and hold for them until THEY can get residency here as well?

So are we back to arguing that there is a substantial amount of illegal investment going on again? Tell me, how is that family member going to buy the house for them? Where's that money going to come from? How is it going to get here? You don't think that the ATO will notice a 600k bank transfer from overseas? Certainly the banks here aren't going to give a loan to someone under those circumstances. If someone gets 600k cash and doesn't declare it on their taxes... what's going to happen then? I reckon that it would be difficult to arrange, it would be very risky (particularly if one wants to get residency at some point) and totally pointless. Why would someone overseas want to buy a house in Aus. now when.... they are living overseas!!!!:huh:?

You can't possibly live in a place like Sydney and think that the established housing market here is being bid and bought up by locals. That's absurd thinking in all honesty mate. I can quote a dozen suburbs where Australians are being systematically pushed out by PPORs or Investors from specific backgrounds.

Why is it absurd? Canberra is being bid and bought up by australians (only 40 odd cases of for. purchases in 07-08) and we have prices second only to sydney. you also have PIs nationwide buying into the market.

The government calls is 'cultural diversity' but really it's a foreign takeover when it really comes down to it.

Ah, so perhaps we have reached the core of the issue at last. I should have asked you how you define "locals". I define it as people with a legal right to buy property. You seem to have another definition that is somehow the polar opposite of cultural diversity. So now you have jumped from an empirically measurable debate on property and the property market to an obscure and subjective debate on whether or not immigration is a good thing. I have had enough of those pointless debates so i will only say it's not relevant if you are interested in knowing what sort of impact foreign investment is having on australian property prices.

But semantics aside, the underlying question really is, what purpose does promoting foreign investment in Australian residential real estate when it's in the largest remaining asset bubble in the entire world serve?

"semantics"? like, mere numbers and statistics? well, i would have thought it was pretty obvious - the policy is clearly geared toward adding more supply to the market. in a country with record high rents and record high purchase prices, what is wrong with adding more stock to the market?

If the Australian residential property market was a bleeding swimmer, Rudd just went to every shark abroad and rang the dinner bell with these so called 'changes' to local law.

how? how are they pushing up prices for existing dwellings if they can only buy NEW HOUSES?:huh:?? an assertion is not a fact.

it would make for a much more productive discussion if you wouldn't change the topic under discussion so many times per post. you railed against rudd for selling out aussies by increasing foreign participation in the RE market, first you say that everyone is ignoring the law (in which case it is irrelevant to the changes as they could've ignored the law before too), then you seem to be saying that temporary residents oughtn't be able to buy (they were allowed to do so before the changes too). then you seem to get to the real point which is "there are too many damned foreigners here", which is not at all relevant to the initial issue. finally you go back to saying that foreign investment is devouring real estate ("sharks to the swimmer") and pushing up prices, again conveniently ignoring the fact that 1. the changes are relatively minor and 2. for. investment in RE is very, very small.

Edited by urchin

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Urchin my only counter arguement is that with the current state of the laws - even with the changes - if people want to invest here, they will anyway.

That is a silly argument though, if they want to break the law they would have done it before the law was slightly modified. Hating Rudd for people breaking the law is kind of weird.

These so called 'laws' are a sham with loopholes you could drive a truck through and if you'd like to take a walk through a number of Sydney PPOR suburbs LONG ago established and look at the local demographics and try to tell me they're all renters, I'll just laugh at the absurdity of your claim.

What loopholes? I can't see any.

You can quote any figure that you like, but anyone with two eyeballs and half a brain who lives in a place like Sydney is WELL aware of what a croc of sh*t that is.

Think for a moment mate. How hard is it for someone from OS use a family member here who has already got residency to buy and hold for them until THEY can get residency here as well?

You are claiming that this is happening in significant numbers? This seems a little far fetched to me. Why wouldn't they just use family repatriation instead of waiting?

You can't possibly live in a place like Sydney and think that the established housing market here is being bid and bought up by locals. That's absurd thinking in all honesty mate. I can quote a dozen suburbs where Australians are being systematically pushed out by PPORs or Investors from specific backgrounds.

Quote 2 and I'll be impressed. Especially if the specific background is not "White Australian born and bred" by a huge margin.

But semantics aside, the underlying question really is, what purpose does promoting foreign investment in Australian residential real estate when it's in the largest remaining asset bubble in the entire world serve?

If the Australian residential property market was a bleeding swimmer, Rudd just went to every shark abroad and rang the dinner bell with these so called 'changes' to local law.

Please point out the change which you think makes a significant difference in volumes. If overseas investors can build more houses here do you think that will make houses go higher / lower or stay the same?

Your linked article was a pile of crap from RE Agents. The chinese hoards are not causing high house prices. I think you'll find New Zealanders own more land here than them by such a huge margin that your argument is either from ignorance or racism.

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it would make for a much more productive discussion if you wouldn't change the topic under discussion so many times per post. you railed against rudd for selling out aussies by increasing foreign participation in the RE market, first you say that everyone is ignoring the law (in which case it is irrelevant to the changes as they could've ignored the law before too), then you seem to be saying that temporary residents oughtn't be able to buy (they were allowed to do so before the changes too). then you seem to get to the real point which is "there are too many damned foreigners here", which is not at all relevant to the initial issue. finally you go back to saying that foreign investment is devouring real estate ("sharks to the swimmer") and pushing up prices, again conveniently ignoring the fact that 1. the changes are relatively minor and 2. for. investment in RE is very, very small.

I dunno mate, it's just my perspective being in a heavily concentrated foreign environment in Sydney that's probably skewing my view on things.

But I live in a suburb that in the space of not even 10 years has changed in core demographic so radically, I'm just finding it hard to believe people played by the rules. A LOT of PPOR in this area and most of it from people with very obvious foreign backgrounds.

I'd like to put 2 and 2 together on this based on what you're saying, but something here just doesn't add up.

Mind you, even that 4% figure being bandied about.... that's Australia wide. Concentrate that down into a few areas of the country and the figure ramps up *dramatically* from a relatively speaking point of view.

So Darwin might only see .01% of the market being bought by foreign investors, but a particular suburb in Sydney is 40% - but overall in Australia, it balances out if you can see what I'm getting at...?

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I dunno mate, it's just my perspective being in a heavily concentrated foreign environment in Sydney that's probably skewing my view on things.

But I live in a suburb that in the space of not even 10 years has changed in core demographic so radically, I'm just finding it hard to believe people played by the rules. A LOT of PPOR in this area and most of it from people with very obvious foreign backgrounds.

but that's just the point - people on temporary resident (not to mention resident) visas ARE ALLOWED to buy a PPOR. They ARE playing by the rules. These rules have been in place a long time and the only real changes on that score in 08-09 were 1. students allowed to buy over 300k and 2. temp residents buying a ppor no longer have to file an application. that's it.

I'd like to put 2 and 2 together on this based on what you're saying, but something here just doesn't add up.

immigration and changing demographics. not foreign investment

Mind you, even that 4% figure being bandied about.... that's Australia wide. Concentrate that down into a few areas of the country and the figure ramps up *dramatically* from a relatively speaking point of view.

So Darwin might only see .01% of the market being bought by foreign investors, but a particular suburb in Sydney is 40% - but overall in Australia, it balances out if you can see what I'm getting at...?

sure i see how, potentially, it could be a factor. but again, you are confusing immigration and foreign investment. foreign investment is not a major factor. if you want to argue immigration, i am sure there are others who will take you up on it but i've grown tired of beating that horse. it has a funny way of bringing out the worst in people.

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I dunno mate, it's just my perspective being in a heavily concentrated foreign environment in Sydney that's probably skewing my view on things.

It is normal to see big changes and be concerned. A lot of people try to take advantage of this and start campaigns which are visceral. It becomes hard to remain emotionally detached but the people that you should be paying attention to are the ones encouraging you to think in a way which is counter factual.

But I live in a suburb that in the space of not even 10 years has changed in core demographic so radically, I'm just finding it hard to believe people played by the rules. A LOT of PPOR in this area and most of it from people with very obvious foreign backgrounds.

You should have been in Newtown 15 years ago. All of us broke students got kicked out by the yuppies. 10 years before that we kicked out the old italian families apparently.

The problem with obvious foreign backgrounds is that they aren't. Odds are good that for every "obvious background" person there are at least 2 or 3 kiwis, a brit and a yank involved. Plus a couple of aussies. Us foreigners that look like you often learn to talk like you too. It makes it hard to see.

I'd like to put 2 and 2 together on this based on what you're saying, but something here just doesn't add up.

Mind you, even that 4% figure being bandied about.... that's Australia wide. Concentrate that down into a few areas of the country and the figure ramps up *dramatically* from a relatively speaking point of view.

So Darwin might only see .01% of the market being bought by foreign investors, but a particular suburb in Sydney is 40% - but overall in Australia, it balances out if you can see what I'm getting at...?

Think the math through, it flat out doesn't matter because australia is so concentrated. 0.1% of darwin is maybe 20 or 30 houses (arse number) 40% of a suburb in Sydney is quite a few more. The 4% is irrelevant when you think of the demographics of this country.

For mine, someone is out to take you for a ride by telling you what you want to hear and you don't know who it is or why they are doing it. That would make me nervous.

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