Dose

Fairfax: The Yellow Peril is upon us

512 posts in this topic

Is this a signal of a top? The Chinese stock market volatility is still causing capital flight presumably. Is the Aussie housing market losing it's appeal as a safe asset?

 

I've just returned from Melbourne where a friend had purchased a house in Preston for 820k. Nice house but it seemed excessive. 

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Preston isn't that nice except for the fact it's not far from the city. It had better be a big, big block...

 

Disclaimer: I lived in Preston years ago.

Edited by Mr Medved

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The block is 550m2. However, it has an ex alley way now enclosed by the property of 10*2m. Darebin council have proposed an auction between my friend and the two properties abutting behind with an estimate of between 20-40k. If my friend loses the auction the fence will need to be moved at extra cost

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Is this a signal of a top? The Chinese stock market volatility is still causing capital flight presumably. 

 

I'm expecting the Chinese to follow the Japanese around 25 years ago, who walked out with burned fingers.

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Oh come on now...what could a real estate industry possibly have to gain by talking up Yellow Peril in a market so pickled in debt they need family or lo-doc loans to cover the deposit?

 

I have been to a number of auctions over the past year and see with my own eyes who is bidding and buying, yet the papers scream Attack of the HAM.

 

What's the saying?  If it is in print it must be true?

 

Meanwhiie, in VanKong...

 

 

As many people now know, Amanda is a young administrative marketing assistant at MAC Marketing Solutions in Vancouver, a company developers hire to flog condos to the rabble. She crossed the ethical line last week when the company tried to (once again) milk the incredibly lazy, gullible and bush-league Van television media. She posed as one-half of a sister team (her fake sibling is also a MAC employee) scoping condos so their rich Mainland Chinese parents could come and indulge them.

The TV reporters bought it. Their editors bought it. The stations bought it. So CTV and CBC aired false reports based on fraudulent statements. Now print media (The Province, the Globe, HuffPost) are gloating over the gotcha moment. MAC’s president says he is apoplectic. The TV guys, as far as I know, have not apologized. And the blog breaking the story is basking.

This is all heinous, abusive and might be cute if it happened in Lethbridge. But Vancouver is supposed to be the No.2 media hub of English Canada, so it’s just hilarious. What a fitting symbol of what’s going on.

Of course, this is not the first time. In 2011 you might recall Cam Good, head of The Key – another house-flogging, Van-based professional pumping outfit – hiring a yellow helicopter to ferry around “Chinese investors” with three TV crews stuffed into the back of the chopper. The intentional buzzing of defenceless places like White Rock was intended to goose the myth of HAM – Hot Asian Money – and feed the meme that legions of oriental Donald Trumps were about to gobble up the region, pricing the locals out forever.

But as this blog pointed out days after Global and CBC ran their yellow peril stories, the Chinese dudes were actually Canadian realtors from the burbs, posing as rich vultures from Guangdong. Mr. Good’s company also tried to pass off an employee as a consumer in a weird scheme that brought the Groupon concept to selling condos. It failed, but not before making it to air.

And how could we forget the fake lineups in places like Burnaby? People (Asians, preferably) were offered money, plus lawn chairs, portable heaters, food and porta-potties to camp out in from of a sales centre for 24 hours prior to opening. TV news crews were invited to come and witness the spontaneous news event and the stories they ran begat longer lines, people being the lemmings they are.

So two years ago this pathetic blog arrived at the conclusion that HAM is as fake as MAC, The Key, Cam Good and the miscehievous little Amanda. Of course there have been lots of high-end houses bought by people who made their money in Mainland China, and that will continue. But certainly not enough to influence the entire market, or to justify the widely-held view that poor natives are being displaced by foreign hordes.

So ingrained is that notion now that people born in Canada, of Asian heritage, are routinely labeled HAM and lumped in with offshore investors. It’s exactly what the marketers were dreaming of – anxiety and competition welling up in the breast of houseless anglos every time they’re passed by a BMW with an Asian kid at the wheel.

 

http://www.greaterfool.ca/2013/02/14/the-myth-of-ham/

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I have been to a number of auctions over the past year and see with my own eyes who is bidding and buying, yet the papers scream Attack of the HAM.

What's 'Attack of the HAM'? I'm not familiar with the term. What city are you in?

 

I presume you are saying there is a lot of Chinese buying. How do you know they aren't residents/citizens? If you attended an auction/ofi in my suburb you could assume that roughly half of the buyers are Chinese. But from what I see you would be wrong - they are Australians that look Chinese - and it's been that way for at least a decade. 

Edited by zaph

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Hi zaph,

From my preliminary read of the article it suggests HAM = "Hot Asian Money".

I think the article is talking about the Canadian market, in particular Vancouver.

 

In our own situation, if it is local Australian residents purchasing all the property at these exaggerated prices, then I would assume that many, if not most; must have large exorbitant mortgages. Either that, or people just simply earn far more money than I and my wife combined.

Even with our combined incomes, the cost of living has risen exponentially in the past 10 - 20 years.

I think all on the foundation of home equity vaues.

We have this much money because we own this half a million, to a million $ + home!!

If ever this dramatically reversed it would sink Australia.

But having now subscribed to this forum (and GHPC) for close to a decade; I'm not convinced its ever going to happen.

I though 2007-2008 might have been the correction, and many of the optimists say it was, but it didn't seem to change anything except the decline of the mining industry.

We would have to have a world-wide depression, extending into a decade, for us to see any reversal in Australia.

 

This is now getting personal for me, because I am at a stage in my life, where I might need to enter back into the home ownership market.

Investment income has just not kept pace with the rise in home prices, since I bailed out of my home in 1998.

Its like someone dramatically moved the goal posts, and changed the game somehow.

I can't believe home prices have risen on the back of wage growth, (at one point it was all blamed on the miners), so it has to be increased debt and loan levels from the banks. Or, it is indeed rich foreigners seeking a safe haven, from their own country's woes.

Oh happy days!!

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Hi zaph,

From my preliminary read of the article it suggests HAM = "Hot Asian Money".

I think the article is talking about the Canadian market, in particular Vancouver.

 

In our own situation, if it is local Australian residents purchasing all the property at these exaggerated prices, then I would assume that many, if not most; must have large exorbitant mortgages. Either that, or people just simply earn far more money than I and my wife combined.

Even with our combined incomes, the cost of living has risen exponentially in the past 10 - 20 years.

 

 

It would be interesting to get the stats on business migration. I expect that it accounts for a lot of the HAM for 'locals' buying. I also would expect for the young chinese buyers to be funded by their rich parents who are trying to get money out of their home country.

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From my preliminary read of the article it suggests HAM = "Hot Asian Money".

I think the article is talking about the Canadian market, in particular Vancouver.

Thanks for that. I didn't read the article as it was about Canada. But I might because Dose seems to be pointing out likenesses between Canada and Oz. From what I understand Chinese Canadians and plain Chinese have been buying up Vancouver for a long long time.

 

I was more interested in Doses views of his local market and how he knew/assumed the buyers were non-resident Chinese. I live in the Sunnybank area of Brisbane, probably 30% of houses are occupied by Asian looking people and a bit more, maybe 40% of buyers look Asian. I know/deduce that the majority of Asian looking buyers are oz residents. I know/deduce that by a variety of methods. 1. A couple of months after an auction I see the buyer putting their bins out etc. 2. I talk to the Chinese agents and they love to brag about buyers - eg they tell me Mr Wong bought that house you looked at last week as an investment and then outline Mr wongs oz businesses and their trophy house in the more up market area of the burb. There are certainly non-residents buying IPs, sometimes buying through oz resident relatives and sometimes just blatantly ignoring the FIRB rules, but they might be 5-10% of sales. The agents tell me they love non-resident Chinese buyers as they are suckers and don't care what they pay for a place.

 

In our own situation, if it is local Australian residents purchasing all the property at these exaggerated prices, then I would assume that many, if not most; must have large exorbitant mortgages. Either that, or people just simply earn far more money than I and my wife combined.

 

Unless you're talking about entry level housing then many would have cash from the sale of their last place. I have, what I consider an exorbitant mortgage, but it's really quite low in comparison to others. Perhaps you have rose coloured glasses? Talking to my parents and others their age (border line boomers and whatever came before that) houses have always been expensive and the first one is the hardest to buy/service. I certainly have far more left over after paying the mortgage than my parents did on their first house. But I do live/own in Brisbane where houses are cheap compared to Sydney or Melbourne. You would have a fair idea whether your household income is below, at or above average. 

 

Even with our combined incomes, the cost of living has risen exponentially in the past 10 - 20 years.

I don't agree that the cost of living has risen in real terms, and certainly not exponentially. The only thing I can think of that has risen in real terms is power and that's a relative new rise. Most things have fallen dramatically. Travel, cars, electronics have fallen in real terms and often in nominal terms. Perhaps as you age you expect more (which is perfectly normal) and it clouds your view of things?

 

But having now subscribed to this forum (and GHPC) for close to a decade; I'm not convinced its ever going to happen.

 

If by going to happen you mean a dramatic fall in house prices, then no it's not going to happen anytime soon. It would take an extraordinary amount of events all happening around the same time for house prices to plummet. 

 

I though 2007-2008 might have been the correction, and many of the optimists say it was, but it didn't seem to change anything except the decline of the mining industry.We would have to have a world-wide depression, extending into a decade, for us to see any reversal in Australia.

If Keen had kept his mouth shut Rudd might not have supercharged FHOGs and there might have been a chance of a correction.

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I was more interested in Doses views of his local market and how he knew/assumed the buyers were non-resident Chinese. 

Of the local auctions I attended in Nov 2015 all the winning bidders were almost certainly not Chinese.   

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Hoping the chinese will pay monies nobody else is willing to

 

 

 

....Delivering interim results in Johannesburg last week, Woolworths Holdings chief executive Ian Moir said the sales campaign for Market Street would begin after the lunar new year.

"We expect we will get a lot of excitement and a lot of engagement, particularly from the Chinese market," Mr Moir said....

 

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Years ago I watched a documentary on Pablo Escobar. Everybody knew the business he was in but nobody complained while he was investing some of his profits in activities that communities in Colombia benefited from. He was even seen as a popular public figure in some parts.

 

Many of these Chinese businessmen (and women) are cut from similar cloth, and any outrage at corruption or impropriety will be in retrospect and after the $$$ have flowed through to beneficiaries in Oz.

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ANZ has closed the door on some overseas' buyers wanting to invest in Australian real estate.

 
The bank, which announced its last review for overseas' buyers only four months ago, also announced tougher rules for other borrowers to prevent fraud and money laundering.
 
They include insisting on original copies of untranslated supporting documents required for a loan application and tightened passport scrutiny, such as foreign applicants having to provide all stamped pages. 
 
It comes amid concerns by developers that a decline in bank lending to investors, capital controls imposed in China and confusion about state planning policies, particularly in Melbourne, might slow investments.
 
Mortgage brokers claim the moves are targeting the Chinese market, which has spent billions of dollars on Australian residential property, particularly in Melbourne and Sydney.
 
From today, the bank will not accept loan applications based solely on foreign income.
 
"Applications based on 100 per cent foreign income will not be accepted," the bank is telling mortgage brokers.
 
For borrowers seeking loans with a loan-to-value ratio (LVR) – which is a ratio of the loan to the value of the asset purchased – of more than 50 per cent there are measures about the size and source of funding.
 
For example, there is a maximum LVR of 70 per cent, no loans in a company name, no guarantor arrangements and restricted construction lending.
 
There are tough controls on refinancing of existing loans, which involves borrowers attempting to get better terms and conditions for their loans.
 
During the past 12 months there has been a more than three-fold increase in the number of borrowers considering refinancing, according to recent analysis by JP Morgan.
 
In addition, foreign salary earner applicants must pass six stringent documentation tests that include providing comprehensive employment contracts, tax returns, current visa documentation and original, untranslated supporting documents.
 
Self-employed applicants will need to provide confirmation the business has been running longer than two years and details of ownership structure.
 
Those borrowing less than 50 per cent of the property value will also have to provide additional documentation.
 
Expatriate Australians working overseas will not be impacted by the lending restrictions but will be required to provide the extra documentation.
 
The bank recently increased the range of products for which temporary, or provisional visa holders, will not be eligible.
 
Products still available include the fixed and standard variable home and residential investment loans.
 
The bank has told brokers that discretionary pricing might be available if there is "competitive justification for the request".
 

 

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Might explain all those empty dwellings

 

Chinese investment in Australia jumps 60% to $15bn

Thanks for this Cobran.

There were several other very interesting articles on that page that were worth a read.Affordability issues, Mortgage stress, Asset rich - Cash poor Baby Boomers, etc.

What was that old adage which was bandied about back in 2007 - 2008?

"When all this information becomes mainstream, only then can you believe that a crash is close."

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Thanks for this Cobran.

There were several other very interesting articles on that page that were worth a read.Affordability issues, Mortgage stress, Asset rich - Cash poor Baby Boomers, etc.

What was that old adage which was bandied about back in 2007 - 2008?

"When all this information becomes mainstream, only then can you believe that a crash is close."

 

The budget is doing nothing about negative gearing, yet restricting how much super you can accumulate and get generous tax deductions.

IMO, there is a good chance that more monies are going to diverted towards IPs to reduce taxes. Every single spare cent will be sunk in IPs before prices drop.

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Surprise!

 

 

 

...ANZ and Westpac discovered they had each approved hundreds of home loans backed by fraudulent Chinese income documents, allegedly manufactured with the help of mortgage brokers, The Australian Financial Review reported.

The banks did not say whether the suspected fraud was linked to Chinese clients, some of the biggest buyers of Australian property. China has become the largest source of foreign investment in Australia, overtaking the United States, according to official figures...

 

 
 

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The Chinese seem dodgy. I'm talking Australian Chinese. I live in the true China town of Brisbane - Sunnybank. Lots of small retail businesses only accept cash. 

 

There's a small shopping strip near me. There's an Asian 'supermarket' that is the size of a small IGA and does the trade of a lemonade stand. The owners drive a new 7 series BMW and a flash merc. I've tried to score drugs off them - how do you say crack in Chineses?

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The Chinese seem dodgy. I'm talking Australian Chinese. I live in the true China town of Brisbane - Sunnybank. Lots of small retail businesses only accept cash. 

 

 

Hello ATO! When central banks introduce digital currency, gold coins are going to thrive in these communities.

 

 

 

There's a small shopping strip near me. There's an Asian 'supermarket' that is the size of a small IGA and does the trade of a lemonade stand. The owners drive a new 7 series BMW and a flash merc. I've tried to score drugs off them - how do you say crack in Chineses?

 

http://dictionary.cambridge.org/dictionary/english-chinese-simplified/crack_10   ^_^

Edited by cobran20

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Hello ATO! When central banks introduce digital currency, gold coins are going to thrive in these communities.

 

 

http://dictionary.cambridge.org/dictionary/english-chinese-simplified/crack_10   ^_^

I'm guessing the 'supermarkets' gross takings for a month wouldn't pay the rent for a week. They've been there for the five years I've lived here. They must be laundering money, or they're just plain stupid. Much easier to launder money and mix the white money with the black money if you only accept cash. No scanner payment system either - everything rung up on a cash register from the Jurassic period. No receipts. 

 

They must be pretty good at their illicit activities to be able to run this laundry for at least five years without being busted for drugs or whatever. You'd hope they respect the first rule of laundering money - pay tax and leave a tip!

 

Having said that, there's a very busy Asian grocer in the area (If you're ever in Brisbane let me know and I'll tell you where - mud crabs for $20!) that must turnover millions a year and has done for years. They only accept cash, but everything is scanned and you get an itemised receipt. If they're laundering money they're not very smart. In general I think Chinese just like cash.

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I'm guessing the 'supermarkets' gross takings for a month wouldn't pay the rent for a week. They've been there for the five years I've lived here. They must be laundering money, or they're just plain stupid. Much easier to launder money and mix the white money with the black money if you only accept cash. No scanner payment system either - everything rung up on a cash register from the Jurassic period. No receipts. 

 

They must be pretty good at their illicit activities to be able to run this laundry for at least five years without being busted for drugs or whatever. You'd hope they respect the first rule of laundering money - pay tax and leave a tip!

 

Having said that, there's a very busy Asian grocer in the area (If you're ever in Brisbane let me know and I'll tell you where - mud crabs for $20!) that must turnover millions a year and has done for years. They only accept cash, but everything is scanned and you get an itemised receipt. If they're laundering money they're not very smart. In general I think Chinese just like cash.

 

I often go to the Flemington fruit&vegetables markets on Saturday mornings. All transactions by all stallholders are 100% cash. I wonder how much gets declared. Fresh seafood is the cheapest in the city that I have seen.

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