Dose

Fairfax: The Yellow Peril is upon us

501 posts in this topic

I would be keen to know as well. Onthehouse seem to list 'Government Notified Sale' prices but not sure how and where it obtains that information and also very slow to update.

Whereas this site - house.ksou.cn seem to be updated more quickly and probably the data is entered by the REA's, so maybe not true?

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I would be keen to know as well. Onthehouse seem to list 'Government Notified Sale' prices but not sure how and where it obtains that information and also very slow to update.

Whereas this site - house.ksou.cn seem to be updated more quickly and probably the data is entered by the REA's, so maybe not true?

onthehouse get's it's government notified sales data from, well, the government. The titles office only find out a sale has occurred on settlement day - that's typically 1-3 months after the sales date. Govts being govts then take a while to update and sell that data to onthehouse, rpdata, ABS etc. 

 

I've found the site you provide is unreliable and sometimes inaccurate. 

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Is there any source of reliable or verifiable information/data about any housing or property transactions in Australia?  Could this have been the best the Fed President could find?

 

IIRC the state government land authorities provide annual reports (i.e., Land Victoria). It's not that timely but as accurate as you'll get. Not sure that they do any analysis on overseas buyers though.

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May not be urban legend after all.

 

http://www.zerohedge.com/news/2013-11-25/chart-day-how-chinas-stunning-15-trillion-new-liquidity-blew-bernankes-qe-out-water

 

Chart Of The Day: How China's Stunning $15 Trillion In New Liquidity Blew Bernanke's QE Out Of The Water

 

Much has been said about the Fed's attempt to stimulate inflation (instead of just the stock market) by injecting a record $2.5 trillion in reserves into the US banking system since the collapse of Lehman (the same goes for the ECB, BOE, BOJ, etc). Even more has been said about why this money has not been able to make its way into the broader economy, and instead of forcing inflation - at least as calculated by the BLS' CPI calculation - to rise above 2% has, by monetizing a record amount of US debt issuance, merely succeeded in pushing capital markets to unseen risk levels as every single dollar of reserves has instead ended up as assets (and excess deposits as a matched liability) on bank balance sheets.

 

Much less has been said that of the roughly $2 trillion increase in US bank assets, $2.5 trillion of this has come from the Fed's reserve injections as absent the Fed, US banks have delevered by just under half a trillion dollars in the past 5 years. Because after all, all QE really is, is an attempt to inject money into a deleveraging system and to offset the resulting deflationary effects. Naturally, the Fed would be delighted if instead of banks being addicted to its zero-cost liquidity, they would instead obtain the capital in the old-fashioned way: through private loans. However, since there is essentially no risk when chasing yield and return and allocating reserves to various markets (see JPM CIO and our prior explanation on this topic), whereas there is substantial risk of loss in issuing loans to consumers in an economy that is in a depressionary state when one peels away the propaganda and the curtain of the stock market, banks will always pick the former option when deciding how to allocated the Fed's reserves, even if merely as initial margin on marginable securities.

 

However, what virtually nothing has been said about, is how China stacks up to the US banking system when one looks at the growth of total Chinese bank assets (on Bloomberg: CNAABTV Index) since the collapse of Lehman.

The answer, shown on the chart below, is nothing short of stunning.

 

China%20vs%20US%20Bank%20Assets%20-%20To

 

Here is just the change in the past five years:

 

China%20vs%20US%20Bank%20Assets_1_0.jpg

 

You read that right: in the past five years the total assets on US bank books have risen by a paltry $2.1 trillion while over the same period, Chinese bank assets have exploded by an unprecedented $15.4 trillion hitting a gargantuan CNY147 trillion or an epic $24 trillion - some two and a half times the GDP of China!

 Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!

 

Here is how Diapason's Sean Corrigan observed this epic imbalance in liquidity creation:

 

 
 

Total Chinese banking assets currently stand at some CNY147 trillion, around 2 ½ times GDP. As such, they have doubled in the past four years of increasingly misplaced investment and frantic real estate speculation, adding the equivalent of 140% of average GDP – or, in dollars, $12.5 trillion - to the books. For comparison, over the same period, US banks have added just less than $700 billion, 4.4% of average GDP, 18 times less than their Chinese counterparts – and this in a period when the predominant trend has been for the latter to do whatever it takes to keep commitments off their balance sheets and lurking in the ‘shadows’!

 

Indeed, the increase in Chinese bank assets during that breakneck quadrennium is equal to no less than seven-eighths of the total outstanding assets of all FDIC-insured institutions!
It also compares to 30% of Eurozone bank assets.

Truly epic flow numbers, and just as unsustainable in the longer-run.

But what does this mean for the bigger picture? Well, a few things.

 

For a start, prepare for many more headlines like these: "Chinese buying up California housing", "Hot Money’s Hurried Exit from China", "Following the herd of foreign money into US real estate markets" and many more like these. Because while the world focuses and frets about the Fed's great reflation experiment (which is only set to become bigger not smaller, now that the Fed has thrown all caution about collateral shortage to the wind and will openly pursue NGDP targeting next), China has been quietly injecting nearly three times in liquidity into its own economy (and markets, and foreign economies and markets) as the Fed and the Bank of Japan combined!

 

To be sure, due to China's still firm control over the exchange of renminbi into USD, the capital flight out of China has not been as dramatic as it would be in a freely CNY-convertible world, although in recent months many stories have emerged showing that enterprising locals from the mainland have found effective ways to circumvent the PBOC's capital controls. And all it would take is for less than 10% of China's new credit creation to "escape" aboard from the Chinese banking system, the bulk of which is quasi nationalized and thus any distinction between prive and public loan creation is immaterial, for the liquidity effect to be as large as one entire year of QE. Needless to say, the more effectively China becomes at depositing all this newly created liquidity, the faster prices of US real estate, the US stock market, and US goods and services in general will rise (something the Fed would be delighted with).

 

However, while the Fed certainly welcomes this breakneck credit creation in China, the reality is that the bulk of these "assets" are of increasingly lower quality and generate ever lass cash flows, something we covered recently in "Big Trouble In Massive China: "The Nation Might Face Credit Losses Of As Much As $3 Trillion." It is also the reason why China attempted one, promptly aborted, tapering in the summer of 2013, and why the entire third plenum was geared toward economic reform particularly focusing on the country's unsustainable credit (and liquidity) creation machine.

The implications of the above are staggering. If the US stock, and especially bond, market nearly blew a gasket in the summer over tapering fears when just a $10-20 billion reduction in the amount of flow was being thrown about, and the Chinese interbank system almost froze when overnight repo rates exploded to 25% on even more vague speculation of a CNY1 trillion in PBOC tightening, then the world is now fully addicted to about $5 trillion in annual liquidity creation between just the US, Japan and China alone!

 

Throw in the ECB and BOE as many speculate will happen eventually, and it gets downright surreal.

But more importantly, as with all communicating vessels, global liquidity is now in a constant state of laminar flow - out of central banks: either unadulterated as in the US, Japan, Europe and the UK, or implicit, when Chinese government-backstopped banks create nearly $4 trillion in loans every year. If one issuer of liquidity "tapers", others have to step in. Indeed, as we suggested a few weeks ago, any possibility of a Fed taper would likely involve incremental QE by the Bank of Japan, and vice versa.

 

However, the biggest workhorse behind the scenes, is neither: it is China. And if something happens to the great Chinese credit-creation dynamo, then we see no way that the rest of the world's central banks will be able to step in with low-powered money creation, to offset the loss of China's liquidity momentum.

 

Finally, when you lose out on that purchase of a home to a Chinese buyer who bid 50% over asking sight unseen, with no intentions to ever move in, you will finally know why this is happening.

 

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May not be urban legend after all....

 

 

 

Unfortunately not around the area where I live. Properties don't last long on the market.

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Reality suggests The Gold Coast Housing Plan is a major plank in both parties platforms.  That's why I scrawled HOUSING on my latest spoiled ballot.

 

I remain somewhat…  suspicious as if this were true we would e hearing about it in the more affordable and desired locations first i.e. California, Vancouver etc.   Those folks would be well and truly overwhelmed.  

 

But, I've been wrong many times before.

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Greenland fetches A$275m from flats sales in Sydney

 

 

Bloomberg in Sydney

Mainland developer Greenland Holding has sold about A$275 million (HK$1.9 billion) of apartments at its first Australian project as buyers snapped up almost all of the units offered.

The state-owned developer sold 241 of the 250 apartments released in the first stage of Greenland Centre, the 66-floor central Sydney tower expected to be the tallest in the city, said David Milton, managing director for residential projects at selling agent CBRE. The most expensive was a three-bedroom unit on the 55th floor, which went for A$3.7 million to a Chinese buyer living in Australia, he said.

"We had enormous interest, about 4,000 in the four to five weeks leading up to it," Milton said. "This has been one of the most highly anticipated projects, with one of the highest levels of inquiries that we've had."

Greenland has invested more than A$1 billion on sites in Sydney and Melbourne. The company has joined other mainland developers in moving overseas as the central government maintains curbs to cool the housing market at home.

The expansion of mainland companies abroad follows an "explosion" in Chinese individual purchases of luxury Western products, overseas holidays and homes, according to an August report by broker Savills.

"This, combined with increasing competition in the domestic property market and the weakness of overseas markets, has presented good opportunities for China to acquire land, resources, companies, brands and real estate," James MacDonald, associate director for China research, wrote in the report. The mainland and Hong Kong together were the second-largest source of investment in overseas markets between 2008 and 2011, accounting for US$146 billion, second only to the United States, he said.

Greenland is emerging as one of the largest mainland investors in the US. In October it signed a memorandum of understanding to buy a 70 per cent share of Brooklyn's US$5 billion Atlantic Yards project.

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and I thought that foreigners were not allowed to buy existing properties?

 

SMH: Mainland Chinese buyer swoops in Mosman

 

 

China’s love affair with Mosman continued this week with a waterfront trophy home selling for more than $10 million.

 
The five-bedroom house at 35 Carrington Avenue, with it’s own private jetty and expansive views across Quakers Hat Bay and Middle Harbour, sold to a mainland Chinese buyer on Wednesday night for an undisclosed price .
 
Selling agent Tim Foote of Belle Property Mosman said the property had been marketed both locally and abroad with a price guide of $10-$12 million.
 
The sale price was “well within that range”, said Mr Foote.
 
An expressions of interest campaign had ended on Tuesday night and the deal was finalised on Wednesday night - exactly a week before Christmas.
 
‘‘We had three offers – the other two were from another Chinese buyer and a local family.”
 
As revealed by Fairfax Media, this year buyers from mainland China have accounted for well over $50 million worth of high end property transactions in Mosman alone.
 
Mosman’s top sale this year was set by Chinese buyer who spent almost $14 million for a waterfront property on Julian Street.
 
The four-bedroom home also had views over Middle Harbour and last traded for $12.3 million in 2007.
 
Mr Foote said that 30-40 per cent of Mosman sales above $3 million this year have been to Chinese buyers.  ‘‘With the dollar now on its way down, local real estate is also becoming cheaper – by about 15 per cent over the past few months alone,” he said.
 
Mosman’s all-time top sale to a Chinese buyer went ahead in 2012 when a mystery mainland buyer paid $20 million for a waterfront mansion on 5363 square metres on Bay Street.

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There was a good article at Macrobusiness today around "Chinese Buyers" and Australian real estate.

 

http://www.macrobusiness.com.au/2013/12/who-is-propertys-chinese-buyer/

 

Comments were particularly good with a few connecting the dots between greed, poor policy / absent government, vested interests, sloppy news media and xenophobic fear and rumour filling that vacuum.  Will be interesting to observe the direction of those comments over time…

 

With the FIRB approving Wontoks, government preferring the money over policy, the first priced-out generation in history and media spruiking for both advertising dollars and page views it is a heady mix.

 

It could well be that Chinese hot and/or dirty money is at the heart of the Sydney Boom but nobody knows, because those who are paid to know refuse to investigate.

 

What could possibly go wrong in this situation?

Edited by Dose

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and I thought that foreigners were not allowed to buy existing properties?

 

SMH: Mainland Chinese buyer swoops in Mosman

I wouldn't trust the SMH (or some dumb arse REA) to actually know whether the buyers were foreigners, or just had yellow skin and black hair. It makes a great yellow peril invasion and oz RE is such a good investment story.

 

But I'm sure there are a million ways around it. eg - Can foreigners on a significant investor Visa buy resi property?

 

Edit - I also would not put it past people to just ignore the rules. They don't seem to enforce them. 

Edited by zaph

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SMH: Chinese buyers fuelling Sydney property demand

 

 

Public servant Tina Ford said she could hardly believe it when her three-bedroom Chatswood apartment sold this month for $1 million at an auction in which all 16 registered bidders were ethnic Chinese.

“I’m over the moon, I’m gobsmacked,” said Ford, 53, adding that she “would have been ecstatic with $940,000” and didn’t expect to double what she had paid 14 years ago for her third-floor unit with a balcony 11km from Sydney’s CBD. “I suspect that overseas investment, Chinese or otherwise, is certainly pushing prices up, but from a vendor’s perspective, I’m ecstatic.”

Such buying by locally resident Chinese and those from mainland China is inflating housing bubbles in and around Sydney, where prices in some suburbs have surged as much as 27 per cent in the past year. That’s almost three times faster than the overall market.

Many of the neighbourhoods with the biggest price gains “are areas that are popular with Chinese buyers,” said Andrew Wilson, senior economist at real estate data firm Australian Property Monitors. “Some of these suburbs are seeing price growth that we haven’t seen in Sydney since the early 2000s.”

The proportion of foreigners purchasing new homes in Australia more than doubled to 12.5 per cent in the three months to September, from 5 per cent throughout most of 2011, according to a survey of more than 300 property professionals by National Australia Bank.

Auction bidding

A second-hand house in suburban Eastwood sold for as much as $1 million more than the expected price, according to John McGrath, chief executive of McGrath Estate Agents in Sydney, which set up a Chinese sales desk in September.

McGrath agent Adam Wong, who brokered Ford’s apartment, said 95 per cent of the more than 100 people at the auction were locally resident Chinese.

Elsewhere in Chatswood, 90 per cent of developer Mirvac Group’s ERA high-rise apartment building sold to ethnic Asian buyers, most of them Chinese, according to John Carfi, head of the residential division.

SQM Research, a Sydney-based data company, forecasts home price gains of as much as 11 per cent this year in Australia’s biggest cities.

Overvalued market

Home prices in major Australian cities rose 9.8 per cent in 2013, the fastest calendar-year growth since 2009, according to the RP Data-Rismark Home Value index. The average weekly wage grew at about half that rate, to $1,105 before taxes as of May 31 from a year earlier, the latest statistics bureau data show.

Australia’s housing market was the fifth-most overvalued among countries in the Organisation for Economic Cooperation and Development relative to rents, the International Monetary Fund said in a December report. Canada was first, followed by New Zealand, Norway and Belgium.

Billbergia, a closely held developer in Sydney, reported selling as much as 85 per cent of its apartment project in the western suburb of Rhodes last year to Chinese buyers, even before beginning construction. Home prices in Rhodes jumped 27 per cent to a median $1.03 million in 2013, according to Australian Property Monitors.

‘Material driver’

“Anecdotally, Chinese buying has been a material driver of new-apartment purchasing activity in the last 12 to 18 months,” Scott Ryall, head of Australia research at CLSA Asia-Pacific Markets in Sydney, wrote in a report in September. “This is a significant potential tailwind for Australian property prices.”

By law, non-resident foreigners can only buy new homes, with exceptions to buy existing properties granted on a case-by-case basis.

While many Chinese immigrants buying in Australia pay cash, they take out mortgages for second or third properties to take advantage of tax rules, said Ray Chan, managing director of Sydney-based real estate broker Henson Properties, 95 per cent of whose clients are from China. Owners can claim tax deductions if expenses, including mortgage payments, are greater than their investments’ rental income.

Housing dream

The distinction between purchases by mainland Chinese and by Chinese who have already immigrated to Australia is blurry. Chen Youmea, 42, bought a two-bedroom unit under construction in Sydney in 2011 while she and her family were still living in China’s eastern Zhejiang province, near Shanghai. They moved to Australia in 2012, and within six months bought another three-bedroom apartment in the inner-city suburb of Pyrmont.

“Chinese people, we don’t want to rent,” she said. “We want to fulfill the dream of our own home.”

Chen planned to spend about $700,000 on a third property, she said while browsing at a November Chinese property expo in Chatswood, where 13.7 per cent of residents were China-born as of the 2011 census, up from 9.6 per cent five years earlier. Home prices in the suburb increased 12 per cent last year, Australian Property Monitors figures show.

“I agree to some extent that Chinese buyers are pushing up prices, but it’s good to have a bit of Asian investment to stimulate the market,” Chen said.

Squeezed out

Some buyers are finding themselves squeezed out. In a showroom in Macquarie Park in October, architect Warwick Mann and his father didn’t register for the sale of one- and two-bedroom apartments listed for almost $1 million and found themselves trying to get attention from agents busily catering to scores of Asian buyers.

“They’re not interested in selling to us,” said the younger Mann, 51, who said his retiree father, looking for a new home, lost his temper and left.

The 378 units all sold in four hours, three-quarters of them to Chinese buyers, according to marketer CBRE Group.

“It was an unprecedented level of interest in the development,” with about 870 people paying a $5,000 refundable deposit to register possible intention to purchase and receive priority, said Ben Stewart, a director at CBRE’s residential projects division, adding that agents do their best to also cater to walk-ins. “It was hard to keep everyone satisfied because we just didn’t have enough stock.”

Most unaffordable

Demand from China has also driven prices higher in other parts of the world. In Hong Kong, the most unaffordable housing market among 360 cities in a survey released this month by US-based urban development consultancy Demographia, home prices have doubled since 2009, driven in part by an influx of wealthy buyers from the mainland.

In Vancouver, where 15 per cent of the population speaks a Chinese dialect as a first language and which is the second-most unaffordable housing market in the survey, ethnic Chinese are the largest group of foreign buyers, according to auction house Sotheby’s. Mainland property hunters were the top overseas buyers of residential property in Singapore as of August, government data showed.

Sydney and Melbourne were also among the 10 most unaffordable cities for housing in the Demographia survey.

More than 20,500 people from China, Hong Kong and Taiwan settled in Australia in the year to June 30, according to immigration department figures. Another 219,000 came to Australia as temporary immigrants and students, the data show.

Online interest

Juwai.com, a website that lists homes around the world in Chinese, saw a 266 per cent increase in page views from China of Australian homes between January and August of 2013, according to the latest figures from the company. Australia is the second-most-popular destination for buyers from the mainland after the US, according to Juwai.

“There is strong interest in Australian property because of its stable housing market, regulatory protection and the all-important time zone,” which is two or three hours ahead of Shanghai depending on the time of year, Andrew Taylor, co-CEO of Hong Kong-based Juwai, said in emailed comments.

For Mann, who gave up helping his father search for a house and now plans to accommodate his extended family in a single residence, his current suburb of Epping and neighboring Eastwood no longer offer value for money, he said.

A three-bedroom brick home in these suburbs now sells for more than $1 million.

Home prices climbed 17 per cent last year in Eastwood, some 18km northwest of Sydney’s centre, to a median $1.1 million, and in neighbouring Epping, they rose 15 per cent, according to Australian Property Monitors.

Leaving China

About a third of residents in these suburbs claim Chinese ancestry and almost a fifth were born in China or Hong Kong, according to 2011 census data.

Instead, Mann chose to look in nearby Beecroft, a leafier suburb where median household incomes are 50 per cent higher than in Epping. Prices there are up a comparative 16 per cent, with a median price of $1.08 million.

“I’d much rather spend that sort of money here,” he said.

Behind the growing demand for homes in Australia is a push by Chinese to leave the mainland in search of better education for their children, a clean environment and higher income, CLSA’s Ryall wrote in the September report.

About 60 per cent of high-net-worth Chinese those with at least 10 million yuan ($1.8 million) - have left China or are considering it, according to Bain & Co.’s China Private Wealth report, released in May.

The number of people in this category with investments outside China almost doubled from two years earlier, the report said. More than half of high-net-worth individuals without overseas investments planned to make them, while 60 per cent of those who have them planned to increase them, it said.

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The Chinese want your land, not the house

 

 

...The article provides a bunch of anecdotal claims of Chinese real estate purchases, and how they are pushing-up prices around Australia.

The claim that Chinese nationals are buying Australian pre-existing homes flies in the face of the Foreign Investment Review Board (FIRB) rules,....

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Demand from Chinese speaking investors is up - but that's not the whole story

 

 

...Temporary residents are able to purchase established residences, so long as they live in the property for the duration of their ownership and don’t rent any part of it out.

Of course, there are ways around this. It’s unclear who exactly is responsible for checking a buyer’s citizenship status when a property is purchased. And with many foreign investors with family members living in Australia it isn’t difficult to park a property under a relative’s name. ....

Edited by cobran20

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Mr MacLennan sold a three-bedroom house on 843 square metres at 3 Yarrara Road, Pymble for $1,285,000 by private treaty last week.

''Three years ago, it sold for $905,000; it had a lick of paint and was immediately let,'' he said.

''Most people said the house was too small but the buyer is living in a 100-square-metre flat in Hong Kong.''

 

http://www.smh.com.au/business/market-heads-up-as-chosen-areas-blast-off-20131027-2w9s2.html

 

Now renting for $790pw or thereabouts.

 

http://www.domain.com.au/property/for-rent/house/nsw/pymble/?adid=8795781

 

3.2% gross yield.   You Beautay

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Heard on the news on the radio this morning that current laws (can't recall if it was NSW only) allow foreign buyers to get the $5K FHOG and many have used it. I can't find reference to it on the papers this morning.  :furious:

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Heard on the news on the radio this morning that current laws (can't recall if it was NSW only) allow foreign buyers to get the $5K FHOG and many have used it. I can't find reference to it on the papers this morning.  :furious:

 

I heard the same on radio national this morning.  Just looked for a transcript but couldn't find one.  I thought they said NSW but not 100% sure.

 

I didn't see any mention in the age, news.com or theguardian.

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From the Oz... Foreign buyers are cashing in on NSW's New Home Grant Scheme

 

 

OVERSEAS buyers of newly built homes in NSW are receiving $5000 grants with the state government's decision to allow non-citizens to take part in its New Home Grant Scheme.

As Chinese investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.

Under the first homeowner scheme, a buyer - and in the case of a couple, at least one of the two - had to be an Australian citizen and they had to live in the home for at least six months to qualify.

But, under the New Home Owner Scheme introduced in the 2012 state budget, buyers can own multiple homes in their country of origin and still apply for the grant for the purchase of Australian properties.

They don't have to live in it. All they have to do is apply through the foreign investment review board to buy.

In fact, if an overseas buyer were to buy 20 off-the-plan apartments, they could apply for 20 $5000 grants, Treasurer Mike Baird's office confirmed yesterday. The grant is paid as a discount on stamp duty for properties worth up to $650,000 and vacant land worth up to $450,000.

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What a fine example of the NSW taxpayers' money will spent!  :furious:

 

Step 1: Tax the local population.

Step 2: Give cash to foreigners for building sh*tty apartments.

Step 3: ?

Step 4: Profit!

 

I think there is a pretty good basis for forming a One Nation-type political party going into the next election cycle. I'm just wondering when people are going to wake up and realise that "mainstream" political parties are all corrupted and only serving vested interests.

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Step 1: Tax the local population.

Step 2: Give cash to foreigners for building sh*tty apartments.

Step 3: ?

Step 4: Profit!

 

I think there is a pretty good basis for forming a One Nation-type political party going into the next election cycle. I'm just wondering when people are going to wake up and realise that "mainstream" political parties are all corrupted and only serving vested interests.

 

I can only assume that the NSW Govt. is using the $5K as an investment in order to get multiples back in revenue via the stamp duty applicable on the sale of the property. The 'collatera' damage' of such decision is naturally inconsequential!

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So how much of that investment money was in the form of residential property purchases?

 

China's Great Wall of visa money

 

 

New analysis from the real estate advisory arm of Korda Mentha has revealed that the government’s significant investment visa scheme is booming, with the number of approved visas growing exponentially in the second half of 2013.

As per the visa requirements, a “significant investor” is required to commit at least $5 million worth of investment to Australia. Off the Korda Mentha figures, this means that in just the fourth quarter of 2013, the scheme brought in at least $440 million to the Australian economy.

The data follows a report published yesterday by The South China Morning Post that revealed nine out of every ten SIV applicants are from the Chinese mainland. This suggests that 90 per cent of the estimated $440 million came from China.

 

SIV%20China.png?itok=VoKMlgON

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