Dose

Fairfax: The Yellow Peril is upon us

513 posts in this topic

QLD next? That would be a fitting finale, following the steps of the Japanese some 25-30 years earlier.

 

 

NEWS: House hunters gallop into Chinese New Year

 

 

CHINESE property investors are expected to gallop into the Year of the Horse thanks to the year's encouraging symbolism of immediate success.

In anticipation of sales growth, real estate agencies are launching websites exclusively at the Asian property market.

One of Australia's largest Chinese property portals, ACproperty.com.au, last week launched a new Queensland section to coincides with the start of the Chinese New Year.

Sales and marketing director Esther Yong said it had experienced a 180 per cent increase in search queries for Brisbane and the Gold Coast in the past three months.

She said affordable property prices, a stable political situation, education opportunities and a clean environment made Australian properties attractive to Chinese buyers.

"We have three types of people coming to us," she said.

"Some are buying for their children studying here, some are families who have plans to migrate to Australia in the future, and some are investors.

"The first group tend to buy apartments near universities while migrating families like luxury holiday homes on the coast.

"Investors usually don't mind where they buy as long as their money is safe."

She said Chinese people really believe in property investment.

"Everyone in China talks about property like Australians talk about sports and this is especially the case during Chinese New Year when families sit around planning for the new year."

Yong Real Estate Sunnybank sales agent Tom XiaoYi said Chinese buyers were a very confident group in Australia and the new year's auspicious symbolism would only increase their activity.

"Many buyers will use the year of the horse's meaning of immediate success as a turning point with better things still to come," Mr XiaoYi said.

Mr XiaoYi's colleague Sue Ye concurred Australia had a lot to offer Chinese home hunters.

"The air here is good for your health and it's a nice place to live with a good lifestyle," she said.

Melbourne's west is proving a hit with Chinese investors with Werribee and Truganina emerging as unlikely hot spots.

The suburbs were identified in the top 10 most-searched suburbs of an Australian-based Chinese language real Theestate website.

The west's new found popularity comes just months after Foreign Investment Review Board figures revealed Chinese investors had spent a hefty $4.187 billion on Australian real estate across the 2011-12 financial year.

The total amount of Chinese investment in property, including residential, increased just $93 million from the 2010-11 financial year to the $4.187 billion reported for 2011-12 by the FIRE.

ACproperty.com.au recorded between 15 and 20 per cent increases in the three months to December last year.

About 200,000 views were recorded across the site, during October and November alone.

And with a 40 per cent surge in inquiries following Chinese New Year last year, Ms Yong anticipates a similar boost in interest in the coming weeks.

Ms Yong said the Chinese city of Shanghai hosted a seminar on buying Australian property almost once a week.

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NSW Treasurer Mike Baird has defended a government scheme that gives non-Australian citizens $5000 new home grants, saying it is boosting housing construction and affordability.

But he says the government is open to making changes to the New Home Grant Scheme to help all first home buyers.

A wave of Chinese investors has been blamed for driving up Sydney house prices and keeping first home buyers out of the property market.

Mr Baird said on Tuesday the $5000 New Home Grant was introduced in 2012 when the NSW housing sector was close to an all-time low.

He said that as distinct from the government's $15,000 First Home Owner Grant, the sole purpose of the New Home Grant was to boost housing supply, putting downward pressure on prices and rents.

"We are conscious of the pressure on first home buyers that foreign investors could be applying," he said in a statement.

"Accordingly we are constantly looking at all options to ensure that our first home buyers are given every support to own their own home.

http://www.news.com.au/national/breaking-news/nsw-treasurer-defends-home-grant-scheme/story-e6frfku9-1226817217494

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"Accordingly we are constantly looking at all options to ensure that our first home buyers are given every support to own their own home.  :laugh:

 

 

How about starting by removing the $5K/house drain on NSW taxpayers which is not helping FHBs!

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An interesting take and a more skeptical POV:   REAs and the Institoots adore the Cashed Up Chinese story because it keeps the panic buyers buying.

 

The recent change to the Canadian rules change should reveal some actual evidence as to who's goosing Real Estate in countries that allow wealthy foreigners to buy citizenship.   My bet is it is locals who are at the heart of it.

 

http://www.greaterfool.ca/2014/02/12/r-i-p-ham/

 

 

 

Lots of people in Calgary, as in Vancouver, have been goaded into paying historic real estate prices because they fear the Chinese. As you know, there is a whole industry which has worked overtime for four years creating exactly that anxiety. In BC the fathers of Yellow Peril marketing have done everything from hire helos full of fake Chinese realtors to planting fake Chinese buyers in front of local news cameras. The message was concise and consistent: there are planeloads of filthy-rich Mainlanders who think Canada’s cheap and will gobble up all the houses, regardless of price. So, buy now or buy never.
…When it comes to flogging real estate to the masses, it’s not so important what the facts are, as it is what people believe. The myth of the voracious, teeming, unstoppable, cash-drenched Chinese horde is now firmly established. And while there’s nothing more than anecdotal evidence – offered up by realtors themselves – on the actual market impact of offshore buyers, the idiot comments on this blog are proof enough the herd’s bought it.

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An interesting take and a more skeptical POV:   REAs and the Institoots adore the Cashed Up Chinese story because it keeps the panic buyers buying.

 

The recent change to the Canadian rules change should reveal some actual evidence as to who's goosing Real Estate in countries that allow wealthy foreigners to buy citizenship.   My bet is it is locals who are at the heart of it.

 

http://www.greaterfool.ca/2014/02/12/r-i-p-ham/

 

Going by the local auction sales, I know the subject matter cannot be 100% fantasy!

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That's why I like this scenario.  As a rule I do not believe that H.A.M. has a propensity for 'Strawlia.  

 

This Canadian H.A.M. policy cut now sets the scene.  Blame your parents or kick out the Yellow Peril!

 

With Chinaman gone houses again become affordable?  Doubt it.

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That's why I like this scenario.  As a rule I do not believe that H.A.M. has a propensity for 'Strawlia.  

 

This Canadian H.A.M. policy cut now sets the scene.  Blame your parents or kick out the Yellow Peril!

 

With Chinaman gone houses again become affordable?  Doubt it.

 

It will take economic/tax policy to resolve the matter. Alternatively, a black swan event like an 'unexpected' economic downturn or sharp rises in interest rates will alleviate the matter.

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It will take economic/tax policy to resolve the matter. Alternatively, a black swan event like an 'unexpected' economic downturn or sharp rises in interest rates will alleviate the matter.

Well, something has to give;  houses cannot earn more than their owners forever.  Garth's position is pretty simple to understand:  easy money -> greater debt -> rising prices -> speculation  … H.A.M. is a convenient scapegoat and highly effective scare tactic to keep the market hot.  While there may be some offshore investing in domestic housing the majority of debt and rising prices is driven by the locals.      -I had never considered the whole Hot Asian Money meme could be or would be fed and maintained by the REAs and Institoots and that media would love running it.   Sometimes I miss the bleeding obvious.

 

The ROTW has been at crisis interest rates for a long while and we're getting there.  Most people now believe that crisis rates are normal, all that free money has to go somewhere.  Personal debt-to-income in Australia is nearly back to record highs and ticking upwards.   In my anecdotal experience it is my own older relatives buying up real estate with a side-order of coworkers talking units "…because just look at the past few years' performance!".   Now that http://www.macrobusiness.com.au/2014/02/canada-blocks-foreigners-as-house-prices-boom/  Canada has blocked wealthy foreigners from buying we will soon know if H.A.M. is the actual cause of runaway prices or simply a marketing device to get buyers over the line. 

 

Re your comment on a tax policy change that seems like a plausible near-term political step;  place a levy on foreign buyers while restricting to new builds, then add an annual non-resident tax.  Foreigners still able to park their money while increasing housing stock, government raises new revenue, locals satisfied they are not being sold out for offshore profits by government.   What are the odds of an Australian government figuring a solution out?   England and Canada are heading down that path so maybe all Joe needs to do is give them a call and ask someone to explain it slowly to him.

 

The black swan?  Perhaps the majority of Chinese nationals find out how wealthy their rulers actually are?  That could end badly.  

http://www.theaustralian.com.au/media/china-censors-block-report-on-princelings-offshore-assets/story-e6frg996-1226807637711#

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I think the "black swan" (man I hate that phrase) is going to be how pissed people get when they realise their wages haven't risen in over a decade and throw their lot in with the crazy kiddies.

 

"Oh you should stop buying iPods" to "You were right by accident because you are kids and stupid and this is a completely different thing"

 

Couple that realisation with the imminent "jobs don't exist anymore" where 40 yr olds lose their jobs and find there aren't any replacement jobs and fun times!

 

Add in the "Man Joyce totally called the unions bluff and destroyed them" shareholder sentiment and you get a pretty nice potential for crazy.

 

I think that there are a few countries which are obviously more corporate happy than others, people with companies there won't be as noticeable for the reaction (unless the person hits conspicuous consumption). However those countries will change and building a personal income which can go "I am wandering" and therefore be "I don't fall under any countries tax laws" seems a sensible fall back plan.

 

If you are not a contractor after the past 5 years I have a suspicion you are not doing the right thing for yourself. Options are zero. Trust in the status quo is required. And status quo only had one good song really.

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The comments are worth reading as well

 

Wealthy Chinese buyers are making Sydney's housing problem worse

 

 

...The impact of those buyers on Sydney property has only just begun. As the value of the dollar falls, foreign buyers will be paying less for Sydney real estate, and the Chinese government is relaxing restrictions on Chinese citizens wanting to buy overseas assets. Real estate agentsreport that Chinese buyers often buy several apartments in a new development as a family group. Joseph Ngo, an agent for LJ Hooker in Glen Waverly, said that paying $100,000 to $200,000 over the market price “is not a problem for these buyers”. The same is happening in Melbourne, if not quite at Sydney’s intensity.

Under Australia law, foreigners are not permitted to buy second-hand homes, unless an exemption is granted. They may buy new dwellings but must obtain approval from the Foreign Investment Review Board (FIRB). But the FIRB simply rubber stamps applications. In 2011-12 it refused only 13 applications (down from 43 a year earlier), less than 0.01% of the total. In 2011-2012, the FIRB approved $4.2bn of Chinese spending on Australian residential real estate, up 70% on the previous year. It has yet to publish figures for 2012-2013, but agents say inquiries from Chinese buyers have doubled over the last year.

A good deal of secrecy surrounds the trend, yet observers know something worrying is happening. The Reserve Bank of Australia (RBA) is one, quietly investigating why Sydney house prices are rising much faster than bank mortgage lending. After all, its concern is understandable. Housing bubbles keep economic managers awake at night; a bust brings everyone down.

So why is the Australian government allowing this to occur? Even the government of Hong Kong, concerned that mainland Chinese investors were pushing up housing prices, slapped a 15% tax on outside buyers. It worked, immediately causing cashed-up Chinese investors to look further afield, including Australia.

While not the only factor driving up house prices – negative gearing has a lot to answer for – the impact of Chinese investment has been substantial. Treasurer Joe Hockey could stop it tomorrow if he chose to. He could, for example, instruct the FIRB to put away the rubber stamp and apply the public interest test. In granting approvals, the FIRB is required to consider the impact of each investment on the economy and the community.

It’s one thing to allow unrestricted foreign investment in businesses, and a case can be made that selling Australia’s mineral resources to China has little downside. But housing is not just another asset. It’s where people live, put down roots, raise families and join in their communities. Some experts in China believe that the rush of Chinese investment into Sydney property over the last couple of years is “just the tip of the iceberg”. A prudent government would see where we are headed and take steps now.

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MB on Clive's effort in The Guardian.   Comments on fire at both MB and Guardian.

 

http://www.macrobusiness.com.au/2014/02/foreign-property-investors-alter-social-fabric/

 

While there are likely elements of truth in Hamilton’s claims, it is impossible to make an objective assessment as data on foreign investment is woeful. As Fairfax’s Chris Vedelago discovered first hand when trying to gain data on the extent of foreign investment, such information is next to impossible to obtain and is treated as if it was a state secret. Three Freedom of Information (FOI) requests later and the best Vedelago could come up with was a stack of blanked-out and redacted pages from FIRB.

Enforcement of the foreign ownership rules appears equally inadequate. As the mythical Chodley Wontok found out when testing the efficacy of FIRB’s approval processes using bogus visa and passport information, the purported checks and balances in the system designed to prevent foreigners from purchasing pre-existing homes failed dismally, suggesting the rules are little more than window dressing.

I was reading similar articles from London and Vancouver last night. This seems to have picked up in a few places around the world at the same time.   Interesting in it's own right.

 

First issue is regulatory / information failure.  Second issue is the majority of anecdotal evidence is provided by the real estate industry.

 

Without factual information this is a seriously dangerous topic for people to wade in on as evidenced by "The Chinese" being used instead of "Foreign and/or laundered wealth" pricing out the local children. But with anger comes page views and with page views comes MSN prioritising and then come the pitchforks and torches at the gate.  Someone at the FIRB may finally set some time aside to look into this situation.     I'm seriously keen to know, but the fact the REAs are quoted as evidence gives me reason to suspect all is not what it appears.

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MB on Clive's effort in The Guardian.   Comments on fire at both MB and Guardian.

 

http://www.macrobusiness.com.au/2014/02/foreign-property-investors-alter-social-fabric/

 

I was reading similar articles from London and Vancouver last night. This seems to have picked up in a few places around the world at the same time.   Interesting in it's own right.

 

First issue is regulatory / information failure.  Second issue is the majority of anecdotal evidence is provided by the real estate industry.

 

Without factual information this is a seriously dangerous topic for people to wade in on as evidenced by "The Chinese" being used instead of "Foreign and/or laundered wealth" pricing out the local children. But with anger comes page views and with page views comes MSN prioritising and then come the pitchforks and torches at the gate.  Someone at the FIRB may finally set some time aside to look into this situation.     I'm seriously keen to know, but the fact the REAs are quoted as evidence gives me reason to suspect all is not what it appears.

 

The fact the government is not willing to make detail info available suggests to me a cover up of rorting of the system, whereby the numbers are bigger than most expect.

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The issue of the Asian competition for our RE is even getting the attention of AK as he discussed it during the ABC News tonight ... but no graph!

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So who are those US investors?

 

ABC: China's wealthy parking profits in Australia's real estate market

 

 

Financial policies in China are driving an interest in the Australian real estate market.

Wealthy Chinese are looking for better returns than they can get at home, and the Australian housing market is now second only to the US in its attractiveness for investors.

In 2012, mainland Chinese buyers spent more than $AU4 billion in Australia, according to the Foreign Investment Review Board.

Andrew Taylor, chief executive officer of Juwai.com, a Chinese language website listing international property from offices in Hong Kong and Shanghai, says the interest is growing.

"Our user data shows that Chinese real estate buyer interest in Australia is up about 370 per cent on this time last year which is a huge increase.

"Investment, lifestyle is a major consideration. Quality education and medical and of course immigration is a strong factor. In fact the most popular bracket is $550,000 to $750,000 for houses and apartments."

Australian media headlines often trumpet the multi-million dollar sales of waterfront mansions.

In the Sydney harbour suburb of Mosman, 30 to 40 per cent of sales over $3 million have reportedly been to Chinese buyers.

John Lee, Adjunct Associate Professor at Sydney University, says this section of the market attracts the extremely rich who will pay above market rates.

"We're talking about the top one or two per cent of (China) and their relatives buying into the Australian market.

"There are capital controls in China, it's very hard to take money out of the country. Buying real estate is one scheme that quite a lot of the ultra-rich in China have come up to get money out of the country into safe assets like Australian residential property. So it's not so much that they want to own something in Australia it's more that they want to get money out of the country.

"Much of it is illegal. So for example you might want to set up a false trading company overseas, you declare the money being sent overseas is for the purpose of trade when it's actually for investment. And it's been estimated that in the last 10 years almost $US4 trillion has left China through this kind of method.

"Another way is to go through various financing companies who have come up with fairly sophisticated schemes. But once again it's really only the very rich in China who have access to these sort of schemes," he said.

There are several reasons prices are strong including low interest rates. John Lee says the Chinese trade is not large enough to be of concern or market distorting in Australia. But he adds the super rich could pose a problem for China in the longer term.

Estimates suggest that the top one per cent of urban households in China own 30 per cent or more of liquid assets like cash, savings, stocks and bonds.

"Estimates have been done that if the very rich start taking anywhere above 20 per cent of their net wealth out of the country... that will create a significant liquidity problem in China. So obviously if the credit dries up, then economic growth dries up," Mr Lee said.

The Chinese appetite for residential real estate is potentially more of a problem for China than for Australia.

Canada, Hong Kong and Singapore have reacted to rising demand and the push on prices to put in controls on international property investors.

In Australia while the spotlight tends to fall on the Chinese, Andrew Taylor says the biggest group of foreign buyers are still from the US.

"We just have different buyers from all around the world now. It's all part of being part of the global economy."

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Racism hides true culprit of housing discrimination

 

 

In 1985 investors accounted for 13 per cent of real estate transactions. In late 2013 investors accounted for about 40 per cent of real estate transactions, with domestic investors representing the bulk. Today first-home buyers have to complete with investors and home owners with significant housing wealth just to get into the property market. In a government briefing report released in January, Andrew Haylen said"there is the possibility that first-home buyers and owner-occupiers will be squeezed out of the market in coming years if trends in residential real estate investment continue."

 

Although individual US or Chinese investment can lead to increasing property prices and housing discrimination, it is not the cause of housing discrimination. US and Chinese investment are granted legitimacy by Australia's housing, taxation, visa, and immigration policies.  Combined, these policies create housing discrimination and the housing identities of renters, home owners and domestic and international investors.

Feigned housing identities that are based on "Asianness" have little explanatory power when it comes to increasing housing affordability in Australia. The rise of China means that individual Chinese investors are now joining the global rich and super rich. If this group of international real estate investors have any cultural similarities it is based around free market economics and private property ideals.

A subversive politics is at play in orientalising the inherent disparity of Australia's housing system. Saying that "Chinese investors are driving up housing prices" recasts the blame for housing discrimination away from Australia's housing system – the real culprit of Australia's housing affordability problem. A longstanding, although marginal, idea about an "Asian invasion" has been remobilised through the affordable housing debate.

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Yep - one of Australia's key export markets...

 

MB:Melbourne’s “mining boom” is false economy

MB:FIRB- Foreign property purchases jump in 2013

 

 

...With the Melbourne’s manufacturing sector facing near-extinction, it is clear that the authorities have turned to selling citizenship, population growth, and foreign investment to drive growth....

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Credit Suisse: Chinese property demand to soar

 

http://www.macrobusiness.com.au/2014/03/credit-suisse-chinese-property-demand-to-soar/

 

As quoted in the article, "Here’s a report to make you projectile vomit."

 

Well I've already learnt two new things today.

 

1:

we know that Aussie banks are happy lending to these buyers. They generally apply a loan to valuation cap of 80% to foreign residents and apply a 25% reduction to income when assessing the potential size of the loan.

 

FFS I didn't know that foreigners were buying Aussie property with loans from Aussie banks, what could ever go wrong?

 

and

 

2: Loggers are the ultimate conservationists.

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