Dose

Fairfax: The Yellow Peril is upon us

511 posts in this topic

war-is-peace-freedom-is-slavery-ignoranc

 

Interesting reference, it's on my to-do list to read 1984 again to see what has come true or even been exceeded.

 

Western governments are acting like 1984 is their bible. Erode one little freedom at a time and take control of the press while the proles are blissfully unaware.

 

We might be slightly behind schedule, but I reckon some of the NSA's shennanigans and nude airport scanners would make the Inner Party proud.

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SMH: Locals priced out by $24 billion Chinese property splurge

SMH: Foreign home buyers a vexed issue

SMH: Who wins from China's property splurge?

 

 

Close to one-fifth of new properties in Sydney are being bought by wealthy Chinese investors and the flood of money is set to continue.

Using data from the Australian Bureau of Statistics and the Foreign Investment Review Board, Credit Suisse estimates that Chinese buyers account for 18 per cent of new property purchases in Sydney, and 14 per cent of the supply in Melbourne. This does not include second-hand homes.

''A generation of Australians are being priced out of the property market. Many face a lifetime of renting,'' analysts Hasan Tevfik and Damien Boey said.

There are currently 1.1 million millionaires in China who could easily afford properties in Australia's two most expensive markets, Credit Suisse said.

Wealthy Chinese buyers have purchased $24 billion of Australian housing in the past seven years, and over the next seven years an additional $44 billion will be spent on residential property, Credit Suisse estimates.

There was $17.2 billion worth of approved residential property investment coming in from overseas in the year June 30 2013, down from $19.7 billion in the previous period, according to the FIRB. Foreigners must seek approval to buy established real estate and rural land, but can buy up to 50 per cent of a new building ''off the plan''.

Of the 2013 total, $5.6 billion was approved for residential properties in New South Wales.

That number may seem large, but across the whole property market the effect dissipates.

There is, on average, a 6 per cent turnover annually in Australia's property, according to the Reserve Bank of Australia.

The total value of Australia's property market is $5.02 trillion, according to the ABS, so yearly turnover in the housing sector is roughly $360 billion.

Chinese buyers are spending $5.4 billion a year on Australian properties, Credit Suisse said, with the split relatively even between new settlers and others, which include investors, developers and temporary residents.

The rise in domestic house prices, while marginally impacted by Chinese investors, is a result of low interest rates, increased affordability and domestic investors, not foreigners, said Deutsche Bank economist Phil Odonaghoe.

''The point that gets lost in this debate very often is that nobody focuses on the rules, which are pretty clear for a foreign investor. The principle that guides the FIRB policy is that foreign investment should increase the housing stock,'' Mr Odonaghoe said.

Chinese investors may be pushing new house prices higher, which is locking out local first-home buyers, but they are not the reason for rises in second-hand home prices, he said.

That doesn't bode well for first-home buyers who struggle to break into the market. First-home buyer activity, as a proportion of total borrowers, is near record lows at 12.7 per cent of total loan approvals, states the ABS.

First-time buyers in February comprised less than 10 per cent of all mortgages processed by broker AFG for the first time since June 2010.

The numbers are most dramatic in NSW where first-home buyers were responsible for just 3.4 per cent of AFG mortgages, down from an already very low 4.5 per cent in February last year. Victoria's first-home buyers took out 10.3 per cent of mortgages, down from 17.1 per cent last February.

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Would they sue Australia as well if the government showed a bit of b@lls?

 

Rich Chinese threaten to sue Canada for visa

Black Dragon's comments got a chuckle ...

 

    Black_Dragon

     March 6, 2014 at 9:18 am 

 

    Speaking of Canadians, they spent a whopping $4.9 billion dollars on Australian property over the last financial year, which was an increase of 100%.

 

    Over the next seven years Canadians are set to spend an alarming $34 billion dollars on Australian real estate..and that is not even extrapolating the doubling of investment from the Canadians over the previous year.

This kind of makes sense with what is happening on the ground. A friend of mine who attended a Sydney auction last weekend told me there were all these Canadian looking people bidding on the house!

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Black Dragon's comments got a chuckle ...

 

Were they chinese immigrants who took Canadian citizenship?  ^_^

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SMH: No joy for first timers at auction

SMH: Property: Sydney expected to gain foreign buyers as Canada closes visa scheme

 

 

But the latest figures from Australia’s largest mortgage broker suggest that mum and dad can only do so much.

According to the AFG Mortgage Index released this week, first home buyers accounted for just 3.4 per cent of all NSW loans in February.

This could be bad news for those who already own homes in Sydney, warned the AFG general manager of sales and operations, Mark Hewitt.

‘‘It flows on to the whole market,’’ he said. ‘‘If you don’t have new purchasers coming into the market, ultimately it will restrict those who want to upgrade because they can’t sell their existing house.

‘‘That is, unless they sell to a Chinese investor.’’

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It's getting lots of publicity in the media

 

SMH: Cashed-up Chinese are pricing the young out of the property market

 

 

...A survey by HSBC Bank found that more than one-third of affluent Asians own overseas property, and Australia is their number one destination. Of the wealthy mainland Chinese surveyed, 9 per cent owned property in Australia; of those surveyed in Hong Kong, 10 per cent; from Singapore, 18 per cent; and Malaysia, 26 per cent.

Given the size and wealth of the Chinese diaspora, these indicate big numbers which could become much bigger if investors from China continue to kick in and the Australian dollar continues to decline in value.
Friday's South China Morning Post had a story which began: ''Chinese investment in Australian real estate has grown 60 per cent in the past two years with buyers and developers focusing largely on Sydney and inner-city Melbourne. Huge interest from cashed-up Chinese buyers has been a major driver.''
The story then recycled news published in Australia that Juwai.com, an online real estate broker which connects Chinese buyers with overseas properties, estimates there are 63 million Chinese who could afford to buy property overseas, the fastest-growing market was Australia, and the most popular price bracket is $550,000 to $750,000 for houses or apartments.
This is pretty much what first-time property purchasers look to buy. If cashed-up Chinese buyers, and superannuation funds looking for investments, are both driving the market, this becomes a cultural issue if Australia wants to maintain the tradition of having one of the world's highest rates of home ownership....

 

Edited by cobran20

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It certainly has been getting TONS of mention these days.   From Paul's article:

 

 

Friday's South China Morning Post had a story which began: ''Chinese investment in Australian real estate has grown 60 per cent in the past two years with buyers and developers focusing largely on Sydney and inner-city Melbourne. Huge interest from cashed-up Chinese buyers has been a major driver.''

 "Cashed-up" is absolutely Aussie vernacular for "Wealthy".   The rest of the world, in my experience, uses "wealthy" to describe their wealthy sorts.   Interesting to see it used in the SCMP.  
 
...so who is this Darren Lee?
 

Darren Wee is a trainee journalist at Cardiff Journalism School. He was previously a lifestyle reporter at the China Post in Taipei, where he interviewed some of Taiwan’s biggest celebrities. He blogs about TV, film and Asian pop culture.   http://www.huffingtonpost.com/darren-wee

 

and 

 

http://uk.linkedin.com/pub/darren-wee/41/15/980

 

-------

 

Any chance a freelancer had this one handed to him or otherwise may have been a bit fast and loose?  Just sayin'... it IS an article on Australian Real Estate after all.   What odds Paul or one of the many Fairfax Domain fact-checkers checked the source's sources? 

 

I don't think any of my shonky conspiracy theories matter;  the proof will be in the UK and Canadian pudding.  If RE there collapses now that wealthy foreigners are locked out we have the answer.

 

To me there remains a curious whiff to all this sudden noise.   For instance, the "Now that The Wealthy Chinese are unable to buy in Canada they will flock to Australia" argument that has recently emerged in Fairfax Domain.    

 

http://smh.domain.com.au/real-estate-news/property-sydney-expected-to-gain-foreign-buyers-as-canada-closes-visa-scheme-20140307-34cr6.html

http://www.smh.com.au/business/china/shunned-chinese-buyers-to-turn-from-canada-to-australia-20140224-33ca8.html

http://www.theage.com.au/comment/cashedup-chinese-are-pricing-the-young-out-of-the-property-market-20140309-34f9k.html   ya ya same article but isn't that the style these days?  Old news is new news if that news references the reference etc

 

 

Wouldn't the second choice for these locked-out unfortunates be the USA?   The USA has maintained their wealthy investor program and it is closer to Canada and cheaper (as opposed to Australia) on every level except the metric system, similar history and a benevolent Queen.

 

And speaking of the Yanks:  http://www.abc.net.au/news/2014-02-15/an-chinese-australia-housing-market/5262374

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.

 

Dammed Yankees.   Pricing out our children, forever.     If they knew anything about real estate they'd be buying their own undervalued houses and getting rich.

Oh, wait... looks like they missed the boat in Ohio.   http://www.scmp.com/news/china/article/1391197/chinese-investors-pour-cash-glass-city-toledo-ohio  

Edited by Dose

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I don't think any of my shonky conspiracy theories matter;  the proof will be in the UK and Canadian pudding.  If RE there collapses now that wealthy foreigners are locked out we have the answer.

 

Perhaps, if their economic circumstances are otherwise identical to Australia's.

 

However, the best way to know for sure will be the real thing; implement the same rules here and let's see what happens. Of course there will be a polar vortex in Hades before anything RE-unfriendly gets passed.

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http://www.smh.com.au/national/sydney-couple-on-missing-malaysia-airlines-jet-off-to-see-children-20140310-34h12.html

 

Two Chinese, pretending to be Sydneysiders, died for their crimes; money over family. No Australian would abandon his/her children. If they had stayed in China they would still be alive.

Edited by sydney3000

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 "Cashed-up" is absolutely Aussie vernacular for "Wealthy".   The rest of the world, in my experience, uses "wealthy" to describe their wealthy sorts.   Interesting to see it used in the SCMP.  

 

To me 'cashed up' means someone who has cash and doesn't need to borrow.

 

In Oz property vernacular it seems to mean any purchaser, or potential purchaser. "There were 8 cashed up buyers competing at the auction of 21 Zaph st", reports the agent. How the phuck would the agent know the financial position of bidders?

 

It's just another fluffy term to make one think they are competing against someone 'superior'. 

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http://www.couriermail.com.au/realestate/news/chinese-investors-are-buying-up-aussie-property-but-where-and-why/story-fnihpv4x-1226850255538

 

Simon Henry, CEO of Juwai.com — a Chinese website advertising property for sale around the world with 1.5 million monthly users, gave News Ltd his insights into the latest surge from an overseas investment group.

“It’s a market which we picked up on four years ago — we saw all these mainland Chinese buying up all the property in Hong Kong and we thought, what happens next?” Mr Henry said.

The website began operating in 2010.

At the moment the site has about 2.5 million properties listed for sale in 53 countries around the world.

Australia is the second most popular of those countries, behind only the US.

“Australia has a similar time zone, locality and proximity to China,” Mr Henry said.

“The USA is number one, and Australia has always been number two, but four of the top 10 cities that they search in the world are: Sydney, Melbourne, Brisbane and the Gold Coast.”

 

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To me 'cashed up' means someone who has cash and doesn't need to borrow.

 

In Oz property vernacular it seems to mean any purchaser, or potential purchaser. 

In all my years living and working in other countries I had never heard the term "cashed up".   Not once.

 

For it to show up in a foreign news article about property in Australia makes me think it was placed there by an Australian pumping Australian property.     To Australians...

 

Just a conspiracy theory, though.    :dots: .    Australian MSM certainly has latched on!

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In all my years living and working in other countries I had never heard the term "cashed up".   Not once.

 

For it to show up in a foreign news article about property in Australia makes me think it was placed there by an Australian pumping Australian property.     To Australians...

 

Just a conspiracy theory, though.    :dots: .    Australian MSM certainly has latched on!

 

Yes I would agree with your assessment that the inscrutable australian real estate industrial complex had managed to worm their way into the asian media. The "cashed up" phrase is equivalent to the three fingers drinks order tell in Inglourious basterds. The chinese buyers myth is simply the latest plot device to keep the local fools investing. There is a room full of marketing "geniuses" dreaming up the next reason why property will never fail in this country. So far they've earned their dough... This month it's wealthy chinese. Last month it was SMSF. Next month who knows? But SMSF is reusable for sure. 

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 "Well if this is it old boy I hope you don't mind if I go out speaking the King's".  Fantastic!

 

To the skeptics Google "Cashed up Chinese" and take note of the sites returning a hit.   

 

Crikey!

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 "Well if this is it old boy I hope you don't mind if I go out speaking the King's".  Fantastic!

 

To the skeptics Google "Cashed up Chinese" and take note of the sites returning a hit.   

 

Crikey!

 

Crikey indeed.

 

Chinese real estate invasion? Not according to the data, fellas

 

 

But let’s assume that all “Chinese” property investment — just over $10 billion of it in 2012-13 — was for residential property, which we know isn’t true. How much of an impact does that have? The total value of housing finance commitments (which isn’t all housing purchases anyway) was $264 billion in 2012-13, so our “Chinese” stereotype is investing less than 4%.

And even if you think 4% is too high and is placing too much pressure on prices, ask sellers in Sydney and Melbourne what they think of foreign residential buyers. Chances are they’re perfectly happy to be getting higher prices.

There are legitimate grounds for concern about housing affordability, but they’ve got little to do foreign property buyers, whether Chinese, Canadian or any other ethnicity. They’re related to land supply, planning laws, development approval processes, NIMBYism, the balance between local councils and developers financing the necessary infrastructure for new housing, and tax expenditures that encourage investment in existing housing stock. The best way to improve housing affordability — assuming that’s what you really want to do, given ultimately that will reduce the rise in value of the key asset of most voters — is to create incentives for investment in building new housing stock.

And oddly enough, at the moment it’s foreign investors who are doing that, not the rest of us.

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The data based on information from the organisation that refused a freedom of information act request and rubber-stamped Chodley Wontok's application (from Russia, with that name on a visa class [858] that doesn't exist, on a fake passport)? :lol:

 

Time to call in the Mythbusters I say!

 

And even if you think 4% is too high and is placing too much pressure on prices, ask sellers in Sydney and Melbourne what they think of foreign residential buyers. Chances are they’re perfectly happy to be getting higher prices.

 

 

What a smug twerp.

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Pascoe to the rescue of OS investors

 

SMH: Why we should welcome Chinese housing investment

 

 

It would be both sad and funny if Australia rejected a renewable, $10 billion-a-year, foreign-exchange-earning, non-outsource-able, employment-rich business opportunity just because a mixture of xenophobes and myopic protectionists collectively chanted: "I don't like it."

It would be sad because of the quality local employment opportunities foregone and because the nation would miss a chance to be richer in several senses of the word.

It would be funny, in a perverted sort of way, because many of the people chanting against foreigners buying Australian housing – something we're obviously better than anyone else at providing – also bewail the demise of protected industries that we've proven to be not so good at.

World beaters

No one does Australian real estate better than Australia, but it turns out half the world is better at building cars. It's a no-brainer.

Paul Sheehan's "Cashed-up Chinese" story on these pages summarised many of anecdotal reservations about an alleged Asian invasion of the domestic housing market, while Saturday's Chinese buyers story suggested a generation of Australians were being priced out of $5-million-plus Bellevue Hill real estate. Very droll.

Crikey's Bernard Keane applied facts to the anecdotes and quickly neutered most but not all of them: it is indeed true that a generation of Australians have indeed been priced out of Bellevue Hill. And quite possibly Mosman and Toorak as well.

There is a bigger point though about the opportunity provided by foreigners wanting to buy housing here and the way markets work. The good ol' laws of supply and demand still apply, meaning movements by either of those variables affect price.

The central complaint seems to be that extra demand from foreign buyers (and Keane points out that such buying actually fell in 2012-13) is making it harder for the minority of Australians who compete with those foreigners in the market.

And it is a fairly small minority. Roughly two-thirds of Australians either own their homes outright or are paying them off, so they benefit from housing prices rising, while a fair whack of the remaining third either don't want to buy a property or have such low income as to not have prospects of buying in last year's market, never mind the present one.

So this is essentially a protectionist argument – part of the market wants to reduce the competition. And like all protectionism, it would be at a substantial cost to the rest of the economy.

Supply problems

But demand is only half the story. If there is a problem with price, it's the failure of all three levels of government that our supply of housing is not more elastic, not quicker to respond to a surge in demand.

Interminable state planning delays, NIMBY-dominated local councils, various damaging taxes and the always-growing thicket of red and green tape conspire to make housing more expensive and harder for developers to respond to demand.

Despite the many official impediments, the market mechanism struggles on. After under-building for a decade, improved demand lifts prices enough to provide incentives for developers to increase supply. It would be nice if governments helped the process instead of hindering it, but the cycle rolls on anyway.

As Reserve Bank governor Glenn Stevens reminded the House of Representatives economics committee on Friday, prices rise and fall:

"Credit to households for investment in housing is (growing by) eight or nine per cent a year. I would say that is probably fast enough. I repeat what I have said before that in Sydney in particular - but not just Sydney now - there has been a very big run up in investor activity. That is okay, but people need to keep in mind that prices do not just rise; they can fall and have fallen."

In the meantime, greater investor activity is effectively lowering rents – it's that supply and demand thing again. When not bleeding for would-be first home buyers (FHBs), the usual suspects are concerned about the cost of rental accommodation as that is one of the two markets  where the genuinely less-advantaged people live.

Public housing

The other is public housing, which is reason to point to the first of two RBA graphs. As can be immediately seen, there's stuff-all happening in the public housing sector, in keeping with the overall government proportion of investment in this country running at its lowest level in at least a half a century and probably much, much longer.

Aside from a GFC-stimulus-related surge in 2009-10, public housing approvals are going nowhere.

The way would be open for brave and visionary governments to develop a stock of public housing that could be bought and sold to smooth the housing cycle – but first it would be necessary to find a brave and visionary government. None is in prospect.

Another RBA graph tells us something else about the disproportionately-publicised first home buyer element: in absolute terms, it's more flat than shrinking.

Yes, the proportion of FHBs is at a low, but that's more about the rest of the market taking off as FHBs falling.

Aside from the distortion and pull-forward created by the federal and state GFC stimulus incentives, FHB activity has been fairly steady.

And it's simply stating the bleeding obvious that, with housing prices mostly rising rather than falling, it's nearly always the case that FHBs have never had to borrow and pay more to enter the market.

In any event, it gets back to the supply thing where FHBs problems are best addressed, rather than trying to restrict demand.

Bigger picture

Meanwhile, an appreciation of how good Chinese buyers are for the broader economy is missed.

Using Bernard Keane's most generous case figure, an over-stated $10 billion a year, that is an amazing amount of employment creation that goes way beyond the tradies.

The preponderance of new housing in Chinese purchases means the wealth does indeed get spread around.

New housing likes new appliances and floor coverings, so retailers get a feed. And as the RBA has mentioned, a significant part of the Australian manufacturing industry is housing-related. The lift in housing starts is doing a wonderful job in all sorts of jobs.

As for the evil business of state government stamp duties and fees on property, struggling treasurers around the nation drool at the thought of those cashed-up Chinese.

And there's the truism that foreign buyers can't take their real estate purchases home.

What they build stays here, adding to housing stock that needs adding to. As previously reported, we're on track to add another 2.3 million people over the next five years. At present, we're arguably still in catch-up mode from under-building. Without the stimulus of investors to get the country building now, we'll face demand-induced price pressure all of our own soon enough.

National renewal

The yet-bigger picture is less tangible – the renewal that each generation of fresh blood brings to the nation, the fire in the belly of people with fresh eyes seeing the opportunities available here for investors and workers. That's the very best kind of foreign investment here, the enriching human capital. The RBA's Glenn Stevens certainly didn't sound worried about it on Friday:

"In particular parts of our cities, including where we are sitting right now [sydney CBD], the role of foreign investors is quite prominent indeed. I suspect it is rather less prominent around most of the metropolitan areas than some of the headlines might suggest; nonetheless, there is a role.

"As a country we tend to feel that we should be open to foreign investment - we generally like that. This is a form of that, just as foreign investors buying shares in listed companies or doing direct investment in resource projects or whatever it might be is a form of it. It has its effect on asset values and the exchange rate, just like all the other forms of foreign investment. I suppose the question is really: how big a problem do you really think it is?

"Foreign investors are generally confined to buying new structures. That is where it is easiest for them to come in. It cannot be beyond our capacity over time to meet that demand and to meet the legitimate demands of our own citizens for structures as well, can it? If we cannot do that, if there is a supply side constraint, I would say that is an issue worth addressing in its own right.

"Beyond that, it probably goes to broader questions of how welcoming we wish to be to foreign investment generally. That can be a vexed issue at times. With all due respect, that is a matter for our parliament to manage."

Memo our parliament: try the vision thing and keep an eye on the big picture, not the pockets of highly visible by myopic protectionists.

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Pascoe to the rescue of OS investors

 

...And it is a fairly small minority. Roughly two-thirds of Australians either own their homes outright or are paying them off, so they benefit from housing prices rising, while a fair whack of the remaining third either don't want to buy a property or have such low income as to not have prospects of buying in last year's market, never mind the present one.

So this is essentially a protectionist argument – part of the market wants to reduce the competition. And like all protectionism, it would be at a substantial cost to the rest of the economy.

The Fairfax Domain is strong in Pascoe.

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http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=0CDQQFjAC&url=http%3A%2F%2Ftheaustralian.newspaperdirect.com%2Fepaper%2Fviewer.aspx%3Fissue%3D17202014031100000000001001%26page%3D1%26article%3D48e50ee5-5f9c-485a-ada4-62d1835762ac%26key%3DxFux87gvpmrb3rCF7UtpdQ%253D%253D%26feed%3Drss&ei=4iwiU7_xItC_kgWT1YDQAQ&usg=AFQjCNHFQJt97KFluswCVbPHVuIx8Goo6A&sig2=EOfnf9lzzI7y1Mj9BP1b5Q&bvm=bv.62922401,d.dGI

 

ALP housing scheme abused

NEW evidence of the hijacking of Labor’s flagship social housing scheme has emerged, with the companies behind a major Sydney development tapping $80 million in taxpayer subsidies to help build units for wealthy foreign students rather than the low-income Australian households the program was designed to help.

 

Earlier this month, The Australian revealed that universities had won thousands of grants under the National Rental Affordability Scheme and were filling hundreds of these governmentsponsored units with fee-paying international students. The revelations have prompted one of the architects of the scheme — National Shelter executive officer Adrian Pisarski — to call for changes to ensure it delivered truly affordable housing to those in need.

 

‘‘As one of the people who thought up NRAS i n the first place, the original intention was not (for it) to be used for international students. The intention was to house l ow- to middleincome Australians,’’ he said.

 

‘‘To the extent to which it’s happening, it needs to be monitored and the intention of the scheme allowing that needs to be reviewed or at least given serious consideration. It should not be what the NRAS becomes.’’

 

He said there was evidence some international students faced difficulty in the private housing market and some student housing for them could be part of the mix, but the overall goal was to address the dearth of options for those on low wages.

 

The $4.5 billion NRAS was launched by the then prime minister Kevin Rudd in 2007 as part of his public campaign to tackle homelessness and the ‘‘BBQ stopper’’ issue of rising housing costs for struggling Australians. It was designed to provide subsidies to developers of housing that would be rented to ‘‘low- and middleincome households at a rate that is at least 20 per cent below the market value rent’’.

 

A promotional brochure issued by developers Frasers Property Australia and Sekisui House Australia, and seen by The Australian, tells would-be investors in the Central Park development in central Sydney the project is ‘‘NRAS-advantaged’’ and that foreign students pay higher fees than locals, with their total expenditure topping $55,000 a year.

 

‘‘This provides some guidance as to the calibre of tenant typical of off-campus student accommodation facility such as Abercrombie Street,’’ the document says.

 

The giant project, just west of Sydney’s Central railway station, is only two blocks from the electoral office of Deputy Opposition Leader Tanya Plibersek, who as housing minister in the Rudd government was the architect of the NRAS. Ms Plibersek referred inquiries about the NRAS and the Central Park development to Labor housing spokeswoman Jan McLucas.

 

Frasers Australia chief executive Guy Pahor yesterday defended the project saying it would be open to local students, and increasing the pool of affordable housing within Sydney’s education precinct would free up housing for students and local workers alike.

 

Outside of Queensland, there is no regulation stating that NRAS tenants have to be Australian citizens and both the universities’ developments and the Central Park project meet the guidelines of the scheme.

 

The brochure issued to potential investors in the $2 billion project makes it clear that international students would be the major tenant group for the 823-bed facility.

 

The 34-page document, issued in October 2012, contains the phrase ‘‘international student’’ or ‘‘international students’’ almost 50 times and describes the main student building, on Abercrombie Street, as an ‘‘NRAS-advantaged’’ project.

 

It talks about how international student numbers at the nearby University of Sydney and the University of Technology, Sydney, and two other tertiary institutions are forecast to grow by 400 per year. In the local area, ‘‘85-95 per cent of privately owned student accommodation is occupied by international students’’, the document says.

 

Mr Pahor said although a ‘‘significant proportion of the dwellings would be taken up by foreign students’’, Australian students would benefit too.

 

He said it would increase the ‘‘pool of affordable accommodation in (the) conventional rental market for both students and local workers’’.

 

‘‘In this application of the NRAS scheme, the pool of innercity affordable housing stock will grow markedly with benefits extending to the community at large,’’ he said.

 

But one critic of the project, a construction industry source, said he was uncomfortable that it did not meet the original intent of the policy.

 

‘‘In general, I am not adverse to government incentives being used to encourage developers to provide a certain type of product that the market needs; however, NRAS in this case provides very little benefit to its target market and is predominantly benefiting the developer — at a cost to the taxpayer,’’ he told The Australian.

 

Estimates contained i n the brochure for Central Park state a studio apartment in the Abercrombie Street building would rent for $450 a week at market prices. The scheme stipulates that landlords or developers must offer the unit at 80 per cent of market value, which brings this down to $360 a week.

 

In exchange, investors get an incentive or tax offset from the government totalling $10,000 per year, or $191 per week guaranteed for 10 years. This takes the total return to $551 a week for investors, according to the prospectus.

 

Forecasts for the project, which was being offered to institutional investors but is proceeding for now under the auspices of the developers, predict it will return $18.5m in net income in 2015 increasing to $22m in 2019 as NRAS incentives increase in line with the inflation of prices of rental prices.

 

The investors will receive more than $85m in taxpayer subsidies over the 10-year lifespan of the project in return for offering a 20 per cent rent discount to tenants.

 

The NRAS scheme has seen more than 20,000 units constructed but has been beset with issues of complexity, bureaucracy and poorly drafted legislation, according to critics. Expectations are that it will not be continued by the current government beyond the 50,000 planned units.

 

A spokeswoman for the Department of Social Services said that for the majority of allocations of NRAS incentives to universities, the department specifies that local students and those coming from elsewhere in Australia must be given preference.

‘‘While an approved participant may have ‘reserved’ NRAS incentives, they must: comply with all the conditions of an allocation; deliver dwellings within the agreed time frame; and rent the properties to eligible tenants at least 20 per cent below market rent before an incentive is paid,’’ she said.

 

Australian Council of Social Services chief executive Cassandra Goldie defended the scheme as a groundbreaking attempt to bring private capital to social housing.

 

She said the Central Park development was the kind of development you would expect under the scheme and it would absorb rental demand in the area through the construction of desperately needed new housing stock. ‘‘This is a scheme that needs to be seen in the broader context of what it does do in the rental market more broadly,’’ he said.

 

To be eligible for NRAS as a tenant you must have earned less than $45,956 in the 12 months before you take up residency, and to remain eligible you must earn less than $57,445 in subsequent years. But parents’ income is not factored in, making it easy for many students to qualify.

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http://www.macrobusiness.com.au/2014/03/government-to-review-foreign-property-purchases/

 

 

Chaired by Victorian MP Kelly O’Dwyer, the parliamentary inquiry will hold public hearings in real estate hot spots including Sydney and Melbourne.

“We need more homes, so foreign investment that increases the number of homes available is a good thing, particularly where it is housing for first-home buyers,’’ she said.

“That is the objective of current policy, but we need to examine what is happening on the ground.

So we want foreign investors to build homes, just not to buy them?   That sentence does not make any sense,  

 

Looks like a witch hunt, to me.  Until tax policy comes into the conversation it is all just tinkering... 

 

Now Government can claim actions being taken!    Wonderful.

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