I was shocked as 16 Chinese bid wildly…

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From Bloomie comes another one of those stories:

Tina Ford, an Australian public servant, said she could hardly believe it when her three-bedroom apartment sold this month for A$1 million ($877,000) 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 A$940,000” and didn’t expect to double what she had paid 14 years ago for her third-floor unit with a balcony 11 kilometers (7 miles) from downtown Sydney in the suburb of Chatswood. “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 percent in the past year. That’s almost three times faster than the overall market.

I grew up in Chatswood. It’s a Chinese hot spot. The story goes on:

On visits to several home auctions in Sydney’s sprawling suburbs, a dozen or more registered bidders, all of them Asian, could be seen vying for each property…“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 percent of whose clients are from China. Owners can claim tax deductions if expenses, including mortgage payments, are greater than their investments’ rental income.

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.”

But what kind of nation (or should I say “city”) doesn’t sell to its own children first?

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Back to Bloomie:

Some buyers are finding themselves squeezed out. In a showroom in the nondescript suburb of 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 A$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.

There is much more at the story and it is not easy to remain calm.

124 Responses to “ “I was shocked as 16 Chinese bid wildly…”

  1. migtronix says:

    Hong Kong by the bridge! 330k/room

    Go Obama! Spray that nasty funky bs all over us!

    • Strange Economics says:

      And the best irony is you can borrow money in the shadow chinese funds (borrowed from the US QE program) then invest in a shadow here (e.g. via a friend with Australian residency) and collect Neg Gearing 40 % back on their tax !
      Tony Abbott , Australian govt supporting China’s economy.

  2. mrd1980 says:

    Sydney is being drowned under a tsunami of dumb, dirty money from China. And quite frankly, it couldn’t happen to a nicer city.

    • Bubbley says:

      I wonder how long till China closes the gates on the great cash exodus.

      No point having a stimulus program if all the cash ends up stimulating another country.

      Oh, wait….

    • worktime says:

      Good on them! There was a time when we did the same to our Asian friends.. buying up all their properties for dirt cheap, the tide has simply turned..

  3. Lori says:

    What is a national interest? Maybe it has already disappeared from history books and dictionaries.

    The last people lose are the illusions.

    • migtronix says:

      “last thing people lose are the illusions[delusions?] ”

      +$1 Million single bedroom flat in Gleeb

  4. ArchCC says:

    As a first step, it’s time to drop both the principal place of residence exemption and lower thresholds on land tax for non-permanent resident and OS owners of residential property.

    Make them pay for the capital protection that our laws and social contract provides.

  5. jimbo says:

    Doubled what she paid for it 14 years ago? That’s anaemic, what ever happened to doubling every 7 years? And there were 16 foreign buyers in a frenzy. She probably got ripped off in the first place!

    • gonderb says:

      Yea exactly – what’s all the fuss about? Foreign Chinese buyers or not???

      PS: Double the price compared to 14 years ago is about typical for Sydney on average I would say. Remember the market was essentially for a decade after 2003.

  6. General Disarray says:

    There are always large cranes working on unit blocks in Chatswood these days. I guess we should be happy supply is being built but it’s rare to see any of them advertised locally.

    • Powermonger says:

      Supply is meaningless though if it is exclusively for foreign investors.

      • General Disarray says:

        Sure, I just hope they get wiped-out in a crash and it ends up being well priced housing for Australian citizens. Trying to take the longer-term optimistic view – no matter how unrealistic :-)

      • Powermonger says:

        @GD

        Unfortunately for us there is a near infinite pool of demand from Asia that can exploit our market. But one can only hope for a wipeout.

      • Monkey says:

        @GD In the long run we are all dead.

  7. squirell says:

    its a tragedy for sure. Younger Aussies sold out on a grand scale. I’ve always said that a country should be run like a family business, it needs to be viable but at the end of the day the family should retain the wealth and steer the ship … of course there might be other people more deserving but thats not the family’s concern (beyond basic charity)

    Whats happening is akin to Dad selling his 100% shareholding inheritance in the business and leaving the kids with nothing. We DO NOT owe the Chinese anything. Bar ALL foreign purchases immediately and massively reduce immigration.

    • gonderb says:

      Ummm – if Dad sells 100% of his equity in the “family business”, you are not left with nothing, you are left with the cash exchanged for the equity….. so buy whatever you want with that?

  8. Powermonger says:

    Like everything else, we are bending over backwards now to Chinese interests, not just in property either. I see a lot of non-Asian retailers now in Sydney CBD doing bilingual signage, or just Chinese script alone for some promotion.

  9. Lef-tee says:

    The seeds of ethnic violence in Australia appear to have been sown.

    Rightly or wrongly, a generation of disposessed Australians are going to end up looking for someone to blame for putting the cost of ownership of the basic human need for shelter from the elements out of their reach. The Cronulla race riots might end up being a mere sideshow to things to come.

    • migtronix says:

      Expect Abbott to exploit this by encouraging more Chinese buying while envying against it.

      • jelmech@bigpond.com says:

        Thereby butchering his own family’s ability to purchase a residence.

        This is the bloke that was bleating about making ends meet whilst in opposition.

      • flawse says:

        Fellas It’s already BEEN butchered. This is just the natural results of decades of CAD’s. Further we NEED this to happen to fund our current consumption. The ONLY way to fix it is to balance the ‘family’ budget….stop running CAD’s and run CAS and gradually buy back our own country. Anybody willing to make the the necessary sacrifices in living standard to make that happen?

        That’s the problem. It’s alright to rant and rave about foreign buyers. However what is going on is only in a very small part a result of current policies. Mostly it’s already written in stone and handed down through the decades.

      • jelmech@bigpond.com says:

        Abbott doesn’t get it flawse.
        And same can be said for the rest of ‘em in Parliament.

      • flawse says:

        jelmech correct…none of them get it. The nearest I’ve met is Barnaby but even he cannot connect A to F let alone Z. However, that said few others get it either…not a single university professor that I’ve ever heard speak. Garnaut seems to ‘get’ a fair bit of it but even he misses the degree of distortion that 55 years of artificially low interest rates has brought to our economy and, indeed, our society. It’s all hopeless.
        The answers lie back in time.

    • Ino says:

      Yes, that may be the case – but on the up-side – politicians can now get elected by simply lightly fanning the smouldering embers of xenophobia.

      They’ll all promise to do something – and they’ll all *not* do it. After all – you need to be elected a few times more to get an awesome tax-payer funded bundle of benefits.

    • Rusty Penny says:

      “We’ll determine who can buy houses here, and the circumstances in which they can buy them”

  10. AlistairMaclennan says:

    On the contrary, if immigrants want to pay us exhorbitant sums for our apartments, let them. We’ll be the winners in that game.

  11. The Patrician says:

    If you suspect an existing dwelling has been illegally purchased by a foreign national/temporary visa holder, please email the FIRB to confirm they have approved the sale

    FIRBCompliance@treasury.gov.au

    • AF says:

      Well one might as well look at the list of sold places on real estate dot com and start at the top and work through the last 5 years, pretty sure about 50% will not pass the test

  12. Pfh007 says:

    Well I suppose real estate in Chatswood beats Shadow banking trusts and wealth products at the moment.

    Seriously, we should get as many cranes going as possible. In fact just print up the plans and the CT’s and sell those and worry about building them later.

    If we can throw caution to the wind and try to dig up all our mineral wealth at break neck speed for export, surely we can allow Chinese investors to build the next 20 years of home unit stock for us for free.

    Those little two bed-room units will make perfect student accommodation in Chatswood for Macquarie University.

    Put a decent land value tax on the properties being built and they will be a nice enduring little earner for Willoughby Council to help pay off the Concourse.

    “I grew up in Chatswood.”

    Really, me too.

    Did you run with the crips or the bloods. :)

  13. Moody Cow says:

    Tie the right to own property to citizenship. Oh, and make it at least a 7 year process to apply for citizenship, too.

    • Ino says:

      Yes, 7 years for applying for citizenship – because that has worked so well in US in stemming the wave of illegal migrants, and that really stopped them getting jobs there too.

      It was ridiculous that the waiting period for citizenship was 2 years, but now it’s a more healthy 5 ( if I recall correctly ) 7? Hmm. I doubt it will make a hell of a difference.

      And, yes, I seem to recall that non-citizens are not allowed to purchase RE. Has it been enforced or even checked? Doubtful!

      My point is: it matters not how many rules you make up; if you don’t enforce them they’re next to useless.

  14. LeoBob says:

    Calm down guys!

    The mainland Chinese money is a convenient scapegoat for the rising property prices.

    Do you really believe that Chinese money alone can cause prices in ALL OF AUSTRALIA to rise? I doubt there is enough of them to cause this to happen. Sure, they can cause pockets of areas like Chatswood to go ballistic. But the ENTIRE Australia or even ENTIRE Sydney?

    The biggest culprit of the recent bubble boom is LOW INTEREST RATES! That is the biggest contributor. Not the so called ‘flood’ of Chinese money.

    • nexus789 says:

      What do you mean calm down.

      Have you seen how much the Chinese have apparently off shored to tax havens. The estimated figure is around 4 Trillion Dollars.

      Seeing that majority the ‘purchasers’ are ‘investors’ they are probably made up of family super investors or Chinese.

      • LeoBob says:

        What has tax havens got to do with property prices in Chatswood?

        And I can bet you that far more of these so called property ‘investors’ are our dear local SMSFs, baby boomers, etc.

        Chatwood is not representative of ENTIRE Australia. Or even Sydney.

      • Schadenfreude says:

        +100 nexus789

        @LeoBob, you don’t get out much do you… Since they decided to look the other way with regards to checking on legal foreign purchases, this market has gone ballistic.

        The Babyboomers were barely keeping the market going sideways until the immigration flood gates were opened.

        Our firm’s clientele is 99% Asian! Most can barely put a sentence together in Engrish!

      • LeoBob says:

        How many clientele does your firm has?

        As many as 1 MILLION local NG specufestors that we already have?

        And you really believe the cutting of interest rates has nothing to do with the recent bubble boom?

      • Schadenfreude says:

        @LeoBob,

        My % example was based on 30 projects last year.

        And the new clients we have picked up prior to close of business last year, before xmas, have been 100% Asian.

        I speak with others in the industry (Architecture) and its heavily weighted towards Asian money driving everything at the moment.

    • flawse says:

      “The biggest culprit of the recent bubble boom is LOW INTEREST RATES!”

      Correct in more ways than one. Now the thing to do is to loower rates more so we can really get a boom going…especially now I’ve bought!

      • Escobar says:

        You’ve bought? Congratulations

        I’m still looking…

      • flawse says:

        Escobar…yes for better or worse. 570K for a property would cost about $1.2M to do now. A bargain? Who knows but I did OK. A bit of paint and love will go a long way!

    • Ortega says:

      100% correct LeoBob.

      The Chinese are a convenient scapegoat.

      It’s the easy money.

      Lets see what happens when the RBA is forced to tighten.

      It will all go backwards, at least as quickly as it moved forwards.

      We had an opportunity to go down the slow melt road.

      We missed it!

      ;)

      • nexus789 says:

        Not sure I agree with the LeoBob school of thought. The Chinese don’t care about interest rates if they are cashed up. They just want the asset.

    • nexus789 says:

      Chinese off shore accounts have everything to do with property prices in Chatswood and elsewhere.

      There are hundreds of Chinese with accounts off shore. This money is accessible and they can bring it to Australia to buy property. They pay cash and drive up the price.

      The 4 Trillion is really an underestimate. The Chinese are buying up around the world big time.

      Sure, there are local investors but they will be eclipsed by the Chinese.

      • Ortega says:

        Nexus, we’ll work out what happens when interest rates start going back up.

        Remember, the current rate setting is the most accommodative in Australia’s history. Its an absolute no-brainer that house prices would go up as a result.

        The ‘Chinese’ and other ‘asians’ exist also as Australian citizens taking full advantage of the low rates.

      • LeoBob says:

        4 trillion?

        Do you know 4 trillion is greater than the entire foreign reserve of China?

        4 trillion is like the ENTIRE GDP of China.

    • Gunnamatta says:

      @LeoBob

      I dont buy your line.

      For sure negative gearing capital gains tax dispensations and SMSFs leveraging into property are significant factors. On top of that we can be sure too that land banking, restrictions on developing new projects and up front council charges are also significant factors.

      But we can be 100% certain too Chinese money is a significant factor in inner to middle Sydney and Melbourne, chunks of the other major capitals, and that that in these markets they are a significant factors in prices climbing – and they are the markets which tend to get the media coverage.

      You can call it anecdotal if you like, but there is simply too much evidence to deny it.

      Head on out to any auction in inner Sydney or Melbourne for starters. I have had real estate agents tell me that in a swathe of Melbourne running from Heidelberg down to Cheltenham and running out as far as Rowville, the Chinese buyer is the biggest single factor in the market at the moment. I spoke with an old lady who had a house for sale near Alamein station who told me that the only people who came to look at her place for inspections were Chinese (and Chinese who didnt speak english). I have had a Chinese Singaporean mate who is an architect for Chinese property developers tell me straight out that in apartment land Melbourne is well on its way to being just another ghost city in the Ordos ghost city fashion, and that the only buyers are Chinese nationals (not Chinese residents of Australia). I have had a agents explain to me at great length their thoughts that the difference between RE prices in Geelong and Ballarat is the presence of Chinese buyers in the Geelong market and their absence in Ballarat.

      You have a look at the Chinese web sites focused on selling Australian real estate, and connect that to the reports of Australian real estate agents and property developers coming out quite openly and stating that they are building for Chinese buyers, or the reports on the mainstream media about Chinese ‘facilitators’ cruising Sydney in Rolls.

      If you want to go further than that head on off and have a look in the Singaporean and Hong Kong Press and read through the glossy advertising from banks (including all big Australian banks) touting loans in Singapore or Hong Kong Dollars or even RMB for buyers of Australian real estate, or have a chat with some Chinese friends as they take you through video broadcast media in China touting Australian RE.

      Then finally cast your mind back to Chodley Wontok and his FIRB experience and the utter political silence that has ensued on that issue, and even the FIRB acknowledgement in a senate committee that it wasnt dodgy FIRB applications they were concerned about but people not even bothering to apply, to go with the spectacular lack of clarity in the reporting by FIRB of the locations and levels of Chinese real estate investment in Australia. Or even quite overt recent auction attendances by high profile Chinese buyers with suitcases full of cash to trump high profile auctions, and the lack of questions about how that money is coming in past the AUSTRAC money laundering setup. Then there is the ever expanding pantheon of stories like the one in Bloomberg and elsewhere commenting on how big the Chinese presence is.

      For sure there are other issues driving Australian RE prices higher, for sure if there is demand to come and live in Australia there is plenty of room for them, if we could simply organise for that to happen without driving up prices. But given that supply is strangled and that Australian speculators are spoon fed, there is not a scintilla of doubt that Chinese buyers are a very significant factors in the major Australian residential real estate markets.

      And if the ‘Chinese’ buyers of Julia Gillard’s former Altona place are anything to go by (with their emphatic statement that they are Australian citizens and have a quite legal right to buy the place) it would seem that there are Chinese Australians also aware of the issue of Chinese buyers (as some indeed have said outright to me).

      • migtronix says:

        Thank you for exposing that so blatantly!

        I often I have this issue with academic arguments (yes of course Chinese buyers aren’t responsible for 15 years of house price rises, but the last 2?) they sound quite reasonable until hit with reality and then it takes a plethora of “anecdotal” (because nobody is counting) stories to build up a convincing counter-example — by which time the horse has not only bolted, its won the Melbourne Cup!!

      • LeoBob says:

        “Head on out to any auction in inner Sydney or Melbourne for starters”

        Surely, inner Sydney/Melbourne is not representative of Australia?

        Go to some working class suburbs of Sydney. I don’t see flood of Chinese money bidding up housing prices. In fact, I hardly see much Chinese over there. Or go to the country/mining towns or the regional areas. Or maybe Hobart, Adelaide??

        Sure, the Chinese may be bidding up the rich areas of Sydney/Melbourne like Chatswood. But are they bubble booming Australian housing market in aggregate?

        Inner Sydney/Melbourne is not Australia. There are far more people living outside of inner Sydney/Melbourne than inside there.

      • migtronix says:

        @LeoBob I think we are talking about the bulk of the value in Australian RE and you are talking bulk of the m^2 of Australian RE?

      • Gunnamatta says:

        wind ‘em up…….

        You arent one of the property trolling types are you?

        What percentage of Australian real estate by value is in Sydney Melbourne? What percentage of Australian real estate by volume is in Sydney Melbourne? or population? If urban Sydney and Melbourne arent representative of Australia then where is?

        They are certainly a big factor in the bubble in the large cities, and thats basically what is covered in the media.

      • dumpling says:

        +1 LeoBob

        Very strange, to say the least.

        Are these “filthy rich” Chinese buying all these apartments (1) for investments, presumably with borrowed money from their now-faltering shadow banking system (because they are in fact not that wealthy after all) or (2) they cannot care less about their money because they have so much?

        If it is (1) i.e., they are speculating in an overvalued foreign market with borrowed money, then their stupidity is off the charts. If it is (2), why on earth multi-millionaires, who can easily buy residential properties with pocket cash, would want to buy apartments? Surely, real superrich would want a waterfront castle, not apartments.

        Something doesn’t add up. Are these “filthy rich” Chinese truly wealthy or not? You cannot have it both ways.

      • migtronix says:

        @ dumpling not necessarily, they are cornering marginal availability – not every property is on the market but every property on the market is bid.

        BTW I think this is the first post this year to break 100 comments – and it’s still January!

        P. S. You liking JBH today dumpling?

      • dumpling says:

        Mig, the availability of water front properties may be limited, but they can surely buy 3 or 4 adjacent properties in a top suburb, demolish them and construct a castle (if they are truly wealthy)?

        I suspect the vast majority of the Chinese “hot money” is borrowed. Well, as Buffett once said, “When you combine ignorance and leverage, you get some pretty interesting results.”

        PS, oh yes, what happened to JBH? I thought they released a positive announcement yesterday. Perhaps fresh shorts moved in? Perhaps the cashed up Ms Ford can buy 10 plasma TVs from JBH?

      • Monkey says:

        Gunna, perhaps the reason that the buyers of Julia Gillard’s old place felt the need to state their citizenship was their realisation that there is a lot of hysteria about Chinese buyers and a lot of commentators failing to distinguish between Australians of Chinese descent and Chinese citizens. Thankfully we don’t make people wear signs identifying their race, ethnicity or citizenship. But the point is that without asking the new owners of Gillard’s place, your supposition as to why they said anything is baseless and speculative.

        As to the comments of LeoBob, I haven’t seen anyone of Chinese appearance at any of the open homes or auctions I have been to although these are not in inner Sydney or Melbourne. South Asians and people with British accents and a whole lot of late middle age Caucasians, plus a sprinkling of desperate looking FHBs.

        Remember, in the 80s we all thought Japan would buy us out and we’d all be forced to learn Japanese.

      • migtronix says:

        Again the protestation isn’t about the race of the buyers it’s about the stupid policies to begin with and our politicians slavish devotion to RE valuation (The Block is back on I hear) that allow a squeeze like the Chinese hot money is creating – and creating it, for the bulk of young Australians w/o property – Sydney/Melbourne is the reality – it is. Don’t ignore the reality because it doesn’t fit your mental preconceptions (and I have plenty)

      • mikeinnz says:

        The Chinese theory certainly has some traction over here. Auckland which is by far our main immigrant destination has well and truly surged ahead of the rest of NZ. I live out in a regional area and house prices here haven’t even followed inflation since the peak of 07. We’re still waiting for the “spill over” to occur. I can see where my town has gone wrong by not doing any marketing in China. :)

      • dumpling says:

        +1 Monkey, +1 mikeinnz

        I do not buy the line that Chinese “millionaires” want to buy houses here so that they can escape the totalitarian regime, or any narrative along these lines. If that were the real reason, why don’t they buy in affordable places like Houston instead of “hot spots” like San Francisco, Vancouver, etc?

        No, no matter how I look at it, their activities look like those of greater fools – chasing assets in rising markets. I am pretty certain that the same old debt bubble dynamics is in play.

        Chinese economy today is larger than that of Japan in the late 80s, but not that much larger. This time is NOT different.

      • migtronix says:

        @dumpling I never said it wasn’t debt driven – I don’t buy the escape line I don’t expect they’ll ever set foot in the place – doesn’t mean its not happening and pricing everyone else out.

      • dumpling says:

        Mig, I agree that the Chinese “hot money” is present in hot spots (did I deny its presence?), just like the Japanese “hot money” in the late 80s. It will pass.

        I just don’t believe these cash-splashing Chinese “investors” are real millionaires. If they were, then it would be a cause for *real* worry, because “this time is indeed different”.

    • JuliusSeizure says:

      LeoBob, do you really think the lady who just sold is going to go and buy another house in Chatswood? She’s going to take her million Chinese dollars, and then go and outbid some poor sod in a different area.

      That’s why prices are going up across the board – because punters move and take their cash with them.

  15. AngryMan says:

    Every time i see these stories it makes my blood boil, even more so because i know that there is nothing i can do about it and no one i can complain to in govt gives a crap or wants to fix it

    Our govts sold out this country long ago.

    I swear if i ever saw KRUDD on the street it would be all i could do to stop myself from punching the c***t in the face.

    • Moody Cow says:

      As a woman, it’s disturbing that you would equate part of my anatomy to KRUDD.

      Please avoid equating him to any animal, too – they don’t deserve such disparaging and unjust comparisons.

    • Mining Bogan says:

      Take a number.

    • Frederic Bastiat says:

      Krudd will go down as the worst PM we ever had, I have no doubt of that. He made Gillard and Abbott look honest and honourable people.

      He is a scum bag of the highest order

    • AF says:

      It is a same no one ever coward punched KRUDD when he was younger, would have saved all of us a lot of bother.

      • Schadenfreude says:

        Instead of the shark cull over in WA, maybe we could feed them politicians, lawyers, spruikers, bankers etc… keep them well fed to prevent attacks at popular beaches….

        That is a show I would pay to see.

  16. 3d1k says:

    Simple. Don’t buy in Chatswood if it’s gripped in speculative fever. Buy elsewhere – plenty of alternatives.

  17. LeoBob says:

    So why is David Llewellyn-Smith writing this sensationalist article?

    As an analyst, he should know better that the biggest culprit of the recent bubble boom is LOW INTEREST RATES. Is he implying that it is caused by the so called ‘flood’ of Chinese money?

    I don’t understand why David is descending from rational analysis into sensationlism.

    • fitzroy says:

      Disagree LB.

      The low interest rate is a factor.
      Pretending that Chinese money laundering isn’t a factor is being blind to the obvious. There is a rush to get funds out of China that isn’t just limited to Australia. Go to a few auctions. Those who rely on working and being taxed cannot compete, firstly with the Chinese in better suburbs in Melbourne and Sydney and those who NG. With NG the last shelter left, those who pay for houses in after tax money don’t have a hope. The interest rate for an investor is of secondary concern.

      • LeoBob says:

        “firstly with the Chinese in better suburbs in Melbourne and Sydney and those who NG”

        We have over 1 MILLION landlords who NG. How many mainland Chinese ‘investors’? Those Chinese are a drop in the bucket compared to our dear 1 million specufestors, which incidentally include our dear politicians and RBA people and baby boomers and SMSFs.

        Sure, those Chinese idiots can cause a booms in pockets of Sydney and Melbourne? But blaming them for causing a boom in ALL of Sydney/Melbourne/Australia?

        Get real, mate.

      • fitzroy says:

        You need to get out more. Its not just Sydney and Melbourne, and not just “a few pockets”. It is Rutherglen and South Australian wineries, rural land. The amounts of funds coming into Melbourne where I am are massive such as the cultural makeup of many suburbs is profoundly changing. More that 400,000 new residents annually change the makeup of a country and it is happening auction by auction. Remembering that the prices change at the margin and the houses are purchased not merely by new arrivals, but by those wishing to get money into ustralia, where the price paid is a secondary consideration.

      • LeoBob says:

        You can get out all you want. But you are just one person and your personal experience is not representative of ENTIRE Australia.

        Chinese investors has been investing in Aussie farms, houses, land, mines, factories since say before the GFC. Then how do you explain why we can have a slow melt in Aussie housing in say, 2011?

        Why did the bubble boom happened just as around the time when the stupid RBA cut interest rates?

        Why did the previous bubble boom happened in 2009 when we have the FHOG and the RBA cut interest rates?

        It is dead obvious. Interest rates is the major contributor of the bubble boom. Chinese corrupt money is just a sideshow.

      • squirell says:

        LeoBob, ENTIRE is a very high threshold. Would you settle with MOST of East Melbourne for a start and then others can add their anecdotal evidence of which Sydney is the most obvious example. From my experience the impact of Chinese money is massive. It is coming via a) legal and illegal foreign investment b) new residents c) residents and students buying on behalf of family back home. As Fitzroy said you really need to get out and visit some auctions – i bought recently in Melbourne’s east and only managed to get in the market because the house we bought had bad feng shui. In EVERY OTHER preceeding auction (SIX) I was outbid by oriental looking persons whose first language was clearly not English. How much less could I have got a house for if not for this foreign sourced demand??? WIthouth it I have no doubt the slow melt in Melbourne would be continuing and we might now be 15 to 20% lower.
        If the official stats say the Chinese are not that big an impact then quite clearly we are being lied to

      • fitzroy says:

        I never said I was representative of the whole of Australia and I did say “the low interest rate is a factor”. But dare I say neither are you representative. Members of my family are rural planners and they see much Chinese money coming in. I am aware of the rise in deductions for NG and of those figures. What you cannot quote is the amount of money that is coming into this country (and others) from China because much of it is hidden. That does not mean as you imply that the Chinese are irrelevant (“a drop in the bucket”) What you would see if you looked was the changing demographic of suburbs and the attendance of many Chinese people with much money at auctions. If the current rate of immigration is sustained the effect on housing is obvious. This is without the purchase of property by non residents. The amount of money coming into this country I suspect is driven by conditions, price of property and stimulus in China.

      • LeoBob says:

        squirell,

        We all know that Australian housing is in a slow melt since say 2010 to 2013 BEFORE the interest rate cuts by the RBA.

        Where is the Chinese money during the time? Did they suddenly start pouring into Australia at the same time the RBA cut interest rates?

      • ArchCC says:

        the houses are purchased not merely by new arrivals, but by those wishing to get money into ustralia, where the price paid is a secondary consideration.

        Yep, so land tax them for the service.

        Why did the bubble boom happened just as around the time when the stupid RBA cut interest rates?

        Was that concurrent with US QE? How about the initial Chinese crackdown on the worst excesses of the shadow banking sector.

        It’s hot US money into China, and even hotter Chinese money into Aus. The RBA doesn’t figure in this transmission mechanism.

      • fitzroy says:

        My observations are consistent with Squirell”s. Agree QE and stimulus and the economic recovery from stimulus in 2010 in China helped, and agree with ArchCC that some of the money is extremely hot and large. Many of the purchasers do so for cash and do not borrow (at least not here).

      • LeoBob says:

        I live and work in the typical working class suburbs of Sydney. Where do I see ‘changing’ demographics or Chinese money?

      • ArchCC says:

        Is there a real estate boom is china?

        Yes, I believe there is! Spooky coincidence, hey.

      • flawse says:

        One thing leads to another. Yes Chinese money is a factor however Arch this current leg of the boom was set off by the RBA lowering rates. There was big debate in this forum before the event with a few of us predictng an RE boom. Indeed that is what happened so it is easy to remember for some of us. Is it more exaggerated in Sydney? Sure and that is part Chinese money and part the fact that Sydney parasitises the rest of the nation especially so when there is easy money and government money around.
        I guess it is a case of once you have yourself a boom running every little puff blows it up noticeably more.

        Anyway don’t knock it. We need that Chinese money to fund our consumption. It can either buy our farmlands so Australian farmers cannot afford farmland. It can buy mines so that our future generations will get little benefit from them. It can buy our real estate so that young people cannot afford to own a house.
        It’s our choice and been our choice for two generations. This is just another debate that really needs framing properly. It’s really not about Chinese buying Real Estate. it’s about choices we, as a society, are making…We = us! You, me and your neighbour Joe Blow!

    • LeoBob says:

      squirell,

      “As Fitzroy said you really need to get out and visit some auctions”

      Let me ask you a very simple question. How representative is this ‘some’ auction to the entire Australian housing market?

      You really believe that the recent interest rates cuts has very little to do with the bubble boom?

      • fitzroy says:

        Melbourne is Australia’s biggest auction market, there are twice as many properties on the market here as in Sydney. To copy my first post “the low interest rate is a factor”. Property prices are made on the margin and the Chinese dominate most auctions I go to. What do you see at the auctions??

    • Powermonger says:

      Low interest rates have had an effect but so has an increase in foreign investment. You can’t look at it in isolation. Look at other western markets, Canada, UK, USA, Hong Kong, Singapore, New Zealand, France, Ireland etc. all are being inundated with Chinese foreign investment. Australia is no different.

      • LeoBob says:

        So, which one have a much bigger impact in Australia with regards to housing? (I’m not talking about farms, mines, factories…. I’m referring to housing.)

        Historically record low interest rates? Or Chinese money?

      • fitzroy says:

        Squirell is right. Without Chinese money the housing market would be on slow melt (except perhaps in Sydney). The fragility of the Australian banking system (see Deep T’s posts) requires a robust RE market with little interference from the FIRB.

      • Powermonger says:

        @leoBob

        Considering data on foreign investment in housing is a closely guarded secret, you can’t rule it out. Why the need for them to hide the information from the public?

        Interesting enough the Chinese government clamped down on property investment in China last March and the world has seen an increase in Chinese investment since then.

      • LeoBob says:

        Fitzroy,

        “Without Chinese money the housing market would be on slow melt (except perhaps in Sydney)”

        So, you are saying HISTORICALLY RECORD LOW interest rates have absolutely nothing to do with this bubble boom?

        The Chinese had been buying since 2009. It’s strange that the housing had a slow melt till 2013 DESPITE Chinese buying over that period.

        Or is it a coincidence that Chinese had been buying at the same time the RBA slashed rates to HISTORIC RECORD LOW?

      • Macro Polo says:

        Obviously it’s interest rates having the largest effect… I’m surprised at the vitriol directed towards the boogeyman of the Chinese speculator.

      • migtronix says:

        @macro polo: then why are FHBs nowhere to be seen? Shouldn’t low rates encourage them most of all?

        Again nothing to do with the origin of bidders – could be bloody Swedish or Russian – its the concentration of bidders from a single origin that make people think something is suss.

      • Macro Polo says:

        Mig, I guess this whole debate is anecdotal in the end. From my perspective, I come from a family that has 10+ investment properties. I know a lot of people who are looking to buy a first house now that rates have come down but are still finding it too expensive (no surprises there) so are waiting for anything decent to pop up, and thirdly I know people younger than me who are loading up on their second or third investment property (early 20′s).

        Maybe it’s the circles I’m in, but I struggle to believe thousands of foreign buyers have more of an effect than millions of Australians acting like this. I haven’t experienced any Chinese bidders, or complaints of, in Perth – yet prices are rising. I just don’t follow that this experience from a small number Melbourne/Sydney suburbs is responsible for a nationwide uptick in home prices, when a more logical reason (rate cuts) is present – since rate cuts are always good for asset prices, and residential real estate is one of the most strongly affected by interest rates.

      • migtronix says:

        @Macro. Oh no you’re not saying anything like this Perth – I was over there December, nothing like this. I’m talking Melbourne/Sydney – I was in Sydney 2 weeks ago and its the same thing you see here in Melbourne, every new reso building going up St Kilda Rd/Southbank/Docklands has Chinese nationals surveying it, every house auction in a 20/30 km (depends on direction) has Chinese nationals bidding. Now this may or may not cause sellers from Melbourne to bid Perth up with the winnings – that could be a flow on effect for instance – but it is absolutely happening in Melbourne and Sydney. Indisputably. Which is the bulk of the housing market in Australia.

      • Macro Polo says:

        I’ve just moved to Melbourne, so I’ll keep an eye out! Though I’m probably not going to change my mind from NG and rate cuts being the driver ;)

  18. AlbyMangles says:

    i don’t know if you have been to china lately but its horrible, really horrible, and they all know it, Australia is a relative bargain when you look at the air pollution, congestion, food quality etc.. general living standards are amazingly bad. just getting home and breathing clean air is amazing.

    • Frederic Bastiat says:

      This is a very good point.

      Yes they are paying massive overs, but they will continue to do so because they are not buying property alone, they are buying a passport out of an imploding and disgusting China

    • ArchCC says:

      Yep. Last time I visited Beijing our hotel gave us complementary respirators. And I was thankful for it.

  19. chino says:

    Chinese don’t explain why inner-west Sydney terraces are also going through the roof. Chinese don’t touch them.

    6 Georgina Street, Newtown was auctioned by an agency back in November 2013 and the property was passed in with the highest bid being $1,355,000. It then sat on the market with no interest “for sale” for $1,485,000.

    The property was relisted earlier this year through another agency, and last night it was put under the hammer, 2 weeks ahead of the original auction date. The property sold at auction for $1,626,000.

    • flawse says:

      Boom! But really if we want to make everybody really wealthy quickly we need to lower interest rates some more and quickly.

    • JuliusSeizure says:

      Ripple effect; Australian sells their crumbling house in Hurstville for a gazillion foreign-born dollars, suddenly they can make a higher offer on the trendy Newtown terrace they’ve always wanted.

      In a perfect world, all Australians would already own houses and would benefit from this inflow of capital, as a rising tide would float all boats. Alas, our young had already been left behind, and are now completely stuck in an economic trap by decades of inaccessible growth all around them.

      It’s a travesty of policy.

  20. jdliveuk says:

    If the Chinese are overpaying for crap apartments, do we really care.

    And if the Chinese are paying “cash in suitcases” for apartments then I have 5 apartments to sell them.
    Thinking about it, it is impossible to pay cash for property and if the Chinese were really doing it, they are stupid.

  21. SaCo says:

    Phew. Happy to see my tax dollars hard at work.

  22. aj. says:

    De-financialise housing for Australians (remove negative gearing and tax speculation/investment out of existence) and allow the offshore speculative boom to only buy very high quality new construct units.

    There would be such an easy way to game this dumb money – Australia is just so stupid.

    What a massive wasted opportunity to suck money from the world.

  23. scottmuz says:

    Chatswood is one of the most Chinese suburbs in Sydney. I often go there to the cinema and am the only anglo I can see. Which is fine by me.

    So “lots of Chinese bidding” for an apartment in a overwhelmingly Chinese suburb, … its a non story.

  24. Dose says:

    SMSF+poor policy+ultra low interest rates.. Blame your parents. And Government. And greed.

    Xenophobia is a symptom of the eventual backlash, make no mistake about that.

  25. Sool says:

    Flawse, I love your thinking! But I reckon people are missing your points! Keep up the good work Flawse.
    Also just as an aside, you can add Adelaide market, can’t make a bid without the “Chinese Factor”. Just sayin’. Only anecdotal I know but…?
    Lets be a bit cool on on all this, I reckon there’s much more at play with all this “SubPrime” Chinese off balance sheet bank bulldust to come….? Maybe when the Chinese subprime blows up there won’t be much money chasing Oz properties & interest rates in Oz might just have to spike a few basis points! Then what happens? Do we recover 50 years of mispricing? Just sayin…….

  26. saintmatthew says:

    I think it is the baby boomers trying to deflect blame onto the Chinese

  27. Alexandra Chapman says:

    Be pleased that the Baby Boomers are able to cash out at the top of the market by finding a greater fool to sell to.

    If they are sensible, they will then stick their cash in the bank and rent at far lower cost (due to the implied subsidy created by negative gearing) while they wait for the inevitable crash which will come when these “investors” want to realize their cash…