The AFR reported over the weekend that tensions at a Melbourne auction in the eastern suburb of Mont Albert boiled over when an onlooker asked a Chinese family bidding for a home whether they had the appropriate residency status:
At the auction of a four-bedroom period home in inner-city Melbourne, a heated bidding war ended with an offensive remark by a spectator. The local man in his 60s yelled at a Chinese family bidding for the $2.7 million property: “Have you go the appropriate residency?”…
Marshall White auctioneer Antony Woodley said the Melbourne incident was sad. “I think it was an isolated incident because I haven’t seen it before,” he said.
“There’s a misconception from the public about Asian buyers because they read the sensationalism in the papers. The majority of them are normal buyers like any families who want a good home.”
Race Discrimination Commissioner Dr Tim Soutphommasane said he has been monitoring the tension between foreign and local property buyers and said Australians should not be complacent about the incident in Mont Albert.
“It’s unfortunate that some xenophobia has been unleashed by rising anxiety about property prices and housing affordability,” he said.
Let’s be honest. The reaction of the onlooker is not to the Asian appearance bidder, it is to the complete and utter failure of Australia’s foreign investment regime to prevent illegal purchases of pre-existing homes.
In Melbourne’s eastern suburbs (where I live), people of Asian appearance – some of whom speak little or no English – are over-represented at virtually every auction.
Prices are also rising to ridiculous levels, pricing younger Australians out of home ownership.
Meanwhile, we have a foreign investment regime that has been proven to be totally deficient, with zero data collected on the residency/visa status of property sales, and zero prosecutions or divestment orders (until very recently) taking place for eight years, despite widespread anecdotal evidence of widespread illegal foreign purchases of existing homes.
To make matters worse, both the the Paris-Based Financial Action Task Force (FATF) on money laundering and the Australian Transaction Reports and Analysis Centre (AUSTRAC) have found that Australian real estate is a haven for laundered funds, particularly from China. This view is supported by other notable “experts”, as revealed by Fairfax’s Michael West over the weekend:
James Tee, an ethnic Chinese property developer whose business specialises in “capital expatriation” – that is, getting money out of China and into his property developments in Malaysia – told Fairfax Media the exodus of capital from China was accelerating, thanks to the government’s anti-corruption drive…
Tee says that if [Australian] real estate agents were required to comply with AML [anti-money laundering] – as was already required of fund managers and casinos – the bulk of the capital inflows would cease, and therefore moderate the rise in house prices.
The $US50,000 limit on exchanging Chinese currency into $US and $A was being breached in the majority of Chinese property deals in Melbourne and Sydney, and once the AML laws were introduced, the “wall of capital” from China would dry up…
Property prices in Sydney and Melbourne don’t reflect market fundamentals as Chinese investors are not worried about a property crash since their principal objective is parking money in a secure environment offshore rather than achieving an investment return.
“That means they can afford to take a 20 per cent to 30 per cent haircut,” says Tee.
“Sydney becoming like Singapore and Hong Kong where an entire generation has been locked out of the property market. There are social consequences for this”.
“I don’t think anybody understands just how much money is coming in”.
Instead of righteous indignation over asking a Chinese bidder whether they had the right residency status to purchase a home, how about some outrage over the complete and utter regulatory failures that are helping to price our children and grandchildren out of home ownership?
Fix the the monitoring and enforcement around foreign investment, along with the Australia’s anti-money laundering laws, and residents’ concerns and accusations about illegal real estate purchases will disappear overnight. It is that simple.
