Aussie property top for Asian hot money

ScreenHunter_06 May. 06 09.27

By Leith van Onselen

HSBC has released a short note today on Asia’s increasing appetite for Australian residential property, with Australia ranked as a top destination for investment by affluent Asians:

Australia is one of the most sought-after property investment markets globally among affluent Asians. And amongst the future investment in Australia, affluent Asians are likely to favour smaller property markets such as Queensland and ACT over the larger markets of NSW and Victoria, according to HSBC research.

HSBC’s international property investment research was conducted by RFi involving more than 7,000 affluent individuals across seven Asian countries to understand their international property investment appetite…

According to the research, Australia is currently the number one destination for offshore property investment among wealthy Indonesians, while Malaysians and Singaporeans ranked Australia second.

For the rest of Asia, 9% of affluent Chinese, 10% of those from Hong Kong and 18% from India are currently invested in Australian property…

HSBC’s research also indicates that investors across the region are broadening their scope from traditional property markets like Sydney and Melbourne to Queensland and ACT. Of the affluent Asians looking to buy in Australia in the next year, 25% intend to buy in Queensland, 23% in ACT, compared to 20% in Victoria, 18% in New South Wales followed by 16% in Western Australia…

“The increased flow of foreign investment into Australia can be a catalyst for increased construction and property development which can support the economy rebalance away from the mining sector”…

ScreenHunter_1366 Feb. 21 11.46

More grist for the mill…

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Comments

  1. A major export industry! Sellling Aussie sand, cement, timber, bricks and labour to wealthy Asians.

    We have plenty of land so it’s not a problem to throw some in with the building materials and labour we are effectively exporting by selling to foreigners.

    • Yeah take a straw poll and see how many agree with the spin your selling.

      Hands up all those who

      1. like being tenants to foreign landlords
      2. like taxpayer subsidies being given to foreign landlords
      3.like being priced out of home ownership

      • But the supply of land for building is within our control.

        We sell them plenty of land and buildings at what everyone on MB says are outrageously high prices. Then we increase the supply so our own residents can buy them more cheaply.

        I am simply making the point that there are two sides to selling dwellings to foreigners. One is the focus of MB, higher prices freeze out Aussies. The other which gets little mention is that the construction emloys lots of Aussies and provides profits to the owners of the natural resources that are used in building the dwellings.

        In the same way, MB concentrtates solely on the disadvantage to the young of high house prices, but rarely talks about the disadvantage to older owners and recent buyers if prices were to be reduced by increased supply.

        Similalry changes in FX rates to depreciate the AUD are championed to rebalance the economy, generally without acknowledging the impact on internationally measured wealth and purchasing power and employment in the distribution chanins of imoprted goods.

        In short, I try to add some balance or a counter case to MB’s often one sided arguments and point out that for every potential winner from changes that some MB contributors (authors and comments) champion, there will be a loser.

        As always I acknowledge the excellent work MB has done in highlighting the inernational comparison of real estate prices and the impacts high prices have and even more the analysis of the mining investment and cliff and it’s probable effect on commodities prices, employment, GDP, wages and income distribution.

      • I’m going to have to throw my support behind a lower the dollar and affordable house prices.
        The wealth of the average Australian will reduced more if the bubble bursts or the economy collapses .
        (I know, I know… same thing)

      • “In the same way, MB concentrtates solely on the disadvantage to the young of high house prices, but rarely talks about the disadvantage to older owners and recent buyers if prices were to be reduced by increased supply”

        I can see the disadvantage for those who have bought and still have a mortgage (particularly if it would be higher than the lowered value of their house), but what is the disadvantage for those who own their house outright?

        If they downsize, the new house/apartment will presumably be reduced by a similar proportion.

        If they want to sell and rent, then presumably rents will have decreased by the same order of magnitude.

        If they wanted to borrow against the original value of their house, then I don’t think we should really worry.

        Am I missing something?

    • Asian demand could easily swamp Australia no matter how much land is released or apartments constructed.

  2. This is great news for Tony’s and the RBAs property portfolio. There’s still a lot of catch up room for Chinese who own Australia property.

    • They are all in on it, Labor, Liberals and Greens, selling us out to Big Australia interests and foreign ownership.

  3. Time to ban property investment for non-residents completely. Otherwise all our kids to be tenants to rich foreigners.

    • This is globalisation, multinationals, comparative advantage and “free” trade in action.

      The lower value output workers end up like peasants, our middle classes get squeezed as huge population countries get a middle class and a few people get incredibly rich in international terms, but most don’t.

      Real estate is just one, highly visible and emotional example.

      In God’s eyes, isn’t a Chinese out of poverty a fair swap for an Australian reduced to poverty? Does God care about Australian’s more than Chinese?

      • “Free trade”….they are free to launder their money in our market and we aren’t given the choice to invest there. They come from a society that favours members of the party and they are free to move their money out. Chinese Peasants don’t come into the equation, as they the ones whom are forced to work the factories after they have been forced off their lands. What’s free about that!?

        Mind you the most likely outcome is the market here, is it will move from boom to bust as abruptly. Bring on GFC 2.0 is all I can say…we’ll manage and at the end housing will be affordable once more.

      • Perhaps there is no God, just people who are greedy and people that are too apathetic to care…

  4. Does anyone know how to report money laundering, I am sure that the “hot” money buying property is not entering legally.

    And is there a way to report a buyer being in breach of FIRB regulations.

      • Thanks, I think we need to get this out there to all the folks that are getting beaten at auctions by foreign bidders.

  5. I suppose now that Canadians have wised up and stop selling to foreigners all those wealthy Asians are turning their attention here.

    This situation is so stupid as to be incredulous.

    The sheer and utter stupidity of it leaves me speechless.

    The sheer and utter complicity of all our so called governments leaves me speechless.

    What ever happened to Govt of the people FOR the people. The whole corrupt situation stinks.

    • True, Canada has just put the brakes on 48,000 applications from the Hong Kong office. All that cash is going to be looking for a new home and if Canada is not available, Australia is a nice alternative.

      Aren’t we the lucky country?

  6. The end of the “Age of Entitlement”…. the next generation wont be entitled to own their own homes ever.

  7. So I sent this to the PM, I would suggest that we all send something like this to our local MP’s

    Dear Mr Abbott

    We are a Australian couple that are looking to buy a house in Sydney, however
    in Sydney the price of a house is now 8-9 times the average income, where the
    normal for a sustainable economy is around 3 times the average income. This
    is pushing house / unit prices out of reach for myself and many of my
    friends.

    The causes of this are well documented.

    1. Restrictive land supply
    2. Lax lending standards
    3. Negative gearing encouraging investors to speculate in the housing market
    4. Foreign buyers moving “hot” money out of China
    5. Excessive immigration

    I would like to know what the LNP plans to do to resolve these issues, do you
    plan to

    1. Release more land to the general public so that developers do not land
    bank as they are currently doing with some holding 30 years plus of supply

    2. Enforce stricter lending like they have implemented in New Zealand to curb
    the risky lending practices like 5% or less deposits.

    3. Save your budget 9 BILLION dollars by removing negative gearing on
    existing builds and helping the construction industry and increasing
    employment in Australia by having it apply to new builds only.

    4. Check on the FIRB as to why a “fake” person (fake details were submitted
    to the FIRB by a reporter) was granted permission to buy a house in Australia
    and why the real estate agents are marketing existing properties so heavily
    in China, and why so many non nationals seem to be buying houses in
    Australia.

    5. Slow immigration so that the Australians that are currently being forced
    out of jobs due to a non competitive manufacturing industry, are able to find
    jobs and continue to contribute to the economy rather than joining the dole
    queue.

    Would the LNP be taking action on these topics that are close to the hearts
    of many Australian voters, or do we need to be looking to other parties to
    provide leadership in these matters?

    Best regards

    • ++++1. I saved this letter as a template to send in protest on behalf of my family. Actually I will get the wife to send it under her name.

      Another paragraph to add of benefit would include:

      Increased productivity in Australia will never be realised when >50% of family income is spent on mortgage repayments and rent for new entrants, as those who understand macro economics the new entrants are where the foundation of growth is achieved. The politico-industrial housing complex in Australia is a parasite to small and medium business and the realisation of competitive productivity in this country. Furthermore, entrepreneaurial spirit is crushed under the weight of such costs to the basics of human life unable to develop and prosper with such a burdan.

      Give me a few LNP and LabOR graves to piss on.

      • How cheap do you need housing to be to inspire your entrepreneurial spirit? The inventors of what’s app were living on food stamps and created a multi-million dollar product. Some times stinking poverty can inspire the entrepreneur.

  8. Two observations – the complicit nature of politicians many of which have property portfolios and apathetic Australians who are having their country sold out from under them and then they wonder why their kids cannot afford to buy a home.

    Try and buy property in Asian countries – we are the dumb country.

  9. I say encourage foreigners to come in and buy buy buy, buy as fast as they can, make this bubble so stupendous you can see it from space. Make the average home price $2m, make it so ridiculously stupidly priced that even blind Freddie will see its a bubble.

    And then it will collapse upon itself. This bubble is not being held up by fundamentals like price/rent or price/income ratios – this flew out the window ages ago. Foreigners are simply buying because other foreigners are buying. Pure speculation – someone buying a new build apartment in Qld from China knows about as much as market fundamentals as someone from Qld knows about buying in Chengdu.

    Let the speculation roll on – let it accelerate actually. Then clean up when it crashes and the foreigners are all heading for the exists, just like it happened in the ’90’s when the Japanese bought blindly and crashed badly.

    • This is exactly right. You can’t fight a mass delusion by telling people they are wrong.
      The more foreigners buy the better since they mostly borrow offshore or are buying outright. Every house sold to them is a “asset” off the books of our banks, and onto the books of an overseas one.
      Selling to foreigners at least shifts let’s us export at little bit of the risk back from whence it came.

  10. Unfortunately the risk is very much here. The more the foreigners buy the more it impacts our currency. Also it impacts our banks because they are lending to the fools trying to compete against the foreign speculators, lending against grossly inflated asset values. Think of how much capital the Australian banks hold – 10% max? How much of a house price crash could they really afford?