Chinese are speculating in Australian realty

casinos-china

From John Lee at locked BS today:

Chinese citizens have become quite clever and skilled at ‘illegally’ transferring large amounts of money out of the country…This is important because it is overwhelmingly the uber-rich – covering the top 1 per cent of households – that have the nous, means and connections to exploit these techniques for capital flight…much of the money entering the Australian and other residential property markets is doing so because of intricately constructed schemes…

…It could be that many want to emigrate [but] the ultra-rich are more inclined to want to stay in China for a number of reasons…One is that being intimately connected to the Chinese Communist Party, as almost all the ultra-rich are, they have no chance of accumulating similar wealth outside China’s CCP-dominated political-economy.

So if they do not want to emigrate, why are they buying such large assets as Australian residential property for themselves or their children, many of whom are students in Australian universities?

…real deposit interest rates remain close to zero or negative in China, as the government remains stuck in a pattern of encouraging investment over consumption (despite what the official press is saying). Why not speculate on a home in Sydney’s Chatswood or Melbourne’s St Kilda when the few million dollars would be losing value in the domestic banking system? Besides, local Chinese citizens realise that the fundamentals of the Chinese residential housing market are even more precarious than so-called bubble housing markets in countries such as Australia.

If that’s true then certain implications follow:

  • the flow of investment will be cyclical and dry up if the market turns;
  • a falling dollar may prevent it being withdrawn as speculators do not wish to crystallize losses, but;
  • Chinese speculators don’t know what they’re doing because if Chinese property crashes so will Australia’s and the falling dollar will double the losses, and;
  • we’re selling out our children for the benefit of Chinese hot money.

All good, peeps!

Comments

  1. Wake up, make coffee, read speculative property porn article with picture of busty asian woman over roulette table.

    Love ‘Srtaya.

  2. No surprise there, we are increasingly being shafted in the pursuit of Chinese money, one of the most destructive things Rudd unleashed onto the Australian public.

  3. Marvellous public policy outcome.

    Outsource economic management to the RBA and its interest rate, debt driving, house price rising lever.

    When desperate drive debt engine with lower rates.

    When house prices soften and put debt engine at risk allow foreign buyers to help boost prices.

    Foreign buyers help push up $AUS

    High $AUS drives down domestic manufacturing and other export sectors.

    More downward pressure on house prices.

    Solution ? – Even Lower interest rates amd further assistance for foreign sales of real estate.

    At some point Captain Glenn Stevens will fly the economy into terrain with a woop woop ‘pull up’ ‘pull up’ siren sounding.

    And the main stream commentators and FIRE pet economists will all say – no one could see it coming.

  4. Our government’s pro-speculative mindset and policy settings attract foreign funds at the same time as China has taken anti-speculative measures, known as home purchase restrictions (HPR), to cool the market:
    • homeowners who sell their homes will be levied an income tax as high as 20% of the profit they make on the transaction;
    • major cities, excluding Lhasa, have been asked to set annual price targets for newly-built homes;
    • new measures bar non-residents who’ve lived in the city less than three years from buying a house.
    • all residents under the age of 20 will be banned from buying. (in Beijing)
    http://www.cnbc.com/id/100516350
    Here we give foreign speculators $5,000 to buy new property and allow students and temp visa holders to buy existing homes.
    Obvious both Liberals and Labor are out to destroy the joint.
    Should be done and dusted within 50 years.

    • 50 years? I reckon 30 years is more than long enough for Australia to become a southern province of China…

  5. They would do much better investing in the US. The prices there are not in a bubble and the USD will go up when the China/Aus bubble bursts.