Foreign property investors alter “social fabric”

ScreenHunter_06 May. 06 09.27

By Leith van Onselen

Clive Hamilton has written an interesting article in The Guardian arguing that wealthy foreigners are exacerbating Sydney’s housing problems:

Every weekend in Sydney, young Australian couples are turning up at auctions excited at the prospect of finally owning their own home, only to find that other bidders are wealthy foreign buyers with money to burn…

Cash pouring in from China is one of the principal drivers and this flood of unregulated investment, coupled with other factors driving up Sydney house prices, are slowly changing the city’s social fabric in a way that will be felt for generations to come. Couples planning families can no longer afford to buy in the suburbs where they grew up, where they have built friendship networks or where they work. Forced further and further west and south, they are progressively cut off from their old neighbourhoods…

Juwai.com, the leading broker connecting Chinese buyers with overseas property, estimates that 63m Chinese are rich enough to buy property abroad. It claims that over the last three years, the number of Chinese buyers in Australia has grown nine-fold, faster than anywhere else…

The impact of those buyers on Sydney property has only just begun

A good deal of secrecy surrounds the trend, yet observers know something worrying is happening…

So why is the Australian government allowing this to occur? Even the government of Hong Kong, concerned that mainland Chinese investors were pushing up housing prices, slapped a 15% tax on outside buyers. It worked…

While not the only factor driving up house prices – negative gearing has a lot to answer for – the impact of Chinese investment has been substantial.

…housing is not just another asset. It’s where people live, put down roots, raise families and join in their communities… A prudent government would see where we are headed and take steps now.

While there are likely elements of truth in Hamilton’s claims, it is impossible to make an objective assessment as data on foreign investment is woeful. As Fairfax’s Chris Vedelago discovered first hand when trying to gain data on the extent of foreign investment, such information is next to impossible to obtain and is treated as if it was a state secret. Three Freedom of Information (FOI) requests later and the best Vedelago could come up with was a stack of blanked-out and redacted pages from FIRB.

Enforcement of the foreign ownership rules appears equally inadequate. As the mythical Chodley Wontok found out when testing the efficacy of FIRB’s approval processes using bogus visa and passport information, the purported checks and balances in the system designed to prevent foreigners from purchasing pre-existing homes failed dismally, suggesting the rules are little more than window dressing.

A related source of buyer frustration is Australia’s rapid population growth, which is being driven mostly from immigration (see next chart).

ScreenHunter_1320 Feb. 19 10.31

This growth is placing strain not just on housing, but also roads, public transport networks, and other infrastructure. While it is unfortunate that Asian Australians have born the brunt of what is effectively a failure of government policy and planning, such anti-foreign sentiment is only likely to grow as long as immigration levels remain high and underinvestment in infrastructure and housing continues.

Absent a substantial reduction of Australia’s immigration intake, the best way to counter concerns around foreign investment is to first tighten-up the reporting process and make it transparent, so that an objective assessment can be made about the impact of foreign investors. And second, abandon the urban consolidation policies pursued by Australia’s state governments, along with tax incentives like negative gearing. Both policies are incompatible with Australia’s high-growth population policy, act to force-up house and land prices, and worsen affordability.

With improved housing affordability and reporting, concerns around foreign investment would dissipate, since domestic buyers would no longer feel shut-out and wouldn’t be in search of a scapegoat.

But as long as Australia’s governments continues to pump demand and choke supply, while hiding the extent of foreign investment, buyers will continue to miss-out, frustrations will grow, and they will lash-out.

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Comments

  1. Boom time Hockey

    “The most important point at this stage is that there is confidence back in the real estate market in Australia.”

    “Rising house prices actually help to make marginal property development viable. What this will do is make supply more readily available.”

    Wealth Creationist Abbott

    “Don’t forget … if housing prices go up, sure that makes it harder to get into the market, but it also means that everyone who is in the market has a more valuable asset.”

    With tweedle dum and tweedle dee opinions like that, there’s no hope for meaningful change

    • Subtext – Hockey

      ” My property portfolio is doing very nicely thank you, I think I might look into some development opportunities”

      Abbott –

      “I’ve got a home and my kids do too. Everything is sweet”

    • Wealth Creationist Abbott

      You got the Creationist part right. I don’t think Abbott believes in the science of evolution.

      As for wealth, it is wealth stolen from the next generation via ponzi financed mega mortgage debt..

    • Hi sydboy007,
      I remember well, back about 2008 after Rudd changed the Foreign Investment Rules, sucking in overseas investors, and the story started getting in the papers about house prices shooting up and young Australians being priced out of the market. Abbott was asked about this back then by a reporter, and Abbott’s reply was, “Aren’t people who sell their house entitled to get as much money for it as they can”. He well and truly lost me as a supporter there and then, and for all time.

      • i dont think scientific belief/faith is necessarily an oxymoron. The facts might indicate a certain scenario without proving them beyond all reasonable doubt (whatever that is) and one might choose to base actions/world view around that scenario … that is a kind of faith.

      • +1 squirrel. Scientific theory is just that. A hypothesis or theory. If it is irrevocable proven, it becomes scientific law.

      • Scientific theory is just that. A hypothesis or theory. If it is irrevocable proven, it becomes scientific law.

        Science is never “irrevocably proven”.

        That is a pretty core tenet of the scientific method.

      • @drsmithy Fair point.

        Should have rephrased.

        If it is irrevocable proven to

        if the theory stands up to repeated and strenuous testing, it becomes scientific law.

        Note laws can be proven false if new data comes to hand disproving said law.

      • True Dr Smithy, but at the same time we cant go to the other extreme and become post modern and reject that truth exists or take Poppers line that everything is falsifiable. Otherwise we might as well all go home. I’m happy to say that truth exists, but we cant be complacent about what we accept as truth and also accept that higher level truths may be refined by lower level truths as knowledge advances.

      • @flyingfox I think you may need to take a science class again. A law a descriptive account of how nature will behave under certain conditions.

        Scientific theory is not an hypotheses that becomes a law. It’s a hypotheses that is tested, and if supported by evidence becomes a theory. They give an overarching explanation of how nature works and why it has particular characteristics. Examples include germ and gravitational theory.

  2. Couple of options:
    1. stick head in sand – change nothing:
    * FIRB records nothing, no changes to foreign investment in residential property purchases especially in relation to sales to students & temp visa holders;
    * tax advantages continue for local investors/investor clubs (now seem to facilitate ‘under the radar’ sales of existing dwellings to off-shore buyers who may or may not make future residence a buying reason in their speculative play);
    * State land release policies to remain intact – unchanged so as to keep prices inflated;
    * Immigration dept to maintain high intake rates;
    2. buy a range of posturepedic pillows to send to various govt depts involved in causing this trend

  3. Federal Liberal Party constitution:

    “The objectives of the Organisation shall be to have an Australian nation:-

    (n) in which family life is seen as fundamental to the well-being of society, and in which every family is enabled to live in and preferably to own a comfortable home at reasonable cost, and with adequate community amenities.”

    The current Government need to get their shit together.

    • Clearly you have an old copy of the constitution. The updated version is as follows:

      (n) in which family life is seen as a bit of a drain on productivity, and in which every family is enabled to rent a run down, poorly maintained, home while some f…g speculating dog uses it as a tax shelter.

      • Fearmongering it is UE.

        Until there is a comprehensive breakdown of foreign property purchasers: numbers; country; investment v resident etc to juxtapose with domestic property buyers we really know nothing.

        Home ownership had already surpassed the capacity of many buyers regardless of the alleged influx of ‘foreigners’, it was already a problem and of course if the anecdotal evidence is true the problem will exacerbated by new (cashed up) purchasers. But it already existed.

        Social fabric changes. Always has and always will. That is what makes a society and a culture interesting and vibrant – nothing is static. Oh well you make get the occasional nomadic Nepalese tribe but modern societies evolve. Immigration has brought tremendous benefit to this nation over the last couple of hundred years – and guess what – the social fabric has changed.

        The same couple walking down the street unable to afford to buy (and they could not afford to in the first place) will pass another couple walking in the opposite direction who can. This couple may have come from Singapore the UK or Beijing – no problem with that – they will adapt to life in Australia bringing with them cultural mores which over time morph and yes societies social fabric changes.

        Housing affordability is one thing; immigration policy another; foreign property ownership shrouded in anecdote; and the social fabric will change. You can guarantee it.

      • “Fearmongering it is UE.

        Until there is a comprehensive breakdown of foreign property purchasers: numbers; country; investment v resident etc to juxtapose with domestic property buyers we really know nothing.”

        So if data doesn’t exist (due to deliberate suppression from the Government), there is no problem and any such claims are “fearmongering”.

        Man, you come up with some beautifully twisted arguments some times.

      • 3d1K – better stats is part of what UE is asking for precisely so people like yourself cant pretent there is no problem.

      • The references to cash pouring in from China changing the social fabric are blatant fearmongering.

        Many people want live and own property in Sydney. There are supply constraints. Prices are forced up.

        We should deal with the supply issues. That some of the demand is coming from buyers of Chinese ethnicity is not a legitimate concern.

      • More utterly specious nonsense from 3d1k

        Basically a rerun of the old cigarette lobby line on smokes being bad for you – ‘there is no proof’

        It isnt fearmongering so much as the stock standard day to day experience of a lot of ordinary people. Reference to Nepalese tribes is just a distraction for the contemplative.

        The attempt to handball the problem backwards historically (it already existed or it has always existed) is pure bullshido – not that many years ago houses were considerably cheaper in real terms (so more people who wanted them were buying them where they wanted). This is the first generation of Australians who are being deliberately priced out of residential real estate as a matter of policy by Governments (both ALP and Liberal – but at the moment the denial or ignorance is coming from the Liberals) – that deliberate policy takes the form of land strangulation and deliberate asset price bloating, but the large scale buying by Chinese ‘investors’ is something which has not happened before, and it too is deliberate policy – FIRB’s position (turning a blind eye to applications) is a reflection of government policy and the Liberals could change it in a day if they were of a mind to.

        If that is government policy then all good and well, but they can come out and acknowledge that and maybe explain it to those on the receiving end of the policy (those aspiring to buy homes – particularly in the inner burbs of Sydney and Melbourne). Yes societies do change, but governments change very quickly when a significant number of people feel they are being treated with contempt and silence is contempt.

        and comments suggesting affordable housing being one thing and immigration policy or foreign purchase of Australian residential real estate policy being another is sheer bull. They feed into each other fairly directly.

        I met up with some international journos staying in Melbourne on the weekend and their first line to me was ‘you should see it here after dark….there is nobody here but ……’ I live an hours drive away, but it isnt the first time I have heard the observation – generally from people of quite open immigration minds and tending towards socialists and multicultural Australia proponents (as am I).

      • Gunna what don’t you get?

        Society and culture changes over time. The society we have now is different to that of the seventies which was different to that if the fifties ad infinitum.

        Property prices in urban regions of Australia are at levels that prohibit the entry of many but not all first home buyers. There are numerous issues at play here including land supply and town planning restrictions; speculator/investor activity aided by attractive tax regime; credit boom of the early 2000s; no recession for two decades and particularly strong economy thru period of mining investment boom etc. This is not a new phenomenon.

        We understand from anecdotal information that Sydney in particular is subject to an influx of property purchases primarily from mainland China. This influx Hamilton largely apportions blame for rising property prices and potential destruction of the social fabric, as he sees it.

        No data, no evidence, not even a tip toward the fact the often social change is a good thing, no recognition that just as property prices have inflated they may well deflate (and that too may change the social fabric). It is baseless fearmongering dressed as caring social critique. This issue is multifaceted and Hamilton has targeted a very minor one – if indeed it is even one at all – and certainly not one applicable to the nation as a whole.

        Curiously Hamilton would probably be a vocal critic of something like the Cronulla riots…

      • “Social fabric changes. Always has and always will. That is what makes a society and a culture interesting and vibrant – nothing is static.”

        3d1k,

        I really, truly do desire to give you the benefit of any and all possible doubt.

        But seriously, in observing your comments on this (and other subjects) — and in particular, the rationalisations that you offer in support of your views — I find myself increasingly compelled towards the following character assessment.

        Either you are:

        (a) incredibly naive;
        (b) ignorant of history; and/or
        (c) devoid of a functioning Conscience.

        Forgive me. No offence intended. That is just how it appears.

      • Op8, Lorax is convinced it’s the last as obviously it’s not either of the other two 😉

        If you can refute the statement you quote, go for it!

      • 3d1k,

        Alas, I fear that the following is pointless, simply because you almost certainly realise this already, and are just choosing to be obtuse. Nonetheless, here goes nothing 😉 …

        “Social fabric changes. Always has and always will. That is what makes a society and a culture interesting and vibrant – nothing is static.”

        Again, forgive me if I am misconstruing your comment. However, my plain reading of your words above-quoted and bolded, clearly says to me that your argument could be distilled as follows:

        Context: social fabric; society and culture; concerns of others regarding change in same — Change is inevitable; change is “interesting” and “vibrant”; ergo, any change is good, (ie), the nature and consequences of change should be welcomed.

        Such a deliberate over-simplification / dismissal of concerns over change in the social fabric can, in my opinion, only come from someone manifesting one or all of the three characteristics I pointed to.

        Either or both of the first two would (unlike Lorax) be my own guess 😉

      • What, no refutation? Of course not. Because in essence I am correct. Change is a constant!

        ‘Interesting and vibrant’ you have decided to load with moral interpretation. I prefer to simply restate ‘interesting and vibrant’ in the context of challenge, change, lack of entropy, life and so on.

        My world view is broadly Taoist. Read my avatar 😉

      • OP8, the simple answer to 3D1k is that a) not all change is progress and b) humans can influence change and therefore c) we should try to steer change towards progress and away from regression. If this is not the case, then we are fatalists/determinists and there is no point having a discussion on things we cant change (except for the fact that in a fatalist world we cant control whether or not to have a discussion and the opinions expressed therefore)
        … and I’m not convinced things change all that much anyway!

      • I’m yet to be convinced this is not fear mongering, especially when Clive Hamilton prefers to cite ‘research’ also used by Andrew Bolt, Alan Jones et al, and includes negative personal views and anecdotal evidence on par with Herald Sun comments….

        Claims are made without evidence, then those who disagree are then required to show evidence to counter the original claim, even though the original claim is not supported by evidence….

        Who’s is to say, least of all Hamilton, what our ‘social fabric’ is? In other words if we wish to enforce an acceptable social fabric, who gets to dictate that? Knowing his influences I definitely do not him or others telling me how I should view my own country.

        Similar strategies have been used in the past in 1930s Germany to demonise those who are different.. what is ‘Chinese’ anyway?

        Why does Hamilton not cite local property or SMSF investors, negative gearing, low interest rates, dodgy clearance rates and the other visible ‘immigrants’ such as backpackers and students (who are obviously buying up loads of property)?

        Like Europeans say (e.g. Germans assume all Australians are ‘shallow’), how to start a riot at an Australian dinner party, start talking about refugees, ‘immigrants’ and aboriginals (and potential for property prices to go down)…. meanwhile nothing changes as we vote for our own benefit via two parties masquerading as the DLP with social views from the 1950s…. and as an Oz American journo said once (and did ask permission to speak openly, and warned it may not be nice), these issues and the negative reactions based on personal views etc. and propagated by media, politicians and ‘influencers’ make too many Australians look like losers.

    • This is getting old.

      Instead of your usual attack on the author you could try addressing some of the points the article mentioned.

      • Because the Mystic Economist’s opine for a socially fairer and more equitable economy, peace on earth and goodwill to all men type stuff has clearly met its limitation.

      • 2D, I see very few social democrat handwringers on macrobiz.

        I an appalled by the economic waste and inefficiency of the model you champion for pay. I want equitable taxes so all may flourish, not just Gina and Andrew and the army of tax accountants that are consulted like soothsayers before any decision is made.

        It is easy to argue citizens need only concern themselves with their own circle, but look at the name of this site: macrobusiness. That is a particular challenge to look at the big picture, the aggregate of all these petty actions in self interest.

        I am interested in improving the overall system. This is where the big benefits are.

    • 3d, why don’t you prove that it is fear-mongering by getting us the actual data on foreign investment in residential property from your mates in the government? Make a useful contribution for a change.

    • 3d1k

      “Until there is a comprehensive breakdown of foreign property purchasers: numbers; country; investment v resident etc to juxtapose with domestic property buyers we really know nothing.”

      Wrong.

      You can’t run a business only making decisions when the appropriate statistics have been released by your MBA workers.

      You need to speak to people and find out what is happening.

      The use of anecdotal information to make decisions is perfectly valid, it just requires a degree of caution due to the uncertainty.

    • A strangely personal attack even for you 3d. Some history there?
      It is a case of ongoing FIRB regulatory failure. Pure and simple.
      Fix it Joe.

    • 3d’s on the job. No challenge to the conservative status quo and agenda that can’t be obfuscated. Would sell you down the river while telling you to enjoy the scenery.

    • What an absolutely insane situation. Clive Hamilton is just saying exactly what is going on. People are accused of ‘fearmongering’ – I note the OP is Chinese presumably by the picture next to their name. 3d1k/ OP you obviously have a vested interest in your opinion, perhaps you are one of the foreign buyers Clive Hamilton is referring to?

  4. This shows how Australia loves wealthy immigrants and wants to get rid of poor immigrants.

    “Fear mongering” ? I don’t think so.

    • In italian accent…

      “you come on big boat….i come on little bit smaller boat….but same…you me same…”

      words i heard many years ago in the neighbourhood.

  5. It’s interesting how some nations restrict the right to own land to citizens and, incidentally, don’t sell citizenship.

      • But the FIRB turns a blind eye, and their (in)actions are supported by the government. In any case, how does one differentiate between a foreign bidder and one who has just moved here?

      • And if it is post-settlement then the government confiscates the asset with no compensation available to the unlawful purchase. This’ll get the budget back on track.

  6. we need to a) let a lot less foreigners in in the first place b) ban all foreign investment in residential property (including students). Its too difficult to police otherwise.

    That said, the growing Chinese middle class will remain a major problem especially as many are able to get around the rules, probably by purchasing via family members/trusts/companies. Its hard to stop this, which is why its imperitive land taxes are introduced as a disincentive and also a way to fund a reduction in income taxes resulting in a transfer of some of the benefits to existing citizens who actually earn a living here.

    in addition, lots of new land supply removes the speculative premium so Aus property is not seen as a one way high returns bet.

    Time to act now Tony.

      • nice find jimbo.

        My partner works as a bank teller, the AFP would do well to just stand there for the day and listen to how much dodgy transactions are going on each day.

        Or give bank tellers an AFP number to call each time they suspect something dodgy.

        Want to balance the budget? Just talk to the AFP.

      • @Dibit

        Doesn’t your partners bank have a Anti-money laundering policy? Shouldn’t their compliance department be doing something about the dodgy transactions and reporting them to AUSTRAC for investigation?

      • @Dibit, I can guarantee there is a serious monitoring and reporting system running in the background that scans every transaction.

        Sure, it doesn’t capture impressions from front-line staff but it can see the flow of every dollar and cent.

        There are pretty strict monitoring and reporting requirements for banks and other financial institutions.

      • @AB

        Sophisticated in what sense? What are they scanning for?

        Obviously not going to go into specifics but did some of my own checking and some things didn’t add up.

        Big computers making sure the $100 notes are real??

      • Jimbo,

        in my daily work, I’ve seen foreign students paying their university tuition fees in cash with amount ranging between $8,000 to $20,000. The school’s cashier has to hire special security pick-up by Armaguard / Chubb to bring the cash to the bank. This is not news…it happens every semester start.

      • No doubt Deo. Despite the social consequences, they have a brilliant capacity to hide money from the authorities/taxman. I wish I had the fortitude, I’d be much better off.

        The guy in the article probably has a reasonable case for discrimination considering the torrent of foreign money flowing here! Why him??

  7. But as long as Australia’s governments continues to pump demand and choke supply, while hiding the extent of foreign investment, buyers will continue to miss-out, frustrations will grow, and they will lash-out.

    The long-term effects on social fabric and national cohesion are totally not considered by the politicians. They’re truly acting like rats.

    The frustration will be felt not only by the original citizens but also by the earlier migrant societies themselves. Combined with lack of social trust and the feeling of nationalistic cohesion due to misplaced faith on extreme cultural relativism, I fear this will trigger minor disobedience at the start and open rebellion much later within the Australian society.

    I spotted more and more instances of cash economy and tax avoidance by regular people in Sydney (disobedience) and would not be surprised such minor incidents will grow to open rebellion towards the state institutions like we’ve seen in fail countries like Greece in the future.

  8. I have to say, in my observing of the volume, trend, and tone, of commentary and (even moreso) reader comments, relating to the interrelated topics of housing affordability, foreign ownership, immigration policy, social and cultural impacts, et al, and in witnessing the very obvious slow and steady increase in frustration (thence, anger), I cannot help but fear greatly for what lies in store for our nation and community.

    Some very bad seeds have been, and are being, sowed amongst us.

    The final words of this prescient quotation spring ominously to mind –

    “In spite of the holy promises of people to banish war once and for all, in spite of the cry of millions ‘never again war’ in spite of all the hopes for a better future I have this to say: If the present monetary system based on interest and compound interest remains in operation, I dare to predict today that it will take less than twenty-five years until we have a new and even worse war. I can foresee the coming development clearly. The present degree of technological advancement will quickly result in a record performance of industry. The buildup of capital will be fast in spite of the enormous losses during the war, and through the oversupply [of money] the interest rate will be lowered [until the money speculators refuse to lower their rates any further]. Money will then be hoarded [causing predictable deflation], economic activities will diminish, and increasing numbers of unemployed persons will roam the streets … within these discontented masses, wild, revolutionary ideas will arise and with it also the poisonous plant called ‘Super Nationalism’ will proliferate. No country will understand the other, and the end can only be war again.”

    –Silvio Gesell (1918)

    http://sacred-economics.com/sacred-economics-chapter-6-the-economics-of-usury/

    • Opinion8Red

      While I do feel anger about the issue, I have a lot of faith that if things ever reach flash point, we have enough collective sense to focus our energy on the enemy, which is those politicians acting for the few, not the many.

      It feels like we are all serfs in the paddock, there is a moat around the castle with a monster (MSM) we individually don’t have the firepower to kill and then there is the castle full of (mostly) wolves.

      And the days, weeks and months grind on.

      A history lecturer from Melb Uni told me once if I remember correctly that housing was the downfall of Rome. Once the affordable housing was lost to the landlords it was pretty much game over for them..

      • Sorry Dibit, but I have to disagree. The politicians are actually acting for the many. Anyone with property is happy to see their values rise, and not many property owners are aware (or care) about the consequences. There are too many people who have made a fortune from property.

        I do sense a rising anger here. I am extremely angry when I read about the influx of foreign investors having precedence over our own. I don’t know how you can maintain the faith that there is enough collective sense to focus our energy on the enemy – politicians. The politicians get away with selling us all out, and doing everything in their power to keep housing prices at unaffordable levels, but they will never suffer any consequences. They will continue to award themselves massive payrises whilst instructing others to tighten their belts. Their snouts are so deeply entrenched in the trough, they can barely lift them to have a good look at what is happening.

      • md

        Politicians are acting for the many in that there are a greater proportion of people with a mortgage or own outright compared with renters.

        Politicians are not acting for the many businesses who have consumers walking into their stores who are spending a larger proportion of their wage on rent/mortgage than they would be if the demand boosters and supply restrictions on housing were not in place.

        My comment about faith is more about the fact that I believe we are smart enough to not blame “Chinese people” for our housing problems. We are mature enough to know it is our policies or lack of certain policies that are the source of the problem.

        The question is always why? why can they keep selling us out?

        When we keep thinking that we cannot win, when we believe that the problem is beyond our capacity then yes, we will keep getting sold out by the politicians and their large “for the rest of your life at full pay” pensions.

  9. Mr Hamilton should be congratulated on raising the gross regulatory failure of the FIRB in the MSM.

    It is part of the FIRB charter to “monitor and ensure compliance” with the FATA provisions.

    What is the FIRB doing to “monitor and ensure compliance” with the requirement that all sales of existing dwellings to non-citizens be FIRB approved in advance?

    Why hasn’t the FIRB conducted audits of recent sales of existing dwellings to “monitor and ensure compliance”?

    Why doesn’t the FIRB require the attachment of a copy of the purchasers passport /FIRB approval to all tranfers of title of existing dwellings?

    Why aren’t these questions being asked of the FIRB/Hockey?

    • They don’t care Pat. I wrote to Gillard as my local member, with a cc to Hockey when he was in opposition on this issue. I thought there might have been some leverage for him there. Silence! Re-sent it. Silence! Questioned them again as to why they refused to answer queries from the constituency. Silence! I later found out Gillard’s other half was given a lucrative job selling apartments to foreigners at the time foreign purchase rules were relaxed. The penny dropped. No wonder she later bought a $2m property for herself.

      • Goon on you, Jimbo…you tried hard exercising your political right although it fell into deaf ears. As I mentioned in another post, the current politician crops we have were and still are acting like rats, thinking about their own stomach and not the national interests.

        I am waiting for a day when Australian young generation feel angrier and more frustrated and start actual on-the-street protest…the bigger, the better and demanding their political right to have affordable home in their own country. I surely will participate, though I may not be considered “young” right now at mid 40s.

        We need our version of Aussie Spring with some revolutionary gusto and fighting passion from Gen X, Y and the next generation. Lots of street protests happened in Australian capital cities for much less important issues, can’t understand why we never have one to demand better deal for Aussie’s young generation in terms of wealth distribution and home ownership opportunities.

  10. Gosh this gets old.

    Australia (Sydney in particular) needs to fix its RE supply engine, this means easier development approvals and more land available for development. Forget that word (more) change it to ALL rural land should be available for development. Foreigners will run out of interest long long before Australia runs out of land. In the mean time we’d all enjoy a construction boom, cheap rents and lots of choice all funded from China, what’s not to love about this?

    FIX THE SUPPLY PROBLEM

    • The current gordion knot of supply issues is going to take a while to untangle, especially with no cohesive national plan in place to address it.

      First action would be to immediately halt foreign purchases, no ifs or buts or exemptions. Bringing supply online will be meaningless if the increase in foreign sourced demand just accelerates at a faster pace.

      • Pm, even it we did outlaw foreign purchases, there is no monitoring/compliance/enforcement framework in place to prevent it happening anyway. That is the heart of the problem.

      • Or put another way, Piss off foreigners this it’s my market and it’s rigged like it is because over 60% of Aussies love it this way.

        Sorry mate but free markets dont work that way, Any time that you create a monopolistic advantage outsiders will find a way to profit from that advantage, In the financial world its called arbitrage . If foreigners become a problem then you can just destroy the advantage, the supply restrictions are 100% your creation, sure there are geographic bounds to the Sydney valley but they’re not the real problem, not yet anyway.

        There are huge tracts of ex industrial land close in to Sydney that could be redeveloped, think of a huge Chinese funded hotel / resort complex where the current Kurnell refinery is. Sure it’d take a lot of work and a lot more money but that’s exactly what China can supply, They’ve got the labor, the money and the expertise at doing these mega redevelopment complexes, leverage this and enjoy the result.

      • CB
        Or put another way – nothing personal, but we will determine how ‘free’ access to our residential housing market is to foreign investors, in accordance with considerations of national interest and other domestic conditions – just like any sensible country in the world (including China) would do. Who really believes in ‘free’ markets ? The Chinese ? Global markets are selectively ‘free’ at best, In reality, those with a monopolistic advantage fight tooth and nail to maintain it, with all of the political manoeuvring that implies; short of political change beyond the monopolist’s ability to control there isn’t necessarily an arbitrage opportunity. The monopoly in release of land is not going to be arbitraged away by the Chinese – not sure what you are getting at in the context you mention it. The desire of a privileged portion of Chinese to diversity their wealth out of their home country just so happens to coincide with a period of immense misallocation of our domestic capital into housing. The Chinese are clearly not the sole cause, but that is not to say it shouldn’t be addressed. If we want to attract Chinese investment into commercial re-development, there’s no reason that can’t be sold on a long-term leasehold basis.

      • @Spleenblat

        I have no problems with countries making laws that control their domestic markets, no problems at all, its what politicians should do, all I’m saying is that we should make create sensible laws that address our real problems, which, in this case, is SUPPLY not foreigners.

        Many countries could conceivably run out of residential land for their own people if they didn’t have highly restrictive RE ownership policies, Switzerland and Singapore are two good examples. Australia however will definitely not run out of land, suitable for residential housing development, at any time in my life time or I dare say the life times of my children. This means for all real planning analysis purposes our supply is infinite.

        The supply of Mosman or Hunters Hill houses is obviously far from infinite, however if this is what rich Chinese want then I cant think of any good economic justification for not selling it to them. If our aim is social engineering policy then that’s a different problem altogether, its also one that I have no opinion on.

        BTW I’m all for Land Taxes even taxes that have special exemptions for resident owners or income tax rebates, lot of countries have these sorts of laws that give advantage to their own. What I’m completely against is laws that are just feel good solutions, they do nothing to rectify the underlying problems and simply create additional jobs for those charged with enforcing the stupid new laws, now that’s something that could aptly be labeled as Australian Disease.

    • It would only get my support if it applied to new supply. I do not feel it is in our interest to encourage foreign investment in existing housing stock but, if they wish to finance new stock I am all for it.

  11. http://resources.knightfrank.com/GetResearchResource.ashx?versionid=2017&type=1

    “Over the 12 months to June 2013, 49% of all £1m+ sales in prime central London went to foreign buyers by nationality”

    “Figure 3 confirms that in the two years to June 2013, 69% of prime central London new-build purchases were to foreign buyers by nationality, but only 49% by residence”

    Do FIRB release statistics like this locally?

    If we have stats at all similar to this, we need policies put in place to effect some change.

  12. Can see this in parts of Melbourne, especially Glen Waverley, Mount Waverley, Balwyn ect

    Fairfax reported that 90% of recent sales in Glen Waverley had gone to Chinese buyers, 60% of these to Chinese living overseas

    One only needs to look at the staff at the local LJ Hooker office to get an idea of the target market

    http://glenwaverley.ljhooker.com.au/about-us/our-team

    • Jesus.

      Been practicing my cold calling lately, may have to look into how to wash the electoral roll against the DNC register and start seeing who wants to support the removal of negative gearing etc..

    • One of my workmates went to an auction with his sister around Glen Waverley and he said she was one of the last 2 bidders but it eventually went to a Chinese family.

      I said, “So what?”.

      He said they went to an auction the following day and his sister again lost out, but to the same family!

      He was laughing saying they must be rich buying a house for each of their kids.

      • I’d laugh if it wasn’t so common, interesting though, Glen Waverley isn’t exactly cheap so we are talking about folks with quite a bit of money

        I have a friend that came here from the mainland to study a few years back, she’s 30, owns three houses on 650sqm blocks around Glen Waverley

        Her parents own a business on the mainland and wire her $700-$900k every 18 months to buy another house, they only want houses with a substantial land content

      • Hi Dibit,

        I think one of Marc Faber’s favourite quotes is how the Hong Kong real estate market went down in the late 90s, “by 70%. Not 17%, seven zero percent”. Doesn’t surprise me. I’m half chinese and the chinese relatives I know love to gamble, on anything!

      • Cangaceiro99,

        The Chinese cultural inclination to gamble/ have a punt, will mean they are just as inclined to pull out quickly if it no longer becomes profitable.

        It’s up to us to change the political mood here, they will sense the change when it happens.

        Or we just watch Tony cut spending and watch the show.

      • Hi Dibit,

        The difficulty is the market is not transparent, so I don’t know if individuals are buying or corporations. If it’s individuals, I would say yes, they may panic and sell. If it’s an arm of China’s foreign investment office, perhaps not.

        An anecdote to explain.

        My friend who lives in Glen Iris went to an auction. Their was a Chinese couple who bid on the auction and lost. He said to them, “come look at my place, I live around the corner and I’m selling my house.”

        So they came around to look at this place and had a good old chat and became quite friendly. Then the couple said to him, actually they weren’t a real couple and they are only over here to buy properties on behalf of a company in mainland China. They just pose as a couple for the auction process.

        Go anywhere in south east asia and same thing is happening. Real estate is being bid up to incredible prices by foreigners.

        China has alot of $USD as reserves. I’m sure they would like to exchange some of that for real assets.

      • cangaceiro99

        Wow.

        I have literally just moved to Glen Iris from living in Melbourne in the past week. It’s a very nice suburb.

        I guess this is the reason I can’t read Macrobusiness for more than a few days at a time before pretending it doesn’t exist for a month or two..

        These issues just get too frustrating..

      • @flyingfox

        Based on what ive read i thinks it’s both. Chinese leadership launched a big crackdown on corruption last year with local officiala the focus. Those guys are finding it harder to buy their 10-20 local properties and not look corrupt. So buy off shore is option now as harder to prove corruption and the communist party can’t take off you if found guilty.

    • Dibit,

      Interesting

      Although if you knew any of these people you would find they are very interested in moving as much of their money out of the mainland as possible, the idea is that they see our property market as a basically no risk investment

      • Although if you knew any of these people you would find they are very interested in moving as much of their money out of the mainland as possible,

        And you assume that none of it leveraged back home. Chinese credit creation in Jan dwarfed all the QE in the rest of the world put together.

        the idea is that they see our property market as a basically no risk investment

        Until it isn’t. This is what everyone was saying about the GC prior to the GFC. When the dollar started falling, everyone starting profit taking.

      • Sure, some of it must be leveraged

        As for the dollar, this time if our dollar drops expect to see an even greater frenzy at auctions

        When our dollar dropped by 10-15 cents v the SG dollar last my friends parents (living in SG) were quickly on the phone to their kids here organising wires and telling their kids to buy now

    • Charles Ponzi

      True, hence why we can’t choose to work 4 days a week and support a partner with children…

      ONE of our essential living costs is full of helium.

  13. OMG,

    not too long ago was at a take-way shop in Melbourne reading a Chinese focused newspaper and they were talking about a wealthy business man who had been executed on the mainland. Authorities accused him of dodgy business deals but article said all the other investors had full confidence in him.

    Hence, many wealthy people on the mainland wanted to get out because they know their money doesn’t protect them from the state.

    There’s a media release from Reiv with a point in there that about 10 million wealthy chinese intend to migrate here over the next 10 years.

    • Dibit, this is interesting

      Theres an old saying in a certain part of Eastern Europe (former communist country) that went along the lines of ‘be careful which way the wind blows’

      Basically, they meant one day you are liked by the authorities, and the next day you aren’t

      This might explain why many would much rather take their winnings and leave and also to quickly move their winnings on outside of the mainland to ensure these don’t get taken when the wind changes

      Sydney and Melbourne will look quite different in a decade, anyone for dumplings?

      • Sydney and Melbourne will look quite different in a decade, anyone for dumplings?

        ROFL…uh how? If you haven’t noticed, everyone around save for the the native aboriginals came here on a boat (water or air).

        Dude we are already a mish-mash of cultures. It is not going to look much different.

      • I think you can avoid the ridiculous prices but only if you buy in areas these folks don’t desire

        They don’t much like the northern suburbs or the west, and they don’t like the beach, anything between Glen Waverley and Balwyn is seeing massive price increases, especially in the school zones

        Matter of fact I feel like some pork and prawn dumplings right now

        Yes FF, we are a mish mash, agreed

  14. Clive Hamilton has completely missed the point that governments at all levels have changed “the social fabric” in regards to housing costs far more than all the foreign buyers could ever do. Talk about not seeing the forest for the trees.

  15. there is allot of talk about do this and do that, where do we go to support the views of MB? do you guys have someone in the politcal system where your opinions align because we can talk crap here all we want.

    Im 26 from WA, and i want change…. and I want to offer my support to someone with the skills willing to stand up and make the change.

    where do I go, who do I see?

    • Late last year Gunnamatta mentioned that he might enter the political arena. He would be great – he knows his stuff really well and is extremely articulate.

      Also Catherine Cashmore has been vocal and she did once say she was considering a political move. She has some clout, and although she is a buyer’s advocate, the rest of the real estate industry hate her for her views. That has to stand in her favour.

      I agree with you, we talk crap on this website, and come up with good ideas but politicians and those who are in a position to make changes are not the ones reading – we’re all preaching to the converted. Nothing changes and it just gets worse each year.

      • i wonder if MB can do an article that addresses this issue:

        we all want change, but how do we change it?, whose views in the political system best align with the views of your readers and so on.

  16. The Irish Penal Laws delivered in a “soft” form. Rather than rout let them buy in to subgugation. The highest bidder and damn the people. Absentee lanlords. WTF.

    THERE IS MORE TO LIFE AND SOCIETY THAN THE THE NAKED$, my dear 3.k.

    Hopefully you will meet a naked buck like meselve!! ( in person) FU