NZ war erupts over Chinese property buying

By Leith van Onselen

A political war has erupted across the pond after the Labour Party’s housing spokesperson, Phil Twyford, released a large Auckland real estate firm’s data showing that almost 40% of buyers in the three months to the end of April had Chinese names, despite Chinese-New Zealanders making up only 9% of Auckland’s population.

This massive over representation, Mr Twyford claimed, meant that there was large scale investment from Chinese nationals investing in Auckland real estate, which has helped drive the massive 26% year-on-year price growth across the metro area.

From Radio New Zealand:

Mr Twyford said he had no regrets raising the matter and warned Chinese investors could spend up to $16 billion on Auckland property over the next ten years.

“This is a vital public debate that we need to be having in New Zealand about the impact of offshore investment on the housing market. Property speculation is rampant in Auckland. It is, I believe, one of the key factors behind skyrocketing house prices.”

He said there was mounting evidence of the impact Chinese buyers were having on Auckland house prices in particular.

“Im talking about all of the international commentary and evidence about the wall of private Chinese investment that is moving into real estate markets, particularly around the Pacific Rim.”

He said foreign investment in housing needed to be banned.

Mr Twyford said that the data strongly suggested offshore buyers were a significant part of the housing problem.

“It’s not credible to suggest that the 9 percent of the population of Auckland who are Chinese-New Zealanders could possibly have bought all those houses … Nobody in the last three days has been able to put up a plausible alternative.”

Mr Twyford’s claim received support from a “property insider” interviewed by the New Zealand Herald, who claimed that one big Auckland real estate agency, where many salespeople are of Chinese ethnicity, was selling almost every single property throughout many suburban areas to people living in China:

In some cases, those buyers had a New Zealand connection “but it’s one group disenfranchising the other. It’s really taken off in the last 18 months. I’ve been studying the figures since October.”

“The Kiwis, South Africans and British have dropped out of the market because they just can’t compete with the Chinese. The people living in China buy the places the Kiwis are trying to get, then those places are rented out the next day,” the insider said.

That showed the person is in an important position in the property sector with extensive access to information unavailable to the public revealing who the buyers really are.

“We’re becoming tenants in our own country. It’s utterly outrageous.”

Rather than engage in debate on the issue, the National Government’s housing spokesman, Nick Smith, and the Greens instead claimed that Mr Twyford was just being racist:

“I think it’s pretty cheap politics from Labour to be targeting one ethnic group and blaming them.

“I’ve seen it before in politics with jobs, seen it before with crime, see that Labour is now effectively blaming Chinese for the housing problems.”

Green Party co-leader Metiria Turei said, while Labour’s information was interesting, Mr Twyford was making massive assumptions about people’s identities.

“You can’t use those stats he’s got to make the claims he’s making… It’s a pretty crude piece of racial profiling.”

To which Mr Twyford countered that his opponents were using the race card in order to ignore the issue, and that he has resorted to so-called ‘racial profiling’ because the Government kept no data on sales to foreigners:

“Anybody, I think, listening to this debate – I hope – has realised that Labour is talking about offshore Chinese investors. We are not pointing the finger at Chinese-New Zealanders,” he said.

“The evidence points overwhelmingly to the fact that there is a very significant presence of overseas Chinese speculators buying and trading houses for capital gain in Auckland.

“If people can’t see that then they’re not willing to address the problem”…

“We wouldn’t even be having this conversation if the Government wasn’t in denial and they agreed to collect the data and share it with the public.

“But they refuse to do that. They refuse to set up a register of foreign property ownership. They refuse to make that information public,” Mr Twyford said.

It is worth pointing out that in the lead-up to the Budget, the New Zealand Treasury examined starting a register of foreign ownership of real estate, but concluded that it wasn’t needed. From Interest.co.nz:

[Treasury] looked at the logistics of creating a foreign buyer’s register and found the costs were manageable, but it questioned whether there was a problem that needed solving or what the point would be without restrictions…

“The evidence we have is limited, but does not suggest a problem with foreign ownership of housing (our best estimate is that around 3% of housing stock is under foreign ownership),” a Treasury official said in the briefing.

“The cost of collecting more information is large and would involve some kind of residency screening of all land transfers. The benefits of collecting the information are likely to be small in relation to the compliance and administration costs of collecting it. So our view is no, it’s not important to collect the data,” the official said…

Of course, it is a bit hard to have an informed debate about foreign investment when zero data is collected. Instead, New Zealanders (like Australians) are left relying on anecdotal evidence or back-of-the-envelope data, which then leads to claims of racism and xenophobia whenever someone raises concern about foreigners buying-up established homes and pushing-up home values.

It’s not like this has only just become an issue. Prominent economist, the Bank of New Zealand’s Tony Alexander, has been calling for Australian-like rules banning foreign ownership into existing dwellings for three years, while commending Mr Twyford for trying to get a handle on the issue:

Firstly, good on someone for trying to throw more light on an issue which I have highlighted in the past with a recommendation that we adopt Australia’s rules of banning sales of existing houses to foreigners…

I do not fault Labour’s Housing Spokesman Phil Twyford for releasing the data. But as with my own efforts to estimate offshore buying last year and in 2013 the data simply do not allow us yet to truly know what proportion of our housing stock is being sold to people who will never live here – be they Chinese, Albanian or whatever…

Whatever the true magnitude of Chinese buying has been these past few years it will get much greater. Chinese families are growing wealthier, so naturally they will seek offshore assets…

We should as soon as possible adopt Australia’s rules restricting foreign buying of anything other than new housing unless resident for 12 months…

Many Chinese who buy properties never, or rarely, occupy them. They sit empty… These investors may never occupy or even rent out their investment. Thus while on the face of it the Aussie rule that a foreigner may only buy a newly built house or apartment sounds like a grand idea, it could leave the housing supply situation unchanged from a no-rule regime.

Thus, were we to adopt the Aussie regime we would need to add in an extra clause along the lines of apartments having to be made available for rent, actually rented, or something like that.

The National Government today claimed that it will collate and publish data on where foreign buyers are coming from after new rules on reporting investment property buying kick in from 1 October. From Interest.co.nz:

The Government announced new rules in the Budget which will force buyers of investment properties, both resident and non-resident, to declare their IRD numbers to LINZ. Non-residents will also have to open bank accounts here, obtain New Zealand IRD numbers and declare their home country tax details.

“The real information will be collected from the 1st of October and it will undoubtedly be released,” Joyce said, adding it would be not be itemised by surname, but would show which countries the non-residents were buying from”.

Maintaining a comprehensive database of foreign interests, along with strong rules precluding investment in established dwellings, is a no-brainer. It is also the best way to prevent so-called xenophobic attacks on ordinary Chinese-New Zealanders by bringing integrity to market rules.

[email protected]

Unconventional Economist
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Comments

    • It is not racism when the one to blame is the government and here only a fact is quoted to support this anger against the government. The only ones to blame are the politicians because they allow this sh***t to happen to their own electorate. When all conditions for one’s existance and survival are owned by someone else, one is NOT FREE and his explotation is just as real as long as he breaths.

    • Aussie1929MEMBER

      @kodiak – Thats not racism. Racism is when people are displaced from their homes and land, attacked, tortured murdered because they are another race, come from another religion or wont be forced into beliefs they dont beleive in. Wake up you ignorant P.C. waste of space, your comment is pathetic and you should appologise for it.

      • It’s not only racist but discriminates against the good looking, wealthy speculators from china.
        I guess you missed the sarc tag lol.

      • Aussie1929MEMBER

        @nsw2206 – I really don’t have time for jokes. We all don’t have much time for jokes. I don’t know who is who on this forum, who is serious and who is joking, so forgive me if I missed some sarcasm. Regardless, what I said is 100% correct anyway.

  1. The irony of an indigenous population that took over a foreign land by Force, complaining about the same land being taken over by Peace! There is no way to stop this. Rules are not made to be broken in this case, but to be simply ignored. Taxing offshore investors won’t work ( they’ll just not pay, and accept any future penalty as a cost of doing business); Ownership Registers won’t work – what will they do except be a few notes written in a book and National Identity ( locals only to own whatever) won’t work as there is a network of tame fronts, well established. This, is what happens when a country ‘has’ to sell its assets to maintain its living standards in a Globalised World. Wouldn’t, didn’t we do the same?

    • Yes. The irony of it isn’t lost on anyone with a bit of perspective. Maybe some empathy might form…

    • Rubbish. Ban all foreign investment and set up a body to investigate as we do with all other types of law breaches. If a local buyer buys with funds they cant prove are theirs, then apply gift tax and/or rescind sale.

      • Squirell I agree.
        But, I’ve been saying since 2007 that in our case here in Australia(NZ too) that the government is very happy for overseas residential property investors to add to the capital account because we have a huge current account deficit.
        Now that mining exports are dropping, we need that money to come from somewhere.
        That’s just another reason for needing a low A$… less imports cut down the size of the current account.
        So truth be told, these foreign real estate investors are actually needed….bitter pill to swallow.

    • When growing up in Christchurch in the early 1980’s, you could count the number of Chinese restaurants on a leapers hand. What i find ironic about the above piece is that it was Helen Clarke who introduced open slather immigration – particularly to the Chinese.

      Now the Labour Party are opposing a measure they introduced!!! The hypocrisy of it all…

      • I understand there are about 30,000 Chinese living in Greater Christchurch now, within a population of about 450,000 (3 LG areas) total. That would be about 6.6% of the population.

        And what a wonderful contribution these people are making. Just think of their influence on the food industry … and many others.

        We are very fortunate having them here.

      • I also grew up in Christchurch and worked in a Chinese owned and mostly run restaurant while at varsity in the 80s. The family were 3rd gen kiwis from the gold rushes but still spoke what I then thought was “Chinese” but I now realise was either Contonese or Fujianese. At Guy Fawkes time I used to buy fireworks from one of about three chinese shops at the south eastern end of High St. Now all swallowed up by CPIT.

      • See on Prime TV this evening disgust at Labours Phil Twyfords public comments on these issues … with a Labour guy by the name of Quinn resigning from the Party.

        I would have expected Phil Twyford to exercise much better political judgement. I know and like the guy.

    • It takes buyers and sellers to make a market. They should cancel the passports of the sellers! That’ll learn ’em!!

      • Hugh – you are referring to permanent residents or citizens. The problem in Auckland is non-residents flying in to buy houses and then flying back out again. As mentioned on this site, some 17 per cent of apartments in the Melbourne docklands appear to be vacant.

      • Hugh – you are referring to permanent residents or citizens. The problem in Auckland is non-residents flying in to buy houses and then flying back out again. As mentioned on this site, some 17 per cent of apartments in the Melbourne docklands appear to be vacant.

    • BubbleyMEMBER

      Its much cheaper to buy a country, than invade and occupy it.

      Australia is currently selling off the good bits to the Chinese. They get the parts that are usefull without having to invest in the crappy expensive parts of running a country, like roads, education and health.

      All the benefits of first world country and none of the expenses.

      Its so simple its brilliant. Give the natives a hand full of beads and take their land.

    • All those kiwis starting to flood back don’t want to have to pay these over inflated prices driven up by overseas migration, how ironic!
      Tonga may be one of the options, at least until they wear out there welcome there.

  2. Hilarious. Middle class NZ decides that the every speculator is a winner, beggar thy neighbour, housing policy that they loved isn’t so much fun when you’re not on the winning team.

    Well suck it up – you wanted it.

    • Amen, the game played by bogan deadshits to get rich by making someone else a captive tenant isn’t fun when you’re the tenant.

    • I agree. They do’t mind feeling “rich” , but it appears that they don’t feel entirely comfortable with the extent to which how “rich” they’ve become off the back of alien support. Interesting timing as the Chinese equity market debacle surfaces and subsides. I’m imagine the Kiwis are not to attached to the idea that they have a bubble on their hands and prefer to think their own house price as a result of their years of hard work, good sense, and natural order (of which the Chinese don’t belong).

      • “Rent is the secret tax the wealthy charge the poor.” Dr. Joseph Stiglitz, 1998

        The rentier impulse is destructive wherever it is tolerated. The difference between a bogan deadshit specuvestor and a foreign placement lies in where the rents are spent. See: The Fall of the Roman Empire, Irish Potato Famine and Scottish Highland Clearances.

        Tax the land. Untax wages and enterprise – the path to a Golden Age. Funnily, both rich and poor flourish under these settings.

      • Winston Churchill:
        “Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains — and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.”

      • Of course B – the same applies in Oz. Local speculators complaining about foreign speculators doesn’t have a strong thread of logic.

  3. Rashist!!

    Tony Alexander needs to know that the Aussie rules are not enforced and breaking them is actually celebrated (another great result!) or watered down (it’s not illegal if you don’t get caught, they’re doing it because the gov allows them to, etc).

    The data is sorely needed.
    Then the convictions.
    Then the penalties. Fk yeah.

    • Yes, I too noticed they hold Australia up as an example to be emulated when everybody knows Australia’s laws are not enforced, the FIRB is the most useless govt body ever, and money laundering is rampant here.

      • Canadians do the same, they think Australia has got everything sorted out and should be modeled off. They must be talking to RE spruikers who obfuscate the actual situation.

  4. Go find a patch of dirt out maralinga way where the Brits tested atom bombs in the 50s.

    Build apartment buildings there.

    Prohibit Chinese nationals to buy anywhere but here, in fact quarantine ut so Australian nationals cant buy here, keep it a store for Chinese wealth only

    • Make sure you call it Maralinga Heights and give it a glossy brochure showing people outdoors having a great time. If you did it might just work. Oh and say it’s in Sydney also. 🙂

      • Shame Alan Bond isn’t with us anymore:

        Andrew Denton: You were quite ingenious in your methods that you’d use to sell things. In your book, you tell a story about Yanchep on the WA coast — a technique you employed to interest people in what was effectively sandhills. What was that technique?

        Alan Bond: Well, when we…decided to do this huge development — and this is over 17km of ocean front and it’s going to house 250,000 people. And the sand dunes… When they were clearing — when the roads were there — there was just nothing but the dunes left. And the wind blows strong off the ocean in WA. It’s, er… If you’re standing there, when you’ve just opened these roads, you can get sandblasted. So what I did was come up with the idea that we would spray the sandhills with a thin bitumen, put some grass seeds in it and a lot of paint in with the bitumen. So we sprayed it to hold the sand down and of course it was green, so they looked like green hills. And, er, looked good in the brochures.

        BTW – Bond mentions that his pitch was that 250k people were going to live there. As of 2011, the figure was 4200.

  5. The best way to deal with rampant speculative behaviour … whether Chinese or any other … is by ramping up more affordable new housing supply.

    That is Auckland’s major problem.

    In contrast to Auckland, prices and rents are softening in Christchurch … thanks to the volumes of new supply. Life is becoming tough for speculators in the latter.

    • Maybe at a purely theoretical level Hugh, but the political systems are not going to allow this – it’s a pipe dream. So any supply coming on board will just feed into the misallocation with generally poor design and shoddy build and the usual destruction of urban amenity – because they aren’t selling the utility of the product.

      It’s time to end the speculation – and that means putting a leash on the banks.

      • Why are you scared of hitting speculators Hugh? We have softening rental yields all over Australia but prices are levitating. Supply is a part of the puzzle, but ending pointless financialisation of housing is the main game.

      • aj … that’s the major purpose of the Annual Demographia Surveys http://www.demographia.com and http://www.PerformanceUrbanPlanning.org … to clearly illustrate the core issue is supply.

        California on the one hand … Texas on the other.

        Finance is just as available in both markets.

        Others commenting … Im hardly a friend of the speculators … or stack up merchants as we call them in the trade. Increasing supply is the best way to fix them.

        Developers / builders are the worst enemy of the speculators. The latter hate the competition [email protected]

    • While I agree with you in a general sense, as much as for the good of society as the economy, in this particular case there is simply no way construction can keep up with demand from China. If a tiny percentage of Chinese decide Auckland or Sydney or whatever is the go, that place will be completely swamped in a very short time and no amount of construction could ever keep up. The obverse of this is when they decide they don’t like the place any more because the people are turning nasty as a result of their activities, then one is potentially facing a dramatic property collapse. The responsibility for this dangerous situation ultimately lies with our criminally negligent parliaments.

      • That’s right, supply is part of the solution, but areas where supply has had an impact have had long long term supply policies and the systems to respond quickly. There is no way the supply in NZ could keep up with the bubble demand.

        Fix the speculators. Make speculating in housing uneconomic.

      • Fix the speculators. Make speculating in housing uneconomic.

        That’s not the outcome Hugh wants. As a developer, he relies on them to move product

      • At Jacques … it is a very big planet out there for the Chinese to buy real estate.

        The planet is more than capable of absorbing their real estate requirements.

      • @ H – that’s right it’s a big planet so imagine how easy it would be to shoo these speculator flys away from our picnic if we bothered. Is there some truth to the fact that the developers want the speculators regardless of the outcomes? The land-bankers do, and the usury industry, it’s one of the reasons changes to limit speculation on established dwellings seem to be so hard to effect.

      • aj … that’s a fair point you raise.

        Developers hate bubble markets … being flooded with speculative buyers … and shutting real buyers out.

        As bubbles inflate, development profits are illusory because the so called profits are required to finance inflation. To add insult to injury, tax is payable on the illusory profits. So they go broke as they run out of cash.

        So if the inflating bubble doesn’t send them broke … the deflating one will as the asset prices collapse.

        Bubble are very bad news indeed … with their massively destructive distortions. Possibly one has to be a developer to fully understand the degree of their destructiveness.

      • SweeperMEMBER

        Hang on Hugh, explain to me why the profits are illusory? If your inventories are inflating at a faster rate than general prices, the profits are not illusory, they are real. Aren’t they?

    • Additionally. The cost of accommodation, food etc for the hammer-hands (say, relocating from Christchurch) needed to create that supply will feeds into the finished cost and continue to make it ‘unaffordable’. Unless Auckland allows Free Zone Building Areas – allows China to buy, build and staff them – there’s little chance of (1) building prices coming down or (2) enough labour being instantly available to build.

    • Does NZ with it’s relatively tiny population even have the physical capacity to build at a rate to satiate demand from a country with a population of over 1 billion people if they have decided NZ property is the ‘flavour of the month’? (Same goes for Aus).

      Controlling the demand side is important, as it’s one hell of a lot easier for a bank to generate a loan out of thin air than it is for a real physical house to be created.

      • Exactly. Supply is an issue for local populations wanting somewhere to live – it will next to no impact in the short/medium term on bubble economics with 100 Trillion bucks a year pouring out of global loose liquidity.

      • Yep, I agree with the other commenters here. Fixing supply with poorly built dogboxes in the sky or houses crammed onto postage-stamped size allotments in the ever-sprawling outer suburbs is NOT the answer. How about we just say no to foreign buyers at the moment? I mean have laws that prohibit ALL foreign buying , at least until the bubble deflates somewhat.

      • BubbleyMEMBER

        In a nut shell:

        “look after the people who actually live IN the country and pay taxes in the country”

    • Are we getting this “China panic” talk in places such as Houston, Atlanta, St Louis, Kansas City or any other of the affordable or near affordable housing markets identified with the Annual Demographia International Housing Affordability Survey ? …

      http://www.demographia.com/dhi.pdf

      Understandably … it is the “basket cases” of Auckland, Sydney, Melbourne, Vancouver, San Francisco and other supply strangled markets they are piling in to, hoping to make an easy 20% ish a year, betting on future artificial housing inflation.

      And what happens if things go pear shape in China … and they exit from foreign markets as the Japanese did in the early 1990’s ?

      Then NZ Labours Phil Twyford would really have something to complain about !

      The only really effective way of curing the problem, is by dramaticly increasing more affordable new housing supply.

      • Mate,

        If

        Step 1: You massively increased supply

        Step 2: The increased supply was largely purchased by offshore interests
        then
        And what happens if things go pear shape in China … and they exit from foreign markets as the Japanese did in the early 1990’s ?
        Step 3: The offshore interests had problems at home and repatriated their capital

        you’d end up with the biggest financial armageddon ever seen as house prices fell way past where mean reversion would otherwise send them.

        The whole problem with the O/S investors putting money into RE is that we are importing volatility even more than we are importing higher house prices.

      • Look at Melb, buyers are just buying into the supply glut, when it goes it will be a mess of poorly build sh8t boxes and dog-box subdivisions… Worse case is the idiot politicians will ramp up the population to cover the mess.

        There is too much liquidity chasing a bubble. Why did tulips go nuts – they have no value – people just wanted them because they thought they would make them money.

        Just make it uneconomic to speculate on tulips – it’s not rocket science.

      • Hugh I agree with you fully.

        I cant blame the mainland Chinese investors buying property in cities such as Vancouver, Melbourne, Sydney and Auckland. They are totally rational in ensuring they get the maximum return for their investment.

        Although in Australia’s case government policies such as State Stamp Duty and Negative Gearing have added even more “fuel to the fire” so to speak.

    • moderate mouse

      LOL. You are a broken record Hugh Pavletich. What’s worse, you’re a lobbyist for property developers. About time you were banned from this site. You are to property what 3d1k is to mining – hopelessly, shamelessly conflicted, and hellbent on obfuscating the debate on behalf of your paymasters. You’re a joke.

      • Moderate Mouse … Wrong again. I advocate independently of the industry on a voluntary basis. There is most certainly no paymaster !

        Ask yourself … is there a speculator problem in normal affordable and near affordable markets ?

        If you wish to insult people, at least have the guts to do it with your own name … instead of hiding behind a nom de plume.

      • moderate mouse

        Well as the ‘Former President – Southern Division – Property Council of New Zealand’ and a Fellow of the Urban Development Institute of Australia (FDIA), I think we can all agree that you, Mr Pavletich, are conflicted up the ying yang…. http://www.performanceurbanplanning.org/

        And the only reason you use your full name (unlike pretty much everyone else on here) is so you can point to all your ‘advocacy’ efforts come contract renewal time. As I said, you are a joke.

  6. australia_is_different

    The lack of an official register for foreign buyers seems to be the sticking point for many of the debates, which I don’t think is going to be resolved by any government agencies at any time soon.

    What is to stop a private organization from compiling this data? Previous comments on this website suggested that it would be an easy process of just data matching the name of the deed holder with those found in some sort of ATO register i.e. if they don’t pay tax they’re not a resident.
    Why can’t this be done as a private individual? How easy would it be to get access to this data?

    • I’ve got an ATO ( well IRD, here) number….and if I had 100 offshore investors clamoring to buy here, and they paid me a modest commission to go and buy 500 NZ properties, in my name, for them…how would that get captured? Tell me that’s not the case in point with that $39mio place that just ‘sold’ in Sydney!

      • What if that was illegal Janet? As in facilitating the hiding of foreign identity. Jail time, huge fines, confiscation of properties.

      • I would suspect that people are likely to be selling their residency status as a proxy already.

      • I’m not sure how that is illegal? If I buy 500 properties and fund them with offshore loans, how is that different to going to Westpac and doing the same thing? Westpac have a ledger that says “We own that until the debt is paid” and if I have a Little Red Book noting the names of my lenders, and allocating the ‘debt’ to them, I don’t see the problem? Ethically, morally I agree. But I could name you one of many investment banks in your country that probably do exactly that, this very day…..

      • If I buy 500 properties and fund them with offshore loans, how is that different to going to Westpac and doing the same thing?

        Boom. There’s the money shot.

        Stomper it’s not illegal – where do you think Westpac gets all the reserves to allow it to lend?

      • Understood Janet, I should’ve emphasised the “if”. The data needs to be such that every title needs to translate to an individual, so even trust/company buyers cannot escape this register. Every submission must be by stat dec, so criminal proceedings against individuals can be swiftly dealt with for fraudulent submissions.

        The banks are given a license to conduct usury, they’re a special case. 😉

      • I sympathise with you, A! But by recommending what you do ( data matching etc), you are trying to ‘play fair’ in a game where the other players don’t care about the rules! Stomper writes “that is illegal here in Australia– just not enforced”. So you even have the games’ umpire ignoring what the rules are! There’s a reason for that – it’s that locks are made to keep honest people out. There is no answer other than systemic collapse. Financial pain is the best teacher, and is going to be the ONLY way that this lots gets resolved now. Your Government, and you and I….know that….

      • If foreigners had to invest tgat way it effectively leaves them in a precarious position ie are you actually going to return the funds that you legally own. If a fiduciary relationship is found to exist then courts will look to the true intent and rescind and hipefully put u in jail. If not, then gifting tax will apply. There are plenty of disincentives if govt has the will.

      • australia_is_different

        Janet, good point but so what?

        It is a criminal offence to knowingly assist third parties in the illegal acquisition of residential properties (http://www.firb.gov.au/content/faq.asp).

        So returning to your example, if you had purchased 500 properties under your name and with your TFN yet not filed a tax return for the year, do you think that wouldn’t be suspicious enough to get investigated?
        If you purchased 500 properties and received a wage/salary/commission, then you must have records available detailing what was purchased and on behalf of whom. There are clearly some realtors out there who are willing to part with this information, hence their willingness to go the media albeit anonymously. I am willing to bet that there are a few good realtors out there who would gleefully part with this information if approcahed in a professional manner.

        Sitting around complaining about lack of data is silly if it is possible to actually generate it ourselves.

      • Janet – if the houses are in your name – then they are yours. If foreigners fund them so what ? I have no problem with you owning 500 places in your name.

        If however you sell them and try and repatriate the money they there are laws which govern this.

        If you try and transfer those titles into their names there are also laws covering this.

      • @Jason – if Janet is just a front for those 500 overseas “lenders’ then it is illegal.

    • The Patrician

      “How easy would it be to get access to this data?”
      1. Name of titleholder – 5min online search
      2. Residency status of titleholder – 5min online search

      • australia_is_different

        This is what I thought.

        So how then do employers check whether or not you have a suitable work visa? Presumably residency status should be accessible as a private institution.

      • Usually a jobseeker will provide whatever documentation the employer asks for – the employer wouldn’t usually spend money or time collecting documents to smooth the process for the job seeker.

      • Australia Is Different

        I can see a quickly built website that scrapes titleholder data from whatever register or, uses, an API (is an API available)

        Make it all publicly available.

        Bodies like Pricefinder have it so it must be accessible. Hopefully not under license

        (My Kingdom for Open Gov/Open everything!)

      • australia_is_different

        tmarsh,

        Unfortunately I don’t have the skill to build any of this but I am interested enough to get to the bottom of the question: Just how much housing is being purchased by foreigners.

      • kiwikarynMEMBER

        Yes there is. VEVO – http://www.border.gov.au/Busi/Visa
        You can check your own visa status (or others if you have their details) or register your organisation for a login.
        All a title register needs to do is pass the details of the date of birth and passport number and origin through an API to get a Yay or Nay answer.

      • australia_is_different

        Kiwikaryn,

        Good find but all a title deed will give you is the name of the purchaser, not a DOB.

    • There is no way for employers to really check. They can ask your status and if you say you are a resident then thats it. I have been asked to supply my passport before.

      If you have a visa then they can check that VISA number online.

      There is no way to check the residential status of someone with an online tool. How would you go about that ?

      Name and Address and Date of Birth ? Tax file number ? Passport number ?

      • australia_is_different

        Okay well that makes things a lot more challenging.

        What other things could you use besides residency status to prove that a particular property was held by a foreign investor? Tax payments to ATO? Medicare number? All of which are not really accessible to the public anyhow…

        Looks like the only other options are to rely on FIRB submissions (and access them via FOI) or any co-operative real estate agents (of which there may only be a few).

      • Even if not each and every foreign buyer was tracked down, surely there must be ways to track down most of them? For so long, our FIRB haven’t even tried. I’m guessing they (and the government) simply don’t want to know, because if they did find out the extent of foreign buying (and illegal foreign purchases) these numbers would leak out, and there would be outrage in the community. Far better to keep themselves and us in the dark so that it can always be said that anyone who speaks out must be racist. But of course, this backfires because now Australians view all Asian looking people as having the potential to outbid them, which in turn is leading to increasing resentment.

      • australia_is_different

        md,

        It’s not up to the government to decide whether or not they want to know. The notion that foreigners are skewing Sydney & Melbourne property markets has already caught traction with the public and social media – admittedly, with some questionable groups.

        This is about determining just what exactly is happening so that proper policy can be drafted – an evidence based approached.

        Now, I don’t for one second believe that there can be “no record” or “no paper trail” for what has been happening – assuming that you are on board with the idea that foreigners have indeed contributed to over inflated property prices, as they have in other markets around the world. For this to happen would mean that literal suitcases of AUD cash would have to be flown from China to Australia, get past customs, handed over to a 3rd party, who then purchases property and hands over a suitcase of cash to the vendor. Repeated x100. The chances of this happening are, IMO unlikely.

        The likely scenario is that there is a “paper trail” and that there are in fact records detailing exchanges between Chinese citizens, intermediaries in Australia and Australian vendors. The public has free access to which properties intermediaries are purchasing (General Register of Deeds) and it shouldn’t be too hard to determine which vendors are selling these properties.
        What will be difficult is finding out which Chinese citizens are matched to which intermediary(ies)? Or, which intermediary(ies) is not a citizen? This is what is stalling me at the moment.

        The quirky thing about Australia is compulsory voting, and if you are a citizen and over the age of 18, you must be enrolled to vote. Therefore, all citizens should theoretically be registered on the Australian Electrol Roll, which just so happens to be freely accessible to the public. Granted, there are a number of people who may not be registered, but I would imagine that the Electoral roll would be a fair representation of just who exactly lived here as registration is compulsory for citizens.

        I would imagine that this would be a safe starting point for anyone wanting to undertake the data matching process. Search for all properties purchased since foreign investment rules were relaxed in 2007. Determine purchasers/intermediaries for each property. Do an ABN lookup for any businesses encountered. Match all names encountered to the Electoral roll. Names that do match are citizens. Names that do match but have recently acquired a large number of properties get flagged. Names that don’t match are either: foreign or removed from the roll.
        Flagged names can be followed up – Are they realtors? Is there a register of Licenced Australian Realtors to match against? Are they too young to have acquired that many properties? Are there names listed with a University? Is there any trace of this person whatsoever?

        If the % of names NOT on the roll AND purchased property > % of names NOT on the roll, then I think that is a significant starting point from which an evidence-based discussion can take place.

      • How long do you reckon it will take to copy out the information for all the electors whose names begin with ‘A’, and then type the same information into your own database to do the matching exercise?

      • australia_is_different

        Well for starters, I think the better strategy would be to go in with a list of known names that you want to check against i.e. Take in a list of purchasers and check them against the electoral roll instead of copying down every single electoral role name and trying to find match them to a deed.

        I don’t doubt even this would be time consuming. If you search Domain (the property search engine) for all properties sold within the Sydney Region; NSW, you get a result of 372 149 properties, sold between now and 10 Aug 2007. Now, that’s without me knowing what “Sydney Region” even means to Domain, and without including other parts of NSW let alone the rest of the country.

        Point is, do you want to wait around aimlessly until someone produces a dataset, which frankly will never really happen?

  7. reusachtigeMEMBER

    Youse are so racialist when you bring up this issue!!! Chinamen are great for property because they help increase its value massively!!!

    • BoomToBustMEMBER

      dont mistake price for value, the 2 are not the same, that is unless you own a lot of IP’s and are very attractive.

  8. The Patrician

    Poor old kiwis must be completely clueless if they are looking to AUS for a model.
    FFS you guys are way ahead of us and don’t even know it. You have had a national land title registration system for over 100yrs. Fully electronic for the last 13yrs.
    Require proof of purchasers compliant residency status to register the transfer of title.
    No proof. No title.
    Fixed.

  9. ErmingtonPlumbingMEMBER

    The main stream media will attempt to obfuscate this issue as much as they can, moneyed interests will look after moneyed interests.

    We need a political party based around Affordable housing with policies like No foreign ownership of residential property, No negative gearing, No capital gains discount on investment properties and large scale rezoning and release of land for residential housing with reduced BS red tape.

    If the shooters and fishers party, motor enthusiasts, and CLIVE PALMER can attract 100s of thousands of votes, then surely the AFFORDABLE HOUSING PARTY would be good for a few million votes!

    What about it fellas?

    I nominate Hugh Pavletich to get the ball rolling,………..any seconders……. or other nominees?

  10. “You can’t use those stats he’s got to make the claims he’s making… It’s a pretty crude piece of racial profiling.”

    Oh dear. That race card ploy yet again. Blowing the dog whistle from the wrong end will get you nowhere my good man.

  11. Welcome to Milton Friedman’s Little Shop of Horrors….

    Skippy… it was quite good whilst the treatment was administered to developing country’s, tho now its being liberally applied to developed country consumers its not fair… John Fraser the Treasury as a subsidiary of the Chicago School of economics.

    • Some times, its best to leave the theory stay put in whatever big books you are reading now. What you say makes no sense at all in the current context.

      • Mav, is your avatar the Iraqi Info Minister for Housing? If you’ve meme’d it with something funny please do link us to a bigger pic for entertainment!

      • Yeah the last refuge of the ideologue is just to infer, yet it seems I provide more than just what rattles around in my cranium.

        Skippy…. its a thing called evidence… try it… you might like it…

    • Ronin8317MEMBER

      When you look at our share of exports, NZ and Australia is no longer a ‘developed country’. It’s not by accident: it’s government policy! !

      • Share and composition of exports. It’s mostly dirt, on which Australia will be a price taker. Dopey Australians thought the few years of the boom where you could name your price was the new normal. It ain’t, so now the country will be squeezed harder and harder. If you’re lucky, some of you might get jobs working for United Fruit or whichever company ends up running the joint. Enjoy the decline, peeps!

      • FIRE sector aka the service sector of the economy, including tourism, education, and financial services, accounts for about 70% of GDP.

        A product of the green economy theory or alternate to incensing legacy costs of industrial based economics both to the enviroment and population, see Larry Summers old memo about non developed country’s sharing the burden of uplift.

        Vandermerwe, S. and Rada, J. (1988) “Servitization of business: Adding value by adding services”, European Management Journal, vol. 6, no. 4, 1988.

      • [email protected]: I’m not sure where I got it. I might have made it up. I might have seen it elsewhere. I can’t remember. It doesn’t much mattter, because it describes the shituation. I am claiming the term ‘shituation’ though – I just invented it.

    • Well Mav seems you missed decades of political – special interest corruption dressed up as evidence based economic theory, please to provide a granular analysis of how you arrive at your opinion.

      Skippy…. Just that Greenspan went to work for Paulson after his stint at the Fed should be a clue.

      • “dressed up as evidence based economic theory.”

        LOL! Stop it Skip, I just ate lunch! But yeah, it’s like saying evidence based astrology!

  12. In Chinese culture it is considered a disgrace to own fewer than four IP’s, so it is not inconceivable that 9% of the population could indeed be buying 40% of the properties.

    • In that respect Chinese culture sounds a lot like Australian culture.
      Maybe Barnaby’s wrong, and we’ll be OK in the Asian century after all. We might be decadent homosexuals, but at least we are good looking specufestors!

      • Mining BoganMEMBER

        I don’t know how much I’m going to like having both those roles forced upon me.

  13. ErmingtonPlumbingMEMBER

    The public school my daughter goes to has an unusual number of students in kindergarten who speak nearly no english,… but all speak “orange” my daughter told me last year,…..she meant Mandarin of course.

  14. The Chinese can keep bidding up house prices whilst selling properties to each other.
    Roll all the debt into one package leveraged against one entity in China and load it onto a Chinese ANZ branch for the Australian public to pay for at a later date.
    Foolproof!

    • I’ve always said a master gambit that we sell all our property to the Chinese, receive a fistful of dollars, in turn paying back all our debt and hopefully some residual cash, then crash the market and buy the property back at a much lower price.

      It would be masterful, clever, take a massive community effort and replete with long term thinking…..

      therefore un-Strayan.

      stupid bogans.

  15. This is what we vote for.

    Australia. Land of the moron. We’re going to lose everything we have and we deserve it.

      • I did vote for them in the last state election, (more as a statement than thinking it’s going to change anything) but in the end it’s Labor or Coalition who still rule, and as we all know, both Labor and Coalition are against anything the SPP or Affordable Housing Party stand for. So either way, Big Australia, rampant foreign investing etc. etc. are still forced down our throats.

        I hope that in the next election, whenever that might be, that Affordable Housing gets more publicity and more votes. The publicity is really important.

      • Me too. If enough people vote for them and other parties it’s possible of course for them to win seats and eventually the main parties will have to change.

      • I’ve given up on Australia for Australians. We’re going to get financially slaughtered and now like everyone else I should be working out how to profit from it instead of trying to get dumb Australians to understand what’s being done to them via well meaning but unbelievably stupid socialists.

      • BoomToBustMEMBER

        I wouldn’t be that pessimistic rich42, everything in this work has a habit of re-balancing once it gets to far out of balance. The Central Banks, governments and people will soon find out soon enough.

  16. My question is simple.

    Who is doing the exchange of RMB to AUD or NZD.

    Someone has to be carrying a lot of RMB and be exposed to the huge credit debt monster that is china.

    Surely, it isnt….the govt? which means us! What a double edged sword that would be.

    • I had an enlightening conversation with a young Chinese employee from our office. I keep meaning to post details here but haven’t found the time . His answer to this question was the two most popular methods to buy/borrow the Aud are through Chinese shadow banks or corporations if you have a company inside back home.

      He is from a poorer district in the north-west. The most interesting outcome of the chat for me was that a lot of the money is coming from Chinese middle class, mainly families who lucked out and were given overs for the land they lived on to enable apartment building. Not much different from some of the boomers doubling down here . Not all corrupt money as often assumed.

      • So as urbanisation slows, what is going to replace that money? This is a pyramid scheme – if there are no new entrants, it collapses.

      • Yes, but who takes on the RMB, the chinese banks sell RMB to someone. Now, fundamentally, someone must hold it, and I wonder if it is the AUS govt. Banks dont hold large reserves, govts do.

      • StatSailor – yes I agree, that part did not stack up with the “endless demand from China” meme.

      • @TheBanker – good point, and I’m afraid I don’t have an answer. I tried to quiz further about the mechanics of these transactions but the language barrier was a bit much. Can you expound on how it would end up on the RBA balance sheet?

        “Second, the RBA has invested some of its foreign currency reserves in RMB. First and foremost, this portfolio shift reflects the growing importance of China in the global economy and the broadening financial relationship between Australia and China. But it has also allowed us to deepen our own understanding of developments in Chinese financial markets and the RMB. Currently, around 3 per cent of our net foreign reserves are invested in RMB.” http://www.rba.gov.au/speeches/2014/sp-dg-230714.html

        So only about $1.7B. Is it possible the flows are hidden in USD trade invoicing?

  17. BubbleyMEMBER

    Maybe someone should request the mailing addresses of those properties from the council.

    If the address the council rates are sent to is an overseas address, they are clearly a foreign investor.

    Is that still racist?

  18. Steven Joyce says Govt will collate and publish data on where foreign buyers are coming from after new rules on reporting investment property buying kick in from Oct 1 | interest.co.nz

    http://www.interest.co.nz/property/76513/steven-joyce-says-govt-will-collate-and-publish-data-where-foreign-buyers-are-coming

    Economic Development Minister Steven Joyce has revealed the Government plans to collate and publish data on non-resident buyers of rental properties after it starts being collected from October 1. … read more via hyperlink above …

  19. Economic issues (44%) biggest problems facing NZ; Housing shortage/ Housing affordability at record high 14% in June – highest in Auckland (21%) and young New Zealanders (18%) – Roy Morgan Research

    http://www.roymorgan.com/findings/6329-roy-morgan-new-zealand-most-important-issues-june-2015-201507100417

    In June 2015, Economic issues 44% (up 4% since March 2015) are still clearly the most important problems facing New Zealand and the biggest problems facing the World today are once again Economic Issues 32% (up 7%) according to the latest Roy Morgan Research conducted in June 2015. … read more via hyperlink above …

  20. Wonder how many are looking for the back door into Oz? My GP freely admits to it after coming via NZ. Happy to have more like him because he was gun, although he only practiced here for 7 years and recently retired. Did he pay his dues?

  21. Brilliant distraction by the banksters. Not a single person talking about the real cause of the bubble.

  22. Housing in California: a profound public policy failure … Wendell Cox … Hoover Institution

    http://www.hoover.org/research/housing-california-profound-public-policy-failure

    For more than a quarter century after World War II, the “California Dream” was real. California was the Promised Land to millions of middle-income households who moved here from all over the country. They were attracted by unmatched weather.

    The house – the largest item in household budgets – was affordable to middle-income households, as it was in the rest of the nation. This remained the case from 1950 to 1970, according to U.S. Census data. Median house values rarely reached more than three times median household incomes in today’s 52 over-a-million-people U.S. metropolitan areas. The highest was a 3.6 value-to-income ratio in 1950, in Hartford, Connecticut. … read more via hyperlink above …

  23. Housing affordability crisis has essential workers fleeing Sydney … Sydney Morning Herald

    http://www.smh.com.au/nsw/housing-affordability-crisis-has-essential-workers-fleeing-sydney-20150713-gi70bl.html

    On a good day, it takes paramedic Gareth Copland an hour to travel from his home on the Central Coast to his workplace at Ryde. Mr Copland would like to live closer to work, but he doesn’t see that happening any time soon.
    “If prices keep rising at the rate they are people could be driven away from the profession and Sydney,” said Mr Copland, 25. “A one-hour commute might be acceptable now, but people can only put up with lengthy commutes for a matter of time.” … read more via hyperlink above …

    • Only one hour in Sydney? That’s an improvement.

      Here in Melbourne it takes families an hour to drop a kid off at school in the next suburb (Point Cook area), let alone commute 15km into the CBD for work.

    • An hour from the central coast to Ryde?…. the guy is a paramedic so is a shift worker (ie travels at off peak times). try that drive in regular peak hour and it’s easily closer to 2 hours, 1 hour for the expressway + 1 hour to traverse Sydney’s bottleneck riddled road system.