Highrise Harry whispers the terrible truth

Highrise Harry’s media foghorns continue his campaign to abolish foreign buyer stamp duties today at the AFR:

Alluding to remarks by Meriton boss Harry Triguboff that he might have to reduce his apartment prices in the wake of the surcharges, Ms Berejiklian said that, given so many people were worried about housing affordability, the NSW government would be “happy to wear that consequence”.

Mr Triguboff labelled the new taxes “very dangerous”, coming as they did on top of moves by the banks to tighten up lending to foreign buyers.

He also urged caution in light of the decline of the mining sector.

“We have nothing else except real estate. We have to be very careful,” Mr Triguboff told the AFR.

True indeed, Highrise. But that’s why policy must shift away from property and towards the repair of everything else.

Comments

  1. sydboy007MEMBER

    Could it be the sacred cow of housing could be bearing it’s duty to be sacrificed to save the economy that has turned it from providing a roof over one’s head to a giant tick lick parasite straining the economy of any semblance of international competitiveness.

  2. I am floored.

    If this is what “bargaining” phase looks like, “depression” is bound to be even more stunningly candid. I dare not think about “acceptance” yet.

    • Look, he (Harry T) is just stating the obvious. I am certain he is seriously worried, but make no mistake – he will be fine. It will be his net worth that will be crimped.

      The part I think you (and many others) are missing is this is the tip of the ice berg. When he hurts, many Mum’s and Dad’s will lose everything. Like lemmings off a cliff, the jumped in the property at the top of the market (as they always do) without appreciation of the risks.

      Trust me when I say, this crash will wipe out an entire investor generation… and hurt many others besides. For instance, will I miss real estate agents ringing me up dropping the rent on houses I have looked at – Sure! Will I miss paying a 2% rental yield – blood oath…

      There will be consequences for all of us, how this will eventually play out, no one knows. But there will be plenty of pain for everyone. And unemployment to the moon, especially for youth.

      • Yes, but that is surely not to suggest that we should seek to distort the system further to defer the pain of decades of misallocation ? Mums and Dads will be fine – they will just have to reassess their priorities and value system, never an easy thing, but avoidance of the same is equally unhealthy. A good thing for this country.

      • Action-consequence. On balance I am very happy with this outcome. Far better than the status quo of neverending hell & depression.

  3. Ha ha ha ha ha! He actually admitted that Australia’s economy is the housing bubble. I’m so glad I got my family and money out. There’s a shit storm a coming. There’s two sticks in the powder works…

    • It really sucks that we can’t take super with us. It’s bound to get raided when the shit hits the fan.

    • I’m so glad I got my family and money out.

      If you play your cards right, you’ll be able to come back here (if you wish) to retire after the shitstorm with your USD savings converted at better than USD 0.50 to the AUD, and with house prices here much lower. You’ll be laughing (more than usual) 😉

      • Those US Treasury 1 year bills paying 0.70% at the start of the month are looking like a fairly safe haven at the moment.

    • There’s a shit storm a coming

      yes there is — and you won’t miss out over there in Disturbia land.

      • Ahhh, Australian exceptionalism again. If you think the US has anything in store that compares to the reset Australia’s house bubble/low margin dirt economy has coming, I’ve got news for you. The US has a very diverse economic base, masses of intellectual capital, a much lower cost base, while being very efficient at reallocating capital and labour. Australia has overpriced houses, low margin dirt, a hatred of people who actually make stuff, and a self-entitled population.

        When the Australian implosion continues this year and into next, people in the US won’t even notice.

  4. In the same AFR story:

    “Pitcher Partners Melbourne-based executive director Craig Whatman said Victoria’s land tax surcharge – which triples to 1.5 per cent on July 1 – applied to to all property owned by foreign interests including commercial property. Owners, he said, would simply pass on the tax to tenants, including Australian businesses.”

    Proves just how benevolent foreign landowners are when they thus acknowledge they charge tenants less than full market rate but will now have to move closer to it.

    What drivel.

    Foreign landholders should use their vote to unseat these horrid state governments interfering with their royal right to spend Oz land rents in Singapore, London and New York.

    • And they are saying they are smarter than HRH, who is actually thinking about going in the reverse direction by reducing prices of his dog boxes.

    • This is a truly naive comment by H&H as is your tax and destroy perspective, David.

      “…that’s why policy must shift away from property and towards the repair of everything else”

      The solution is to helpfully massage housing and real estate for the good of all. You seem to think that cheaper rents and purchase prices are not the goal but punishment and pain are.

      As I wrote previously…

      It is small minded greedy thinking to tax foreign investors in this way.

      It is short-sighted and shock jock reporting for H&H to state: “By taxing foreign investors in this manner, Australian states are enjoying a revenue windfall at zero cost to the domestic population which can be spent on improving services, including those currently overrun by the population growth behind the apartment boom in the first place.”

      Foreign investment could be used as a vehicle for reducing property prices while also providing inexpensive rental properties to renting tenants. Instead we have a tax grab by state governments that will reduce the quantity of housing made available for rental or sale and cause upward pressure on all property prices as foreign investors pull out or never start to buy off the plan as they do now. Supply will be reduced. Renters could have had lower rents and better homes but instead we now have greedy state governments, driven by greed and anger of noisy constituents, taking money as tax which they will spend on any number of projects that will, as their past records to date clearly show, most likely not help renters and home owners.

      Stopping immigration is another means of reducing property prices that is rational but does not profit governments.

      If foreign investors are required to rent their property at market rates or pay the equivalent amount in the highest income tax bracket then even more government tax revenue would be gained over time or their properties would increase the available rental stock and put downward pressure on rents. Also, minimum quality of accommodation standards are required to prevent the building of ‘dog box’ apartments. This would ensure that quality accommodation is available for renters or subsequent buyers.

      H&H is proposing more dog boxes, less supply and higher rents. This is a lose/lose result for renters and home buyers when it could be a win/win.

      REPLY

      Jason
      June 16, 2016 at 12:32 am
      If foreign investors are required to rent their property at market rates or pay the equivalent amount in the highest income tax bracket then even more government tax revenue would be gained over time or their properties would increase the available rental stock and put downward pressure on rents

      How do you enforce this? How do you ‘require’ that foreign investors are renting their vacant properties?

      naturaltrust
      June 16, 2016 at 3:52 am
      Jason:

      A few adjustments, bells and whistles will be required but the basic procedure follows:

      1: Mandatory disclosure of non- Australian citizenship at time of purchase of real estate.

      Mandatory disclosure of real estate assets owned on tax returns.

      Mandatory annual tax return for foreign real estate owners.

      Introduce world standard money laundering laws.

      Continue, and introduce with current best practice controls, to identify foreign buyers who do not comply.

      2: All real estate holdings automatically assessed to pay income tax at the highest bracket rate if they are vacant for more than, say, 2 months of the tax year (some exemptions may apply such as during proven periods of construction/repair/renovation work).

      3. A full ATO tax rebate is given if the property is rented for the required period (say 10 months) and the owner then pays tax on the actual rental income less expenses.

      4: Continue with only off-the-plan ownership for foreign purchasers of residential and ALL other real estate including farms and commercial property except when FIRB approval is disclosed at the time purchase contracts are exchanged. Approval document is numbered by FIRB and registered on Title when property payment is settled or in, say, one year if not yet settled (ie delayed settlement) and this notification is sent to and matched by the ATO.

      • Whatever the thinking behind taxing foreign property owners, it’s a global phenomenon that Australasia seems to be absent from. If there’s one thing that we should have learned from this current financial debacle, it’s that we can’t be outside The System. And if THEY are doing it, we have to as well. What’s Singapore’s rate gain? 15% ? And HK? 10%? Australia is still dragging the chain, and NZ is yet to get started! But it will……

      • naturalturst, your agitation to deflect good public policy to advantage your current placements is not a good look. Give it up. Lazy rent-seeking investment settings have driven Australia to its current impasse – paralysed by extreme land prices and strangled by eye-watering levels of private debt.

        Time for a new departure. Tax the land and use the proceeds to untax labour and capital. An economic golden age awaits any country willing to stare down the rentiers and direct capital to productive activity.

        Failing to do this will be resolved by Mr Market. You will not like the consequences he imposes.

        Don’t Buy Now!

      • Yes, and passing the second part of the Property Anti Money Laundering Bill which has been blocked for 10 years in Govt, will put banks, lawyers real estate agents andante others liable to penalty for aiding and abetting money laundering.

      • Dear Janet,

        I really don’t think that “…if THEY are doing it, we have to as well.”

        Do you have some sound reasoning to offer?

      • Dear David,

        You continue with your tax and destroy rhetoric, David.

        I note that you are unable to refute my plan that improves the property market by giving renters and buyers opportunities to rent or buy homes at lower prices.

        You are sounding very much like a shock jock, David.

      • Neville Gearless

        “Foreign investment could be used as a vehicle for reducing property prices”
        This has merit. The problem is the kind of foreign investor we see don’t like tenants, and any form of vacancy tax brings us back to scaring them off. This fundamental mismatch between the aims of foreign investors and that of Aussie renters is the deal killer.

        It’s why Singapore’s foreigner stamp duty tax has relevance and probably works when Australia’s probably won’t.

        We aren’t going to see foreigners diving into something relevant to the Aussie market – detached housing (new builds) since they tend to be inner city apartment dwellers themselves and find the fringes of Aussie cities too damn boring.

        I’m all for foreigners wasting their money building concrete structures (I think that’s High-rise Harry’s point), but what do we do with them down the track? Demolishing hi-rises in a hi density locale is a PITA. Ideally we could designate a special zone, the back of Wagga, for empty dog box towers, ….except they want “inner city”.

      • naturaltrust, why don’t you put your thoughts up as a post on macrobiz in proper joined up writing and we’ll have a look at them. I can’t work out what you are trying to say from the comments fields.

        Meanwhile, yo momma is fat.

      • You must be one of the few who cannot understand what I write, David.

        Others ask questions and make comments and some agree with me and some don’t.

        The reality, David, is that you feel like you will lose face if you admit that you are wrong or that you do not understand something I write. That is why you frequently reply to people, including me, in bully tones and bully comments.

        You will not lose face if you admit you are wrong or do not understand. People will actually respect you for being honest and for trying to improve yourself. I suggest you try honesty.

    • Pitchers do a lot of work for property developers. Including foreign property developers. A lot.

      That should clarify the context of the guy’s comment.

      • reusachtigeMEMBER

        I’ve seen naturaltrust and Jason holding hands at the same property developer seminars! A cute couple indeed!!

    • You do not have a reply button on your latest comment below and I am sure you do not want to miss this comment from me so I am posting it higher u in the chain, david collyer:

      You must be one of the few who cannot understand what I write, David.

      Others ask questions and make comments and some agree with me and some don’t.

      The reality, David, is that you feel like you will lose face if you admit that you are wrong or that you do not understand something I write. That is why you frequently reply to people, including me, in bully tones and bully comments.

      You will not lose face if you admit you are wrong or do not understand. People will actually respect you for being honest and for trying to improve yourself. I suggest you try honesty.

  5. Surprising that the good folks at the AFR let Harry state the truth so bluntly. Surely a good spin doctor would’ve been on hand to advise better messaging?

    • wasabinatorMEMBER

      Stupid laggy phone. Mods pls delete. When attempting to edit on mobile it always says I don’t have permission, likewise request deletion function also says same thing. Are there issues with mobile website wrt this?

      • Not your phone it’s the website! It’s driving me nuts for months now! Had to put ad blocker on which helps a little

  6. Perhaps this has been obvious to everyone, but the definition of foreign person would appear to include anyone who is not an Australian citizen or permanent resident (looking at QLD’s budget anyway).
    I wonder how the stamp duty surcharge will work for temporary visa holders.. will they wait to buy until they have PR to avoid the additional $$?
    (Obviously not impacting wealthy foreign students, but your average highly skilled or other visa holder.)

    FHB grant has also increased in QLD from $15k to $20k…making sure any slack from foreigners is picked up by the FHB’ers.

  7. For what it’s worth – I’ve been doing my bit to feed a little of uncertainty to some of the people in my entourage… Seems to get quiet them down quite quickly when I ask them “so… what are we producing these days? Tourism? Coffees? Restaurants? Houses? Aren’t all of those the ‘consequence of producing something else useful’ instead? So, we’re selling coffees and houses to each other, at ever increasing prices, no?”

    That black cloud that covers their look as it dawns onto them that things aren’t as peachy as they desperately wanted to believe is just a sight to behold. The “bu-bu-but …” which sometimes half-heartedly comes out as a rebuttal is even more so satisfying as they struggle to find points to anchor the now shreded sail of beliefs…

    • You must be fun at parties. Nobody likes someone who speaks the truth, better to play along and tell them it’s all good and that Australia will continue to prosper because we are unique and are different. Everyone wants to live here etc.. That soothes the punters fears.

      Pretty soon you’ll have no friends and be correct, better to have friends and pretend to be wrong ;).

      • Don’t worry – I don’t pull that on at parties… only when we sit down and have a yarn about this kind of things … oh yeah 🙂

        My personal best was hearing one of my guys saying to some loudmouth that the superannuation thing is a ponzi scheme in disguise.

  8. “We have nothing else except real estate. We have to be very careful,” Mr Triguboff told the AFR.

    “We” doesn’t include me. Mean reversion at a minimum is entirely desirable, and will be celebrated daily if/when the time comes.

  9. There are a lot of people in the chain beneifiting from selling new builds to foreigners even if the foreigners leave the places empty. Everyone in the supply chain from the sand mining, clay extraction, cement production, bricklaying, concreters, tilers, lawyers, bankers, real estate agents, cabinet manufacturers, carpenters, etc are at risk of lower incomes from these xenophobic measures.
    Buiding apartments for foreigners is a great export industry.

    • Agree in some ways, tax vacant properties and force them to rent them + introduce a land tax that makes land banking / capital gains less appealing and rental yields more attractive…

  10. Harry, try getting Hong Kong or Dubai to abolish it.

    Why should AUS abolish taxes on foreigners before HK, SG, Dubai?

  11. If are just a normal pleb, with no investments apart from your house and 90% cash in your super. What do you do? Apart from wait!

    • “If are just a normal pleb, with no investments apart from your house and 90% cash in your super. What do you do? Apart from wait! ”

      Aren’t most of us just normal plebs ? Firstly get your Super into a SMSF – if you have at least $50k .
      You could then try reading & learning as much as you can re Gold.
      It’s no surprise that governments, central banks, and investment funds are the world’s largest holders of gold reserves — – while trying to supress the price for ordinary punters.
      Following carefully in the footsteps of Elephants may lead to great benefits -eventually.
      ABOVE is NOT investment advice – do own Due Diligence.
      https://www.google.com.au/search?q=Who+are+the+major+purchasers+of+Gold%3F&ie=&oe=#q=Who+are+the+major+purchasers+of+Gold+in+2016+%3F

      • Thanks for the points you made. In regard to my comment about an ordinary pleb, I think a lot of the comments from MB customers trade professionally and have exposure to the bond market, buying shorts, currencies etc which are not available to the normal pleb. Would you agree? Cheers

    • I would agree that a few “may” have the necessary skills – but only a few – the vast majority just as unsure as yourself & myself. Most getting involved in Currencies, short selling etc will get to lose money unless they are professionals. It’s another world very much open to manipulation. Having said that you should still take the time to read as much as you can re simple financial matters where you can look after your own interests.

  12. We have nothing else except real estate. We have to be very careful

    This is actually a pretty stunning public admission and indictment from a significant business figure in this country.

    Our current and prospective political leadership should be made to own this fact, and explain in no uncertain terms whether they think this state of affairs is acceptable, what they intend to do to change our economic trajectory, what are the national sacrifices that will need to be borne to make the adjustment, and who are the vested interests that are acting against establishing a new economic trajectory.

    Labor has at least started to pull those pieces together from a policy point of view, albeit as diplomatically and indirectly as required by wanting to avoid telling the real truth and burning its bridges entirely.

    But the Libs are just standing out there proudly as the party for maintaining, neigh, doubling down on this delusional economic status quo. The Lib’s passivity, their ideological rigidity, their lack of real foresight and courage, are going to finish this country off, and it will highly likely require some unpleasantly demagogic leadership in the future to drag us out of the wilderness.

    • Argentina used to have one of the highest living standards in the world. Now it’s a perpetual mess. I’m really starting to believe that Australia will end up the same. Australians don’t have the ticker for delayed gratification and hard work, and don’t have the moral fibre to resist corruption.

      Harry’s just pointing out the obvious.

      • LD,

        Re this “Australians don’t have the ticker for delayed gratification and hard work, and don’t have the moral fibre to resist corruption.”

        Sorry, but you’re wrong. We did plenty of that all the way to the early 80s, we’ll just have to relearn it, which we will. It’s just that a lot of people will feel the pain, but overcome it they will.

      • I used to think that. I changed my mind. After the correction they’ll just try and pump the bubble while running the government in permanent austerity mode owing to oldtitlements and bubble pumping tax rorts.