After being lectured for years by various ‘experts’ that Chinese buyers were not driving up Melbourne and Sydney property values, and might even be lowering prices by boosting supply, the narrative is finally changing.
A case in point is the latest rant by Robert Gottliebsen (aka ‘Gotti’), who worries that Chinese buyers are beginning to desert Australia’s housing market and could prompt a sharp downturn in prices, transactions, retail and car sales:
When three similar global city real estate markets start showing the same patterns, it’s highly likely you are seeing a major trend emerging…
The western Canadian city, like Melbourne and Sydney, has seen enormous Chinese buying of real estate. Vancouver prices are higher than Sydney or Melbourne. And, again like Melbourne and Sydney, a series of clamps and higher taxes have been imposed on overseas investors in Vancouver.
Accordingly, Vancouver has seen an easing of prices but, more importantly, volumes have been slashed because sellers can’t move their stock. In April the volume of detached Vancouver houses sold fell a staggering 50 per cent… Across to the east of Canada in Toronto, the volume reductions were not nearly as spectacular but the market is also very jittery…
And so we return to Australia… On the overall dwelling price front, there has been an easing…
What we are seeing in the three markets (Vancouver, Sydney, Melbourne) is a reduction in Chinese buying and reluctance by the non-Chinese locals to buy at the high prices.
In Australia, the biggest driver of the domestic economy has been the rise in dwelling prices in Sydney and Melbourne. Higher real estate values made people feel confident and it also drove a substantial rise in dwelling investment.
The slower real estate sales combined with no rises in non public servant salaries is causing motor and retail sales to stall. The share market is clearly nervous. And we are just at the start of the process…
It was always a giant bubble Gotti, brought about by the perfect storm of mass immigration, foreign buyers, domestic speculation, and surging household debt. While it has lasted far longer than we ever imagined, the bubble was always going to deflate at some point.
Time for your mates in the property sector to take some pain.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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Dr Cameron Murray - author of the Book Game of
They’re all coming out of the woodwork now. It’s a beautiful thing to watch.
..and the fuckers will take us all down with them.
Yup, that’s the unfortunate truth given the sheer scale of this thing. It’s almost an exact replay of the 1890s depression: long commodity boom, income poured into housing speculation in Sydney and Melbourne, banks dependent on foreign wholesale funding.
We’re not exactly fast learners, that’s for sure. You’d think a century would be enough time for the lesson to sink in. I guess repetition is the key…
M a century is long enough for people to forget !
Most investors have already forgotten the GFC … this time is different and all that
Jeez i’m still haunted by the 1992 recession. And during my entire adolescent years it was like every news bulletin was only ever about unemployment.
It’s beautiful, but don’t get too excited. You’re going to get angry for the bs they will try to pull on the way down, too.
More good work by Janda:
http://mobile.abc.net.au/news/2017-05-29/janda-sink-housing-market-and-drown-property-investors/8568238?pfmredir=sm
“And, again like Melbourne and Sydney, a series of clamps and higher taxes have been imposed on overseas investors in Vancouver.”
What higher taxes in Australia? If you are referring to the $5k extra, well that is not a tax, that is a joke.
Anyway, I will not be surprised to see Scomo coming up with another cunning idea to boost housing market such as no stamp duty for first home chinese buyers.
Foreign buyers will need a clearance certificate and face 12.5% witholding tax from 1 July for all properties over 750k.
The NSW govt is going to boost its foreign buyer stamp duty in the upcoming state budget.
Foreign buyers are facing growing imposts here too..
It’s a good news story by Gotti, right? He’s saying that we’re somehow (accidentally) snatching back some of our sovereignty
What’s it called when the last bull capitulates?
faaaaark?
A bottom.
Correct. And it has nothing to do with today’s stage of the cycle.
Besides, Gotti is a fake. The real last bull, known as reusa, will never capitulate.
“What we are seeing…is a reduction in Chinese buying” ?
Are we Gotti?
Where is the data?
What we ARE seeing is that in the last 7days the median Melbourne asking house price rose $9500 to a new all-time record high of $909,900.
The 10th time this year the record has been broken
That is an increase of over $100,000 since Jan and nearly $200,000 in the last 12mnths
You have a point
No, he doesn’t.
Corelogic reported a 0.5% drop in Melbourne last week and a 1.8% drop over the month.
I’d like him to source his data. Seems hell bent on convincing himself everything is right as rain.
@brenton – it’s the front page of SQM site
sqmresearch.com.au
Therefore, based on listings, not sales.
Brenton you might not have been around long enough to know The Patrician is not a pumper
With respect to CoreLogic, I see that their esitmate of a decrease of 1% in national property values during May is on the front of the Age and SMH websites, suggesting at least a certain amount of nervousness at Domainfax, if not their readership.
http://www.smh.com.au/business/the-economy/sydney-and-melbourne-property-prices-slip-in-may-20170530-gwg5qa.html
Except that property disaster reporting might drive even more traffic to their web sites than property porn.
Exactly! This place is full of losers making shit up. They’ve totally lost the battle and realise house prices always boom so they are creating a #fakenews & #alternativefacts dream world that they can nod off to. It’s sickening and pathetic. These people have given up striving to be better. Suppose that’s what happens when you realise you’ve hit rock bottom.
LOL!!! Thanks, reusa
hahaha
Reusa I’m not gay but I’m prepared to get into relations with you just to get some of that stuff your sniffing
“I’m not gay but” = I’m gay
Reusa – without doubt the King (or Queen) of Naivety.. Long may he (or she) live.
“”Reusa – without doubt the King (or Queen) of Naivety.. Long may he (or she) live.””
Reusa – without doubt the King (or Queen) of superlative satire.. Long may he (or she) live.
The age of heroes has not passed, for reusa is still amongst us, giving hope to all those that are yet to find happiness in IPs and relations.
Yes would love to get optimistic about this but it just is not reflected in the data yet.
E.g. Vancouver: https://www.zolo.ca/vancouver-real-estate/trends
Scroll down for median prices. Clear trend backup to previous highs. If Chinese have really pulled out it would have to be very recent.
If you read the greaterfool blog on Toronto it is just filled with anecdotes e.g. ” Another 9,500 properties came on the market in the Greater Golden Horseshoe area since last Wednesday”.. Nothing solid and macro about prices actually falling. Maybe it is just early or maybe it is all just BS and business will continue as usual with Chinese buying in force
A condo is an apartment, right? Because if so, holy snapping duck-shit! $1m for a two bedroom apartment. $2.3 million for a two bedroom detached! Those prices put Sydney to shame.
The Greater Fool guy is reading for serious serious absolute extreme above and beyond suckers. He’s just peddling Canadian shares, which are sh1t compared to booming property in Canadia!
Data source? And its terms of verification? All players use data to their own ends.
Gotti has no data
I’m loving the real estate ads on Gumtree.
How about this one – it’s magical:
“Instant Equity Townhouse Only $240k Valued at $275k
The purchase price is $240k. Last sale Price was $310k. Market Value is $275k or more. Rent is $305 per week. So instant equity of about $35k.”
Is the vendor a charity?
https://www.gumtree.com.au/s-ad/brisbane-city/property-for-sale/instant-equity-townhouse-only-240k-valued-at-275k/1148293854?utm_source=criteo&utm_medium=cpc&utm_campaign=LF-property_for_sale
This is not a bargain in my dictionary. Assuming that the numbers given are correct, $305 per week rent only provides the gross yield of 6.6% per year. Given the high transactions and maintenance costs of housing, and the illiquid nature of the asset class, 10% gross yield should be considered the minimum that qualifies for a bargain.
Yield is not a good measure of anything residential in my opinion. It needs to be in context of the property. Yield is a fools measure.
I told you guys, this is a market for the intellectually challenged, ah?
http://www.realestate.com.au/property-townhouse-qld-kallangur-420985330
Bit cheeky listing it as “Brisbane City” it isn’t even in the Brisbane City Council area. A lazy 31km from the CBD.
Ahahahah!!! Kallangur! Man, oh man… What a joke..
A Clanger in Kallangur
Chinese government is more Aussie. Trying to stop it’s citizens from buying our houses. Bloody Chinese bogans.
China is more like Islam, except everyone is a woman with no rights
I caught up for lunch last week with a Chinese expat friend who was over here to buy a house. Some interesting thoughts…
He’s a PR here so can buy existing resi, but because he lives in Asia these days he has to pay the foreign stamp duty (call it 8%, roughly double the rate for locals). But he said that is way better than buying in HK where it is more expensive than Australia, and stamp duty for foreign buyers is 30%, and there is rage there against mainlanders – apparently he has experienced hostility just talking to people in HK as soon as they hear his mainland accent.
Due to proximity to the mainland HK is where you look to for many possible futures wrt to mainland influence on the rest of the world. Am not at all surprised to hear your friend’s reports of hostility. Sad, but completely predictable. There has been an abject failure of governance from both HK and the mainland wrt to protecting the locals from negative mainland economic and social influences. They deserve all the social upheaval/unrest they get.
Should’ve told him to buy in Canada, Recently their stock levels soared exponentially
AFR reports house prices in Syd and Mel fell 1.1% over the month.
Fake news ! ………everyone knows Sydney house prices never go down ……..Reusa where are you ? ……..we need the thruth……yes we can handle the truth !
– Amen.
Gotti has a key point for all of us bubble-busing doomsayers.
Once we have sold out to foreign buyers, whether it is established dwellings or new dwellings that are supposed to help ‘supply’, they do not have to sell if the local market goes pear-shaped.
Unless they are forced sellers for reasons to do with their own, potentially domestic, situation, they can just sit on the property during any Australian downturn.
The last whiff of a downturn in our property market was after the GFC. I was in the market then, wide-eyed and hopeful, but all that happened was the number of properties on market dried up, the prices didn’t drop at all
Unless they are forced sellers for reasons to do with their own, potentially domestic, situation, they can just sit on the property during any Australian downturn
The flipside being that if their domestic situation motivates them to sell, they can bring down the Australian economy.
They key here is what happens in China…
Squiggle – shoulda looked at the gold Coast!
I wonder if there’s a way to figure out which properties are held vacant… Gotti’s scenario sounds like a squatter’s paradise to me.
Yes there is way. I wrote a design for an app to do just that but due to possible legal ramifications..I canned it. It may be time for me to revisit this?
“In Australia, the biggest driver of the domestic economy has been the rise in dwelling prices in Sydney and Melbourne. Higher real estate values made people feel confident and it also drove a substantial rise in dwelling investment.”
Aha ! the famous “wealth effect ” as the “biggest driver of the domestic economy “….or should we say the “debt effect “……. debt to compete with foreign money for homes in our own country for our children ………nice work Straya !
Worth reading the whole article just to get a picture of how pessimistic Gottliebsen is right now – a handful of houses got passed in in Kew and Camberwell, and Sydney only had a 73% clearance rate, so we’ll all be rooned.
I would like to think this Gotti article will ve found to be the turning point of the bubble.