China is looking more and more like the biggest risk to oz property market. Australia is too reliant on China (resource, tourism, education, property etc), and right now China's economy is looking very much like Japan in the 1980s and America pre GFC.
I am of Chinese heritage and follows news over in China quite closely. The situation currently is really mind boggling. An average 2-br apartment in my home town is about 25 times the annual salary of a typical household income, so even if a family spent nothing, they will need 25 years to buy house!!! In reality only speculators and parent assistance can afford to buy, which can't go on forever
Chinese state govt is hell bent on increasing property price since their only KPI is GDP growth, and property revenue through selling land is the easiest route. They take on massive debt and provide lots of special green lights to top developers (so developers can keep buying land from govt at record price). Western media tend to only focus on the federal govt and its consistent GDP growth and supposedly massive foreign reserve, which overlooks the real danger lurking beneath.
Oh and the shadow banking system and rampant P2P lending is very much like the subprime junk....
The question is when China will implode (my sentimental side sure hopes it never happens!) and how it will affect Australia? China helped to smooth out the pain from GFC, who will be the saviour if China goes down?
The bottom line is how us property investor can do to mitigate the risk? My plan is to hold more cash/bond, sell down part of the portfolio that became low yield due to CG, buy new CF neutral/+ properties. Is there any other ways?
Here is a few of the articles on this
Aus dependency on China's fortune:
http://www.smh.com.au/comment/risky...-leaves-nation-vulnerable-20140310-34hkz.html
China's ridiculous property bubble
http://www.smh.com.au/business/are-...ing-towards-economic-ruin-20140321-358l2.html
I am of Chinese heritage and follows news over in China quite closely. The situation currently is really mind boggling. An average 2-br apartment in my home town is about 25 times the annual salary of a typical household income, so even if a family spent nothing, they will need 25 years to buy house!!! In reality only speculators and parent assistance can afford to buy, which can't go on forever
Chinese state govt is hell bent on increasing property price since their only KPI is GDP growth, and property revenue through selling land is the easiest route. They take on massive debt and provide lots of special green lights to top developers (so developers can keep buying land from govt at record price). Western media tend to only focus on the federal govt and its consistent GDP growth and supposedly massive foreign reserve, which overlooks the real danger lurking beneath.
Oh and the shadow banking system and rampant P2P lending is very much like the subprime junk....
The question is when China will implode (my sentimental side sure hopes it never happens!) and how it will affect Australia? China helped to smooth out the pain from GFC, who will be the saviour if China goes down?
The bottom line is how us property investor can do to mitigate the risk? My plan is to hold more cash/bond, sell down part of the portfolio that became low yield due to CG, buy new CF neutral/+ properties. Is there any other ways?
Here is a few of the articles on this
Aus dependency on China's fortune:
http://www.smh.com.au/comment/risky...-leaves-nation-vulnerable-20140310-34hkz.html
China's ridiculous property bubble
http://www.smh.com.au/business/are-...ing-towards-economic-ruin-20140321-358l2.html