Chinese buying Sydney Property & Pushing Aussies Out of Market

[truong]

Despite GM's unhelpful views reciprocity should not be dismissed out of hand. It is after all the basis for trade agreements between friendly nations, and we're in trade talks with China aren't we? For example I'd very much support reciprocity in the free circulation of news, ideas, books, internet etc... I agree however that for property it has little chance of progressing beyond the status quo.

Similarly, dirty money is an area that?s very hard for Australia to make a stand on. What's illegal here is practised there almost as a way of life, even at the highest levels, and only an infinitely small proportion of the corruption involved will ever be prosecuted. We just can't put a blanket on every transaction coming from China.

My wife is ethnic Chinese so there's no reason for me to be negative about the Chinese. My son-in-law comes from mainland China and we love him very much. For years I've tried to dissociate the people from the regime that governs them. Chinese people would make A1 migrants/citizens in any country but their government is a nasty one.

For a lot of them who buy property here however, I can't make that distinction any more considering how their private and public affairs are all mixed together. You'd be astounded by the stories I hear that will never make it to the media.

My wife's health has been deeply affected by how her parents' relatives are treated back in China. Thousands of farmers robbed of their land, two suicides, families dislocated and pushed to the brink. The (presumed) perpetrator of this has a daughter studying in Australia. She spends a lot of time at the casino and each of her bets could have fed a farmer's family for a whole year. He recently came here to visit and bought several properties.

Don't tell me this is a desirable state of affairs. What can we do about it, I don't know. But please don't be the cheer squad every time they celebrate our trade relations. There is a darker side and it can be really dark.

I'm sorry if my posts could be used to promote prejudices. Certain truths need to be told though.

 

[HiEquity]

No; I advocated tarriffs on online overseas purchases - Ebay and other online sites, etc. These are currently not taxed an import duty, and are killing the retail store industry in this Country.

Some don't care about that.

...........

Reciprocation is all I ask for.

There are a few people who can't see the forest for the trees in this thread! GreenMedallion is clearly trolling but this needs to be corrected.

It has never been about reciprocity - that is a completely flawed argument. It has always been about what is best for Australia. What has made Australia one of the wealthiest countries in the world per capita? One of the main contributors (if not the main contributor) to our current economic prosperity is our low sovereign risk combined with our openness to foreign direct investment from anywhere. Without it we would be a tin pot little Australia with no relevance and certainly no wealth. Australia has always relied on foreign investment to develop as rapidly as we have - from nothing just 200 years ago. Restricting that investment would be to go completely against our own national interest! The fact that China or others impose these sorts of restrictions does not make it a good idea for Australia - quite the contrary! Go live in China if you think their policies are so great - you can see the results for yourself!

As for retail stores, if the internet can do something cheaper and better for people, why do you want to make me pay more for something in a physical store? Just so we can keep people employed? Technological change drives progress and prosperity through making things cheaper for everyone. If that means some retail shop assistants need to retrain in other more productive fields then that is a good thing. What happened to all the people who used to man the "one hour quick photo" film processing machines? We now get photos much cheaper and they have other more productive jobs. Technological progress makes some jobs redundant and opens up other opportunities - trying to fight it is the worst response.

As for poor Aussies not getting a look in with all this foreign property investment (actually very little but lets not let the facts get in the way of a good story...) - well perhaps they need to sprinkle a cup of concrete on their Weet Bix in the morning and HTFU. If we want to be prosperous as individuals and as a nation then we need to compete - introducing policies that inhibit competition will only make us fat and lazy and bite us on the bum in short order! The fact that other countries subsidise stuff and protect some of their industries from competition only makes them fat and lazy - at their peril! They need ever increasing subsidies to survive, which they eventually can't afford (as we are seeing now around the developed world). These types of policies come back to bite in a big way eventually... nothing comes for free!

 

[Witzl]

I mean that the proportion of chinese people buying is far exceeding the proportion of chinese living in the area.

Yes this could be an increase in the proportions of Chinese wanting to move into the area..... but the increase just does not seem realistic. At most houses i went to, over 80% of the buying groups were mainland Chinese.

Of course, I could be wrong - but I am only reporting what I have seen anecdotally.

 

[Witzl]

For a lot of them who buy property here however, I can't make that distinction any more considering how their private and public affairs are all mixed together. You'd be astounded by the stories I hear that will never make it to the media.

My wife's health has been deeply affected by how her parents' relatives are treated back in China. Thousands of farmers robbed of their land, two suicides, families dislocated and pushed to the brink. The (presumed) perpetrator of this has a daughter studying in Australia. She spends a lot of time at the casino and each of her bets could have fed a farmer's family for a whole year. He recently came here to visit and bought several properties.

Don't tell me this is a desirable state of affairs. What can we do about it, I don't know. But please don't be the cheer squad every time they celebrate our trade relations. There is a darker side and it can be really dark.

I'm sorry if my posts could be used to promote prejudices. Certain truths need to be told though.

What you have said here is very very similar to several stories i hear from the Chinese that i know and meet with regularly.
I agree that it would startle most Australians just how corrupt the country is compared to here. It is beyond what most could imagine.

That's what i was trying to get at in my post above - that whilst there is almost certainly genuine Chinese Australians buying property (and im genuinely happy for that), there is unfortunately, in my opinion, a much murkier and darker group of chinese buying Australian property at the same time via potentially corrupt means.

 

[alexlee]

I mean that the proportion of chinese people buying is far exceeding the proportion of chinese living in the area.

Yes this could be an increase in the proportions of Chinese wanting to move into the area..... but the increase just does not seem realistic. At most houses i went to, over 80% of the buying groups were mainland Chinese.

Of course, I could be wrong - but I am only reporting what I have seen anecdotally.

Say the area is originally 10% chinese and 90% caucasian, and there are 1,000 houses in the area. On any given weekend, 5 houses change hands. Assume 80% of these (4 out of the 5) are purchased by Chinese, but also that every 2 weeks one of the 10 sold is sold by a Chinese owner.

After 52 weeks of this (overwhelmingly Chinese buyers) the ownership ratio is about 28% Chinese. That's a huge increase. But the result is not unrealistic, even when the majority of buyers are Chinese.

Extrapolating observations at the periphery can be misleading.

 

[BayView]

Go live in China if you think their policies are so great

I never said they were great.

In fact, I was illustrating how bad they are, while ours are terrific. That's why everyone wants to move here from their own hell-hole joints, no doubt.

As for retail stores, if the internet can do something cheaper and better for people, why do you want to make me pay more for something in a physical store?

So that it is fair and equitable. I'm not forcing you to buy from a shop-front retailer, but there is a system in place which is now under severe threat.

A system which is arguably the biggest employer of people in this Country, both directly and indirectly.

Retailers have to buy their supplies from wholesalers, who have been given the rights to distribute a brand's products within a defined area.

All the stock they buy is subject to import duty. This is one of the reasons why it is more expensive to buy from shop front retailers now....overhead costs etc, to operate are also a significant factor.

Since the invention of online shopping, we can now buy the same products from all over the world, and basically bypass the retailer and wholesaler, avoiding import duty.

In effect, it will destroy the traditional system of shop front retail stores and jobs, and many wholesale related jobs.

Many smaller factories and warehouses house these wholesalers, so they will be effected as well - in time, many of these LL's will struggle to find tenants.

Just so we can keep people employed?

Yes. A few dollars out of all our collective pocket is not going to kill you or I and will ultimately save a huge number of livelihoods.

Technological change drives progress and prosperity through making things cheaper for everyone. If that means some retail shop assistants need to retrain in other more productive fields then that is a good thing.

Assuming there is room for jobs after the retraining. With retail and farming and their subsidiary businesses - two of the biggest employers in the Country - on the decline, and given that the population is steadily growing due to immigration; what is there going to be available to put these people into? I keep hearing this glib statement of yours all the time from folk here.

What happened to all the people who used to man the "one hour quick photo" film processing machines?

They are all $2 shops now.

We now get photos much cheaper and they have other more productive jobs. Technological progress makes some jobs redundant and opens up other opportunities - trying to fight it is the worst response.

Have a closer look as you drive around the Country and see how many shops are now vacant. The LL's are hurting too due to this march for progress and cheaper product.

I want to buy cheap stuff too, but I don't mind seeing an import tax on my online purchases if it means I help keep jobs here. What about the term "Buy Australian". This is why a large chunk of our manufacturing industry is dead now.

But hey; who cares, right?

As for poor Aussies not getting a look in with all this foreign property investment (actually very little but lets not let the facts get in the way of a good story...) - well perhaps they need to sprinkle a cup of concrete on their Weet Bix in the morning and HTFU.

I'm not complaining about not being able to buy property. It's the folk of today who are.

I've done it tough a lot of years and still bought property for the last 30 odd years, thanks.

I don't particularly care if the Chinese buy heaps - I'll get richer as they push the prices up. They bought up half the suburb of Blackburn after I built there in 1996 and made us money on our then PPoR, so yay. Bring it on.

But, I don't like that they can buy freely here and not allow anyone to do the same there. I don't like that Japanese boats can kill thousands of whales in the name of "scientific research" either. But that's just my idealistic aquarian mind....

If we want to be prosperous as individuals and as a nation then we need to compete -

I agree, but as far as selling to folk in your own back yard, or buying from local businesses in your own back yard, it doesn't matter if Joe Blog in Ireland sells his handbags to his local folk cheaper than we do to ours.

introducing policies that inhibit competition

An import duty on personal online overseas purchases does not inhibit competition here - only over there. The online stores will need to become competitive and give the local retailers a chance to survive.

The fact that other countries subsidise stuff and protect some of their industries from competition only makes them fat and lazy - at their peril!

See above.

They need ever increasing subsidies to survive, which they eventually can't afford (as we are seeing now around the developed world). These types of policies come back to bite in a big way eventually... nothing comes for free!

Our manufacturing is seeing this already - car industry for one example.

But, we are all lining up to buy cheap Hyundais, and so on. It's our fault - not the Gubbmint's for the subsidy policies. Without them the car industry probably would have folded a decade or more ago.

So, put an import duty on the bloke who buys the Mustang in the USA online and wants to bring it in...maybe he might still buy it, or maybe think about a locally made car instead if it's cheaper. (this is a poor example because a Mustang aint no Falcodore, but you get what I'm saying).

 

[Dan_p]

according to another thread, it has been proven that south east Asians are smarter than other people. also bank research shows that people of Asian origin are better with money and can therefore have better interest rates. So it makes sense that if you are smarter and can borrow money cheaper that you would push others out of the market.

Not to mention asian families tend to help each other with buying properties, unlike australian families. (very general)

Perhaps it is the australians who need to learn to remain competitive and help your children buy their first property.

It is easy to say the next generation has no chance, that is a losers statement

 

[HiEquity]

We are clearly never going to agree but I will just make the following points:

- The ATO has investigated charging duty and GST on imports below the $1000 threshold and concluded the cost of doing so would be greater than the revenue gained. All that money we would pay would just be consumed supporting the salaries of bureaucrats trying to administer the system - is this what you want? I guess it all creates employment at our expense...?
- There are plenty of employment opportunities in other industries - the only problem is the level of pay those employers have to pay because their employment markets are currently under supplied. Releasing a whole heap of retail employees into the employment pool will increase the pool of available labour in the economy and allow other industries (like agriculture and mechanic shops) to employ people at lower cost - there are lots of jobs going begging now because the cost of labour is too high! It would allow local manufacturing to thrive again because the cost of labour is its number 1 problem... together with the exchange rate.
- As for the LLs of wholesalers, I'm surprised to hear anyone thinks they should be a protected species? Least of all themselves - that's life in business.
- If the car industry folded over a decade ago we could well be better off overall as we wouldn't have thrown so much money at a dead duck. But the car industry debate is far more complex than that from an overall manufacturing capability perspective and I don't intend to go into it here.

 

[BayView]

I'm surprised seeing some member in this property investment forum prefer property prices are kept affordable, rather than pushed out by foreigners. What's the point of investing in property, if all aussies can buy property. Small rental yield (as few would rent), and little capital gain.

If you mean me, then refer to me.

And you'd be wrong about me, anyway.

I've never ever said they should be kept affordable, because in my lifetime, it's never been affordable.

Hasn't stopped me though.

 

[sash]

Yep this happening to mosman as we speak....good on the rich chinese for bringing some diversity

Say the area is originally 10% chinese and 90% caucasian, and there are 1,000 houses in the area. On any given weekend, 5 houses change hands. Assume 80% of these (4 out of the 5) are purchased by Chinese, but also that every 2 weeks one of the 10 sold is sold by a Chinese owner.

After 52 weeks of this (overwhelmingly Chinese buyers) the ownership ratio is about 28% Chinese. That's a huge increase. But the result is not unrealistic, even when the majority of buyers are Chinese.

Extrapolating observations at the periphery can be misleading.

 

[virgo]

Oh no the Chinese are coming!

Hiya

I just came back from Singapore...and yes..one of the reasons Singapore property market is frothing is the influx of mainland Chinese...as i mentioned previously my brother's mate's house has gone from 7mil to 24 mil...most of the friends i went to uni with have their property DOUBLED in less than 10 years ...

If the trend continues in Sydney and Melbourne in particular, you guys have not seen anything yet

BTW the government there is onto its 7th set of cooling measures...the latest seems to have worked ...15% stamp duty how's that?

 

[Aaron_C]

But Singapore is full of commission flats. Surely the price rises you are talking about is only limited to the private housing?

 

[virgo]

Singapore

Hiya

Even the "commission" flats have doubled! Crap 3 bedders apts going rate is 350 k all the way to 600K...and not everyone can buy them either!

20% are private housing (4 mil population) ....and minimum is 1 mil for a decent small 2 bedder...

Whether commission or private, my point is the mainland Chinese are definitely driving the market there too

 

[virgo]

Property rises

Oh...forgot to mention, that in Singapore , you can use super to buy and loan property too...kaboom!

(see the mirroring with our SMSF?)

rising population : in 10 years from 3.5 to 5 mil and the govt wants to target 7 mil (again see the similarity with Oz?)

BUT interest rates are really low something like 1-1.5%; now all Sydney needs is interest rate trending downwards and the pot is ready to boil...

 

[Deltaberry]

As the country embraces globalisation and benefits from the Asian century, there is nothing more important than holding very prime property to ensure you don't get priced out.

The Chinese are only half the story and driving a very small residential market. The ones to watch are the Malaysians and Singaporeans who are buying the most prime CBD land and shopping centres in Syd/Melb and building some of southern hemisphere's tallest skyscrapers there.

 

[truong]

Some of this worldwide phenomenon may be linked to this:

http://www.smh.com.au/world/the-great-china-corruption-fire-sale-20130122-2d3v5.html

Thousands of Chinese communist officials have been panicked into a fire sale of their illicit properties and billions of pounds have been smuggled overseas as the country's new leaders intensify a campaign to root out corruption.

(...) The CDIC report, which was obtained by the Economic Observer newspaper, suggested that nearly 10,000 luxurious homes had been sold by officials in Guangzhou and Shanghai last year. It also claimed that $US 1 trillion, equivalent to 40 per cent of Britain's annual gross domestic product, had been smuggled out of China illegally in 2012. Economists and experts cast doubt on the figure, but said the flow of money was dramatic. Li Chengyan, a professor at Peking University, suggested that about 10,000 officials had absconded from China with as much as pounds $US100 billion.

Marco Pearman-Parish at Corporation China, a company in Beijing that helps clients find properties abroad, said there had been a strong rise in clients looking for homes in the Cayman Islands. "In Beijing, half our clients are government officials," he said. "Nine out of 10 claim to be businessmen, but it emerges over the course of the deal that they have government jobs."

The CDIC said 1,100 government officials had fled China during last year's national holidays in October and that 714 had been successful in getting away. In the United States, the National Association of Realtors said properties worth more than $US7 billion had been bought by Chinese in the US last year. Some high-end homes were now built for rich Chinese, with ponds for koi carp and a second kitchen for pungent cooking.

As a general rule I welcome foreign investment but this current wave looks quite unusual. Very different from the Japanese buying in Gold Coast years ago.

From macrobusiness
http://www.macrobusiness.com.au/2013/09/chinese-buying-unprecedented-sydney-property/

I will remind everyone at this point of two things. First, it was Chinese money (among others) that played a major role in blowing up US housing via purchases of Treasury and GSE bonds. This held down interest rates and stoked a local investor blowoff. So think carefully before you conclude it is a good idea to have a wave of foreign capital distort your asset markets.

 

[truong]

Hiya

I just came back from Singapore...and yes..one of the reasons Singapore property market is frothing is the influx of mainland Chinese...as i mentioned previously my brother's mate's house has gone from 7mil to 24 mil...most of the friends i went to uni with have their property DOUBLED in less than 10 years ...

If the trend continues in Sydney and Melbourne in particular, you guys have not seen anything yet

BTW the government there is onto its 7th set of cooling measures...the latest seems to have worked ...15% stamp duty how's that?

Hong Kong's tightened the screws too... 15% tax on foreigners (i.e mainland Chinese who make up about half of the property sales).

As a result the mainland Chinese market share has recently fallen to about 20%, hence a spike in other countries.

 

[redwing]

according to another thread, it has been proven that south east Asians are smarter than other people. also bank research shows that people of Asian origin are better with money and can therefore have better interest rates. So it makes sense that if you are smarter and can borrow money cheaper that you would push others out of the market.

I thought it was the Jews that had the highest IQ's

If you know any Asian students. You know they study, study, and then study some more. Education is highly encouraged in Asian families. Their high IQ's are due in large part to hard work rather than genetics, in fact a Singaporean teacher I knew said his student were great at learning by rote, they knew the how, but not the why

The Olympics always seem to re-enforce some of our long held beliefs also, but its great to see an underdog triumph

 

[XMW]

The principle thing can only go so far. I am pretty sure that most of the cash that comes here from overseas like China etc is dirty money. No question about that. Do we therefore prohibit them using that to invest in this country, since we abhor corruption and money laundering? Shades of grey.

Just curious how you get to the conclusion that "most of the cash comes here from overseas like. China etc is dirty money. No question about that". Care to share the evidence? I'm pretty sure AUSTRAC will look into this if this is the case.

I read a lot your post and like most of them, but this comment is really childish and irresponsible.

 

[Aaron_C]

Just curious how you get to the conclusion that "most of the cash comes here from overseas like. China etc is dirty money. No question about that". Care to share the evidence? I'm pretty sure AUSTRAC will look into this if this is the case.

If you looked into how business is done in China you will understand what I mean. Let's just say that going down the straight and narrow path will get you nowhere. Everyone who is wealthy, from the local Customs bureaucrat to the mayor of a major city is corrupt to the core. AUSTRAC has no jurisdiction over how the Chinese people earn their money. As long as there is no tax evasion or fraud here what can they do?

I read a lot your post and like most of them, but this comment is really childish and irresponsible.

You may not like what I've said but that is the reality of that country.