Chinese buying Sydney Property & Pushing Aussies Out of Market

[Piston Broke]

Maybe they have a bible that states this is their promised land.
Worked for that other mob.

We pay them a few bux and a bowl of rice to supplement our lifestyle with all the cool stuff we must have.
Everything comes with a price.

 

[Deltaberry]

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.

It comes from observations over many years. Too hard to explain to people outside the country, let alone on a forum.

Reality is, what is deemed "dirty" money in one country is a way of life in another.

There're also some countries that will stone us to death for some of our behaviour.

 

[truong]

OK I'll have a go, and sorry for the long post.

Take guanxi, the Chinese word for relationship, one that has been deepened over a long period of time through the mutual offering of material and immaterial gifts.

In traditional confucean society, guanxi derives directly from the Five Virtues that every moral man should possess (Humaneness, Loyalty, Propriety, Intellect, Trustfulness). It used to be a measure of your own humanity and a means to achieve social harmony, but over the last century it appears to have lost much of its potency.

Nowadays people generally think of guanxi as nothing more than personal networking, the attachment (enslavement?) of other people to your sphere of influence through gifts/bribes/favours. The keyword here is indebtedness, the strength of the guanxi being determined by the size of the mutual debts. By accepting a favour and paying it back, you show your social worth and your willingness to belong.

How guanxi works:

- to fail to honour guanxi is immoral even when it involves going against the public good (a remarkable twist in the confucean code of morals).

- to refuse an offer of guanxi is an affront, not immoral but unacceptable.

- guanxi is your lifeblood and without guanxi you will amount to nothing.

- your guanxi can expect you to give them a favour even if they know it's going to cost the company/government/boss you're working for.

- you may be asked to break the law: guanxi is above the law.

- it's a good show of guanxi when you take personal risks to fulfil your part of the deal.

- your guanxi can ask you to give their own guanxis the same favour you would give them and vice versa (group guanxi).

If you ask me, this is open slather for corruption. It's so widespread and ingrained that you'll find it everywhere, at every level of society, from your everyday stuff such as trying to get your kid into some school, get to the top of the hospital's surgery list, get a job/promotion, add to your household hukou, even buy/rent a property... to the really big stuff that involves billions of $ and affects the lives of millions of people. If you think it really through, every RMB that goes around can be deemed to be tainted in one way or another.

It's really hard to keep your nose clean as many Western businesspeople have found. Many times I've tried to avoid undesirable guanxi by offering them a small gift before they could give me one, basically telling them that I'm not rejecting their guanxi, just preferring to be free for now But it can become a tiring cat-and-mouse game where you're always trying to keep the upper hand.

Communism hasn't cured the ills of the imperial regime. The power structure is still wildly arbitrary while the family/social structure has been shot to pieces after going through so much upheaval. The love of money and the pursuit of every bit of pleasure has become the obsession of the new rich... all extra reasons for guanxi to be debased and corruption to flourish. It's ironic that the poor folks in the countryside are keeping Chinese culture alive more than anybody else.

Some Chinese people will tell you guanxi is their way of life and something not to be worried about, but many others are increasingly wary about it. For me though, it doesn't matter a bit: we should call corruption wherever we see it.

 

[Deltaberry]

Funny you say the poor folk in the country side are keeping the culture alive.

 

[truong]

Why... ?

 

[truong]

Info I just got from a friend, usually well-informed:

There was quite a panic earlier this year when the Chinese government said it was going to set up a centralised database of property ownership. Previously corrupt officials have been able to spread their buys around, hide their assets and get around the restrictions because every province kept separate databases.

There was a lot of selling/transferring going on to the extent that it was feared prices were going to fall.

However the whole affair has cooled down a bit when the single database became bogged down as the factions/provinces came up with all sorts of excuses to delay it. This should have been expected anyway considering how many people were trying to cover their backsides. According to rumours the central government had to promise that anti-corruption units would not be allowed to look into the database.

But because of the loss of confidence the flow of assets overseas hasn't slowed down. As my friend said, these people are buying overseas by necessity more than by choice.

And they're mostly paying cash. This is in line with observations that (1) Chinese buyers virtually never complain about the low vals they get and (2) Sydney prices have shot up despite very little increase in credit volumes (other factors may be in play here too).

Another thing my friend said: there's a new trend emerging where they're trying to vertically integrate the whole thing. By becoming developers themselves, using as much Chinese material and labour as possible and then selling to a captive clientele, they aim to control it from A to Z. This is a worldwide trend by the way, not just in Australia.

 

[Deltaberry]

Why... ?

Go to a tier 3 city, and you might not come back, or might not come back with a liver.

 

[truong]

Go to a tier 3 city, and you might not come back, or might not come back with a liver.

Ha ha .. but you're talking about the worst of them all here, the ones that want to become as brash and rich as their big city cousins but are too uncouth to achieve it.

I was more thinking of the real countryside where the old human values can still be found. Every time I see my in-law folk I can measure how much innocence has been lost through the destruction of traditional bonds. The countryside has degraded greatly but there are many who still believe in simple decency.

 

[Deltaberry]

I'm not sure which country side you're talking about.

But most of China in the rural is still very poor and would have no qualms selling your liver.

 

[truong]

Been there and back... with my liver (and both kidneys) intact, thank you.

I'd suggest you read this book: Fighting for Breath: Living Morally and Dying of Cancer in a Chinese Village and you'll get a glimpse of how poor, powerless villagers still manage to their keep their dignity up while their way of life is being utterly destroyed.

From the author, Dr Anna Lora-Wainwright:

Over the past decade, I have spent almost two years living in rural China and researching attitudes to development, illness, pollution and morality. This has brought me to witness first-hand some of the often unthinkable suffering rural villagers face (environmental and otherwise), as well as poignant moments of human dignity, kindness and resilience.

I will always remember a woman in her fifties salvaging roof tiles before she demolished by hand her own newly built home to make space for a road. A seventy-year-old woman refusing treatment for glaucoma -- because "one eye is enough" -- whilst opting to save the money for her grandson's education. My host tending to her dying father (suffering from oesophagal cancer) as he spat blood into newspaper scraps. Sixty-year-old Uncle Wang committing suicide by drinking pesticide in the final stages of stomach cancer. His wife, a few years later, scavenging plastic bottles in the township to boost the family's income and support her granddaughter's education. Villagers growing crops in fields they know to be severely polluted. An anti-incinerator activist lying in bed surrounded by flies next to his sick wife after suffering a stroke.

However, in the majority of cases, they suffer in silence, are unsuccessful in their attempts to put an end to pollution, or are co-opted by polluting enterprises into seeing it as inevitable.

The village I know is not a "cancer village" but one where residents have been forced off their land and dislocated. Different circumstances but same stories of silent, unassuming goodness.

Edit: Compare this to modern day guanxi and you will understand the degradation that has happened to the Chinese psyche.

 

[Deltaberry]

Yea I've travelled extensively in major metropolitan and rural areas, and have lived and studied there too when I was younger, and invest there too. So definitely appreciate the wealth gap and "cancer" villages and the inner workings of the country.

But I also have many casual friends or acquitances who have started businesses in tier 3 cities almost everyone here would've never heard of, doing businesses like small groceries, internet businesses, commodities, tutoring schools. And gee these cities...

 

[truong]

And gee these cities...

... are populated by those poor lads that have been evicted/lured from their villages to fend for themselves and have become thugs out of necessity.

Stay or leave, they lose.

Deltaberry, I see where you come from and appreciate your views. Cheers.

 

[DennisLeung]

My theory is that for many of the Chinese investors who are cashed up, they are simply using Australian properties (specifically high rise units and/or million dollar mansions) as "parking spaces" for money where they can dump large quantities of cash into a relatively safe environment (compared to both shares and investing in China or properties in other countries), so that if the Communist regime ever collapses, they can essentially draw on their foreign cash reserves.

To that extent then, you have these property investing companies helping these Chinese investors park money all around the country. These people don't really care about the yield as they have such deep pockets, they think, if we dump for example 500k into an apartment, as long as the value doesn't drop, we have 500k in cash basically. In some sense this is essentially subsidises cheap accommodation for Australians as most of these new high rise OTP units are all negatively geared so all the overseas "investors" foot the majority of the costs whilst the people who need somewhere to live pay rent which is cheaper than the servicing costs. Also the building industry benefits from all this artificial money.

The downside for us investors is probably a dilution of the rental supply which creates "blackholes" where we will no longer be able to invest, e.g. Hurstville, Zetland, Parramatta CBD etc.

 

[Deltaberry]

Not sure what the concern is when they only buy stuff that noone wouldve otherwise bought such as CBD apartments.

 

[Ausprop]

Not sure what the concern is when they only buy stuff that noone wouldve otherwise bought such as CBD apartments.

indeed - should be encouraged

 

[divirgo]

aussies priced out of market.

I know this is a tantalizing topic for developers but the question has a moral core...this is Australia, and it is incumbent on our government to protect its citizens...you know, the ones who helped mould this country and pay tax! If you care to investigate recent reports, you will find Chinese flauting FIRB rules and getting their relos to buy established houses for them...landbanking, waiting for the right time to sell...taking away stock for local citizens.

Of course, cashed up foreigners are pushing up prices, great if you sell but what about the aussies trying to break into the market? Landbanking a big issue and instrumental to the gov introducing FIRB rules.

We need foreign investment but it needs to be guided and sagaciously monitored before we lose the essence of who we are as a nation. I am not a bigot...I come from migrant stock, I speak 4 languages and I share my house with Chinese students one of whom calls me Mum. I love her to bits but we are first and foremost Australians and rather than trading that for some quick, lucrative commercial gain, let's put it in perspective and keep a vigilant eye on our precious terra firma before our identity and way of life dissipates forever more. Just my thoughts.

 

[Aaron_C]

let's put it in perspective and keep a vigilant eye on our precious terra firma before our identity and way of life dissipates forever more. Just my thoughts.

You do realise that the land remains in Australia, right?

 

[sanj]

Identity and way of life dissipating? Seriously?

 

[ZachAnSel]

You guys must be dreaming right??
Part of globalisation is people and/or their money migrated from one country to another.

Stop whinging, stop wish its easier for you. Wish you're better than their money..

 

[Deltaberry]

indeed - should be encouraged

Yes sell them more ugg boots and nougats.