Wealthy migrants pricing locals out of Sydney property market

Some more research to back up what I've been saying for years. Australia's policy of high skilled immigration leads to higher house prices. When there is a shortage, the available properties flow to the wealthiest people.

And... Steve Keen admits there is a shortage. Sorry bears, your idol has fallen. He has capitulated on the shortage issue, after previously capitulating on the possibility of a 40% crash. Who is the bear idol now? :D


Full article: http://www.news.com.au/money/property/weal...0-1225820461473

Wealthy migrants pricing locals out of Sydney property market

* By Nick Gardner
* From: The Sunday Telegraph
* January 17, 2010 12:00AM

AUSTRALIAN families are being priced out of the property market by record numbers of highly paid skilled workers arriving from overseas.

Research by The Sunday Telegraph has revealed for the first time how skilled immigrants - predominantly from Britain, India and China - are forcing house prices to some of the highest levels in the world when compared with average incomes.

...

And because skilled migrants command above-average salaries, they pay above-average prices. As a result, a relatively small number of highly paid buyers can have a disproportionate effect on house prices.

Proof of this theory came when Mr Edwards plotted a chart of the increase in skilled migration alongside national house-price growth.

"It correlates at a rate of 98 per cent, which is almost unheard of," he said.


"It even has an 18-month time lag, which is obviously the period between immigrants arriving in Australia, getting themselves settled and when they first purchase a property."

. . . . .

"The fact there is a shortage of property doesn't necessarily mean prices have to keep rising," Steve Keen, professor of economics at the University of NSW, said.

. . . . .

"Sydney is set to be the best-performing city in the country this year
 
I don't agree with Edwards.
The key fact is new dwellings aren't matching population growth, as shown in this quarterly comparison of estimated resident population change and building approvals.




In a free market where supply more readily adapts to demand, recent population growth, including influx of skilled migrants, would have stimulated housing supply.

So what's restricting supply??????

I say environmentally obsessed urban LGAs resisting higher housing densities, lenders restricting funds to developers since GFC, and.............could there be an affordability issue?
 
I say environmentally obsessed urban LGAs resisting higher housing densities, lenders restricting funds to developers since GFC, and.............could there be an affordability issue?

Exactly, and even if a developer can get sufficient funds to build, where are the buyers?

There are not enough buyers for new developments and investors are now hesitant to buy because

1. with the recent price increases the yields are now cr@p,
2. thanks to the RBA interest rates have gone up significantly and could increase more
3. and capital gains is questionable......

Maybe we need a investor incentive scheme that actually works or something to boost everyone's affordability like tax deductibility of a PPOR loan?
 
Exactly, and even if a developer can get sufficient funds to build, where are the buyers?
There's stacks of 'em Bill. We have never been busier and I'm not sure what % of buyers use a BA - but it must be miniscule in the overall scheme of things.

There are not enough buyers for new developments and investors are now hesitant to buy
Not in my experience on the ground

1. with the recent price increases the yields are now cr@p,
Yeah but Bill this is just a normal part of the cycle. You know how it works: Yields are 5+%, then you get price rises that makes yields 3 - 4 % (cr@p yields as you put it). Then rents rise until the yields come back to 5%...........same ole same ole.:p
2. thanks to the RBA interest rates have gone up significantly and could increase more
There is no doubt they are going up more BUT they are still LOW. You and me both were paing 3% higher 2-3 years ago than we are now and prices have only increased 10-12% in parts of SYD.
3. and capital gains is questionable......
Huh? :confused: Nothing about what has (or is happening now) makes me think that this cycle will be any different than all the others we've had.

Maybe we need a investor incentive scheme that actually works or something to boost everyone's affordability like tax deductibility of a PPOR loan?
Now a point on which we can agree :D:D Cheers mate.
 
Maybe we need a investor incentive scheme that actually works or something to boost everyone's affordability like tax deductibility of a PPOR loan?

I recall from ABS musings, new dwelling construction is funded moreso by investors than oo's. (i.e. how many FHBs can afford the cash flow burden of building)

If potential IP growth and yield looks sick, then it fits that construction will slow.

I wonder if Rudd and the RBA understand the extent of new dwelling supply dependence on investors!!!! I somehow doubt it.
 
That title should read:
Wealthy Workers outprice Lazy Locals.

The dude from residex should look at the dribble they been publishing for years and their useless medians.

And the noob lines of "Prices will shoot up this year" referring to Sydney have been printed for quite a few years now, but eventually it will happen.
 
Ouch!.....that is bit harsh.....

I have said this for a while.....we like London has become the preferred place for wealthy immigrants to come to work and enjoy a good lifestyle.

It will certainly be interesting to see what happens when places like the Sutherland shire also become over run by immigrants.

Might be time to pick more property in Sydney....


That title should read:
Wealthy Workers outprice Lazy Locals.

The dude from residex should look at the dribble they been publishing for years and their useless medians.

And the noob lines of "Prices will shoot up this year" referring to Sydney have been printed for quite a few years now, but eventually it will happen.
 
Most migrants have more wealth than many locally born people.

Wealth isnt just measured in money, indeed as I get older and meet more and more people with "serious money", wealth I believe is measured more in security and peace of mind than a bank balance or a bunch of assets

And simply, for many migrants their wealth, skilled or unskilled, it comes down to attitude, work ethic and perspective, and dare I said it in many cases gratitude.

ta
rolf
 
And simply, for many migrants their wealth, skilled or unskilled, it comes down to attitude, work ethic and perspective, and dare I said it in many cases gratitude.

Which says a lot about prevalent Aussie 'values'.

Always amazes me that so many educated Aussie parents of teenagers say they can't motivate their kids to get away from the tele or computer games, to do homework or a part time job, or eat healthy food.

This just isn't an issue for my Asian and Greek friends.
 
Depends on the generation

Which says a lot about prevalent Aussie 'values'.

Always amazes me that so many educated Aussie parents of teenagers say they can't motivate their kids to get away from the tele or computer games, to do homework or a part time job, or eat healthy food.

This just isn't an issue for my Asian and Greek friends.

Speaking with first hand experience on the Hellenic side of the fence.........it really depends on the generation in the time line.

The children of the migrants (generally) tend to be motivated and achievers whether scholastically, career, etc., however their children......... :rolleyes:

I am speaking generally and of course there will be exceptions, however that's the anectdotal evidence and experience that I have.

For the record I am a son of migrants :)
 
so....property went to the highest bidder....again....and there's a problem....??

do these socialists understand they benefit from the flow on effect of this phenomenon, this money out of thin air, this perceived value?
 
Speaking with first hand experience on the Hellenic side of the fence.........it really depends on the generation in the time line.

yes, they say third gen Japanese migrants to the USA have the same risk of heart disease as whites..........

some don't realize what they lose in their quest for a bigger and better Holy Grail.
 
"Proof of this theory came when Mr Edwards plotted a chart of the increase in skilled migration alongside national house-price growth.

"It correlates at a rate of 98 per cent, which is almost unheard of," he said."

pulling together two charts that happen to match is not proof or a correlation of anything.

Would be interesting to match bankruptcy filings onto the same charts. Or the price of eggs.
 
Not in my experience on the ground

Actually I wasn't talking about the Sydney market.
I was checking things out up the NSW coast this weekend
and there is a lot of stock on the market (particularly around The Entrance).

I guess many coastal areas will be in a similar situation as existing investors are tired of losing money and are getting out and new investors look at the yields and the risks associated with that type of investment and don't want to touch them.

It's not the same in Sydney though and I'm guessing that it will vary between states as well
 
Actually I wasn't talking about the Sydney market.
I was checking things out up the NSW coast this weekend
and there is a lot of stock on the market (particularly around The Entrance).

Ahhhh yes. The Entrance is "awash" with units - has been for some time. If you can find a motivated seller, as Nathan did recently, and can hang in until all the slack is taken up in the market, then you should be OK..... few years though :(
 
British immigrants now come with a lot less money than a couple of years ago, caused by the double whammy of falling property prices in the UK and the collapse of the pound v. the Aussie dollar. I sold my UK home in November 2008 for around 25% than it would have got at the peak of the market, but at least I was able to move the money over here at a rate of around 2.30; it's now 1.75.
 
Speaking with first hand experience on the Hellenic side of the fence.........it really depends on the generation in the time line.

The children of the migrants (generally) tend to be motivated and achievers whether scholastically, career, etc., however their children......... :rolleyes:

I am speaking generally and of course there will be exceptions, however that's the anectdotal evidence and experience that I have.

For the record I am a son of migrants :)

Fits my wife's family perfectly. Grandparents came with nothing, working like crazy. Parents saw the opportunity and were brought up right, worked hard and became wealthy. Kids typcally lazy and supported by parents.

Fortunately my wife developed some work ethic...
 
Exactly, and even if a developer can get sufficient funds to build, where are the buyers?

even if you find the buyers - there is no guarantee the banks will lend you the money to build. i've heard of developments where they have been 100% presold with a profit and the bank pulls out for whatever excuse they can come up with. i am not looking forward to entering the developer loans arena later this year!

blaming skilled migrants sounds like an excuse and hitting at a soft target, imo.

many of those that can't afford to buy what they want (for whatever reason) find they have to blame someone else rather than their inability to save a deposit due to blowing it on the souped up car/year overseas/nightclubbing/whatever - or unwilling to lower their expectations to something more affordable.
 
if you are 100% presold and the buyers are strong and have 10% deposits and the developer has 25-40% equity in the project then they should be able to fund it? I know the scenario is unlikely but funding shoul dbe available for such projects. If not, no new supply until the numbers stack up and people are so desperate that they will precommit to such purchases. There can be no complaints though about housing becoming more and more expensive - it is fait accompli
 
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