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What will foreigners buy next? Answer: Australia

By Community Action Alliance for NSW

At Community Action Alliance for NSW (CAAN) we long ago joined the dots on how the Housing Affordability Crisis was contrived, and why where we live is being destroyed for high-rise precincts along with higher density across our low-rise suburbs for as many as 10 terraces on the lot next door or fugly mega-sized duplex for the 100% sell-off to foreign buyers particularly from China …

View CAAN Facts Sheet where we can back this up!

How did this all come about? This started when the floodgates were lifted for a big Australia with a migration intake raised to 200,000 per annum from a sustainable level of 70,000, whilst at the same time scapegoating refugees.

In 2008 developers called on their federal mates to introduce a plan to make them even richer, to sell 100% of our new homes supply to foreign buyers off the plan. And so in 2009 there was a Foreign Investment Review Board (FIRB) ruling change from 50% to 100%!

This and other matters were all revealed thanks to a number of investigative journalists including Michael West, global corruption investigation organisations, and others … recently a real estate source confirmed much of what was suspected, it said:

“As the world’s leading marketplace for buying and selling off the plan properties and with a large team on the ground in China, we see and closely track what’s happening in China on a daily basis.

Purely a B2B platform, we don’t deal with end buyers, but connect developers with the agents who have hundreds of thousands of Chinese buyers as their clients …

When it comes to buying international property, the vast majority of Chinese investors rely on an agent to do this for them …

Very few Chinese have the expertise, local country knowledge or contacts to undertake this, hence they rely heavily on agents and advisors specialising in the type of investment property or migration path they seek … our current reading of Chinese investors is that demand remains reasonably steady, although the type of investment product they are seeking is expanding …

Rather than relying on email and mobile-based communication, face-to- face meetings between agents and developers are crucial for developing the ongoing relationships needed to sell in China’s crowded marketplace … It used to be mostly one and two bedroom off-the- plan apartments in Melbourne and Sydney priced under $500,000 … we have seen a significant increase this year in investors buying house and land packages. These can be located up to 40 km from Melbourne and Sydney CBDs …

Townhouses are also increasingly sought after, as Chinese buyers appreciate the larger living areas and inclusion of the private land component usually accompanying townhouses …

Feedback from our Australian developers at China Connection was that the Chinese agents were very interested in their new developments and looking for quality projects in blue chip locations to sell, especially those near good schools or universities …

Have Local Bank Lending Restrictions Impacted Demand?

Definitely is the short answer, and overall we’ve seen demand from China fall by about 30 – 40% largely due to the restrictions since the start of the year. However, this has created a big opportunity for a number of non-bank lenders and foreign loan funds backed by High Net Worth Individuals to come into this space, offering competitive loans to Chinese investors and effectively filling the local bank funding gap.

Keep in mind also that many Chinese investors are cash buyers, according to our China 2017 International Property Outlook report, some 82% of Chinese buyers have enough cash reserves to settle their purchases without any need for finance at all. Medium term, we believe current loan restrictions continue to impact on Chinese investors …

However motivated buyers are very resourceful in finding ways to secure property, and will often pool their funds with family members to buy. The sheer size of the Chinese market is enormous and growing. China has an overall population of 1.4 billion people, 74 million residents in its four biggest cities of Shanghai, Beijing, Tianjin and Guangzhou alone, who are becoming increasingly wealthy with growing disposable income.

Indeed China will be considered a middle class society by 2030. Despite the rapidly escalating prices of Sydney and Melbourne, many Chinese buyers remain keen to secure their wealth for future generations in assets outside of China, and Australia still ticks this political and economic security box, along with its well known, renowned clean air and lifestyle benefits.”

With the Turnbull Government restrictions on foreign investor participation and another round of APRA constraints only having some minor impact on foreign buyers of our domestic housing, and importantly not to the level that they alleged they were expecting. They had bigger expectations the foreign buyers would ease off …

View this on Economic Bubbles.

However, what is at the heart of this … the very core … is the second tranche of the Anti-Money Laundering Legislation (AML L) to be applied to the professionals engaged in the real estate sector. The Turnbull Government advised it was to be implemented in October 2017; we then learnt it was to be watered down and not apply to real estate agents!

With the dual citizenship fiasco it appears to have been lost somewhere.

Which leads to why the Australian people should ask the question: “If the Prime Minister is not prepared to do anything about the second tranche of the AML Legislation, why is this so?”

This is a national interest matter of great importance yet he is choosing not to do anything about it!

What it would mean is that the Housing Affordability Crisis for a whole cohort of Australian first home buyers would be solved overnight with the disappearance of the proxy onshore foreign buyers agent, the 82% Chinese cash laundered in our domestic housing, and visa manipulation to gain residency upon purchasing property!

The Federal Government is in denial. They are doing nothing; obfuscation. Their position on housing is indefensible!


9 comments

  1. Gavin

    Good topic for 4 Corners to investigate. Lots of targets, start with our ‘Give the Banks a $50B Tax-break’ PM and ‘Big Companies must pay No Tax’ Scomo. What decisions have they made that relate to their investment properties and AML legislation delays that smell like a conflict of interest? Probably wouldn’t hurt to do an audit of all home sales in capital city elite school catchment zones over the last 4 years and ping any illegal sales. State based Title Offices, ATO and Dept of Immigration could co-ordinate any investigation. Any proceeds of forced sales could go to the pool of State Housing properties.

  2. Nero Dog

    I’m really glad AIM is now publishing on this subject. There is a really good article here about the ‘growth lobby’ on https://candobetter.net/node/1002 from a site that says it is for reform in democracy, environment, population, land use planning and energy policy and writes from many angles on this issue. Maybe you should publish with them as well.

  3. corvus boreus

    Nero Dog,
    In the past, a few people (notably a very vocal Hanson supporter) have provided links to ‘candobetter’.
    Immediately that I clicked on such, my computer started screaming malware warnings.
    So thanks, but no thanks.

  4. etnorb

    It is scandalous to see just how much the Chinese already own here is Australia. There is already far too many residential sales to overseas (Chinese) “investors”, but let us not forget just how much they have already in the form of major infrastructures, such as ports, pastoral properties etc. NO ONE here in OZ could ever be “allowed” to buy any property or buildings etc in China, so why are the “allowed” to own any property etc here in Australia? I am not being “racist” here, just stating the bloody obvious, as I see it!

  5. john ferris

    Well that’s the thing is that we get called racist if you mention this, but it is clear it’s exploitation of people by developers and money lauderers. Creation of a restricted tight market and thus high demand with lax laws. The local and chinese based developers and agents make a killing with no care.

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