Rick Feneley writes in The Sydney Morning Herald newspaper about offshore investors, particularly the Chinese.  Search on “Forget the farm, we’re selling the city” if you wish to read the article in full.

Things I’ve heard first hand over the last few years, and “Chinese Whispers” from elsewhere, paint an unhealthy picture of the Chinese Government’s plans for places like Australia.

The Chinese, world’s factory, hard workers and smart operators, bless them. are still controlled by a centralised communist government.  We can’t really believe everything Chinese leaders tell us, nor their statistics, or anything else for that matter, as they will say and do anything they please as they have no accountability.  The level of corruption within their ranks is legendary.

All that aside, they have designs on Australia.  their purchases of farm land continue unabated.  if they can;t buy it directly, they buy it using “other means” if you get my drift – any tactic to get around our pretty pathetic foreign investment laws.

I’ve long-held that one should analyse the residential sales in Sydney and Melbourne in particular and to a lesser extent Canberra, to see exactly who is buying up and forcing prices up in certain sectors.  I think you’ll find that individuals with names like Yuen, Chen, Wang, Chu etc are predominant.  if properties are bought by Trusts then one should have a bit of a dig to see where the trail ultimately ends. I’ve heard that phenomenal amounts of money are flowing out of China, mainly through Hong Kong to fund these purchases.

How about this for something to think about?  the Chinese Government, through intermediaries, given naturalised Chinese Australians non-recourse but secret-handshake “loans” to buy property in Australia.  The people who “sign up” for this kind of nonsense “know” that the Chinese Government ultimately own the property even though their name is on the Title, but, as long as they “play the game” they can live there, rent free, (or maybe not – who would know) pay the rates and so on, for as long as it suits the Chinese Government’s purposes.

Rick Feneley writes that 16 percent of New South Wales new housing is being snapped up by Chinese buyers.  what percentage of the population of New South Wales do Chinese represent and why this sudden surge in activity?  Perhaps because the shine has gone off the mining and farm sectors so the massive piles of money have to go somewhere? Maybe?  He further writes that real estate has indeed overtaken mining and the biggest category for foreign investment approvals with real estate purchases in 2011-2012 accounting for 35% of approvals, or $59.1 billion.  I don;t know about you, but this rings alarm bells, but, as we know, nothing will be done, and our kids and grand-kids will be speaking Chinese as a first language and have nothing but Chinese landlords if we keep this rate of acquisition up.  I know, I know, it sounds alarmist but, pooh pooh this proposition at your peril…

In the same article, a statement by a Mr Bright, founder of EPS Property Search is of concern – “Too many of these foreign buyers are paying over the odds. Even if I wanted this business, I couldn’t put my hand on my heart and tell them they were paying a fair price.”

This aligns with what I’ve been saying for years.  Foreign investors, especially the rapacious Chinese, don;t care if they pay 20 or 30 percent too much – it gets their money OUT of China and into what they see as a stable and OK country.  Many Chinese, at all levels, don’t trust their holdings of US dollars (fair comment there given the US’s debt and current issues!) and rather than see those holdings devalue to perhaps NIL, they seek to shift them to Australia and are buying anything and everything they can and paying anything over the odds to get their hands on prime real estate.  That’s why the prices are “popping” in Sydney, Melbourne and Canberra – and for NO OTHER REASON.

NAB Chief Economist Alan Oster is quoted – “If you’ve got 15 percent of new stock being taken by foreigners, that’s a large stock.  Without them, prices wouldn’t be as strong.”

First home buyers are now being squeezed out of the market and they’ll be “forever renters”.  Guess who’ll be their landlords?

Meriton Group, for instance, has long held that about 70 percent of its sales are to Chinese buyers but also say that they are to Chinese living in Australia. Hmmm – go back to my earlier assertions.  There is something fishy here and the appropriate regulator should be having a really close look at the flow of funds to identify this mass of local Chinese investors with tons of money to buy up Meriton product.

Watch this space.

Tagged , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: