Tag Archives: chinese government

HERE COME THE LOAN RESETS

Overheard a couple in their 20’s talking about Mortgages, so I waded in and told them a little of my background.  We chatted for a while and he pulled out a letter from his Lender.

$450,000.00 loan over 30 years at about ca. 4.5 or 4.6% INTEREST ONLY for 3 years, about to revert to PRINCIPAL AND INTEREST at >5.3%.  Neither of them had ANY IDEA what those terms meant or how it affected them, and they certainly did NOT understand why their Mortgage repayments were jumping from around $1,720 per month to $2,500.00 per month in a couple of weeks. NO IDEA at all.

Since they had borrowed through a Broker, she had had a baby and gone part time AND they had signed up for a brand new car at Dealer finance, which was not, in any way, a “friendly” deal as had been promised!

I brought up a Loan Calculator online and asked them what their circumstances were at the time they took out their loan.  OH DEAR!  The BEST I could come up with was $350,000.00, certainly not $450,000.00.  I told them about suspect Brokers who were inflating people’s circumstances, as well as Banks bad lending practices that were “setting people up for failure” down the track.

They got quite angry – not at me, but left, RAGE ON, ready to question  both Broker and Lender with the list of ‘please explains” I’d provided.

Here it comes folks – all these bullshit loans made before the Banks were forced to tighten lending criteria are coming home to roost.  This couple are screwed and will have to hand back their car, or sell their home.

Advertisements
Tagged , , , , , , , , , , , ,

HERE IT COMES FOLKS – WE NEVER, EVER LEARN…

I’m copying all of this excellent article from the ABC’s Alan Kohler.  Read into it what you will, but really, “are you kidding me?”… Do we never learn?  The Perfect Storm I’ve written about already is now definitely upon us.  This rise, if you will, may be rapid in some sectors of the market but when interest rates inevitably rise, the fallout will be catastrophic.  Here’s the article from ABC News Online  17 April 2014

The mortgage-backed securities market is booming and bodes well for bank competition. But it’s driving house prices higher and making it even harder for first homebuyers, writes Alan Kohler.

After five years of near death, the residential mortgage-backed securities (RMBS) market in Australia is roaring back to life, which is both good and scary.

Good because the banks might finally get some competition from non-bank lenders again; scary because the resurgent supply of prime and subprime mortgage money from yield-hungry investors is not being matched by the supply of new land to lend against, so it’s just driving house prices higher.

We are seeing two quite different markets being mixed together: one for credit that is active and plentiful (call this one nitro) and one for land that is short (call it glycerin).

In 2013, $26 billion worth of RMBS were issued in Australia, which was the most anywhere in the world, according to Deloitte partner Graham Mott. So far in 2014 the market in mortgage securities is still active, with big issues from AMP, AFG, Pepper Home Loans, Heritage Bank and Liberty.

In a speech to the Economic Society yesterday, Assistant Governor (Financial Markets) of the Reserve Bank of Australia, Guy Debelle, said: “Deal sizes have increased, especially for RMBS issued by the major banks, where the average size has increased to $2.5 billion.”

He added that issuance has picked up for the major banks as well as regional banks and non-banks (i.e. credit unions and mortgage originators), with “a number of smaller issuers returning to the market after an absence of several years”.

“RMBS … spreads, over the last year or so, have remained at their lowest level since mid 2007, despite the significantly larger volume that has been brought to market.”

A large and growing proportion of the securities are backed by non-conforming, or sub-prime loans, paying higher yields. These are about half “low doc” (not much detail on the borrower) and half to borrowers with bad credit ratings.

According to one issuer I spoke to this week, the buyers are apparently church funds, health insurance companies and state treasuries that prefer the risk/return equation of sub-prime mortgages.

But most of the RMBS being issued are AAA securities and, surprisingly, a lot of them are being bought by banks, which are, in effect, funding their competitors.

They are doing it because the furious competition, and therefore high interest rates, for retail deposits has filled their coffers and there isn’t enough demand for credit to soak it up. Buying AAA-rated mortgage securities is an easy way to make a return, even if you don’t know the end customer and can’t sell them insurance or super.

Money has been pouring into bank deposits for a few years, and now, once again, it’s pouring into the arms of “shadow banks” at lower interest rates, reminiscent of the non-bank lending boom from 2003-2007.

The typical AAA-rated RMBS issue is at 105-120 basis points above the bank bill swap rate, which is 2.7 per cent at present.

That puts the wholesale cost of funds at 10-50 basis points below retail deposit rates, and is allowing the non-bank lenders, as well as smaller banks, to gnaw away at the massive market shares of major banks.

The only problem with this idyllic scene is that all the money and lending competition is only pushing up real estate prices.

There simply isn’t enough land being released in Australia to match either the demand for housing or the supply of credit.

Bob Day, the Family First Senator-elect and one of Australia’s biggest home builders, calls it the “Baptist/bootlegger” problem.

The Baptists and the bootlegger were both in favour of prohibition for different reasons: one for misguided morality, the other to make money. He says that about 15 years ago a similar (non-collusive) coalition of environmentalists and developers formed in Australia to restrict land release.

The result, says Day, is that while the cost of building a house has come down, getting land to put it on is hard and expensive. He says that 20-30 years ago the price of a block of land was about 40 per cent of the cost of a house; now the land cost is 2-3 times the cost of a house.

The result is that instead of being three times the average wage as it used to be, the cost of housing in Australia is 6-10 times the average income. First homebuyers are now totally excluded from home ownership unless their parents support them.

It’s not a bubble – yet – because it’s merely the true forces of supply and demand working (which is the definition of a non-bubble).

Supply is restricted (of land, not houses) and demand is being fuelled by immigration and the plentiful supply of credit to investors looking to take advantage of negative gearing.

And the rejuvenation of the RMBS market will only increase the supply of credit even further and lower its price.

Next: perhaps a recommendation from the Financial System Inquiry chaired by David Murray that retirees be forced to take at last part of their super payout as a pension rather than a lump sum (so they can’t blow it on a world trip before reverting to the aged pension – which would also help take the pressure off the government-funded aged pension).

That would give another boost to the RMBS market because mortgage-backed securities are perfect investments for private annuities and pensions.

In other words, the supply of credit for mortgages, both prime and subprime, is only going in one direction – up – and it wouldn’t take another subprime mortgage bubble to produce a glut of cash available to be lent against real estate.

By the far best solution would be a big increase in the supply of serviced land in the outer suburbs of Sydney and Melbourne, but it would be slow and the infrastructure would be expensive – too expensive for the first homebuyers themselves to pay, or for governments for that matter.

Will the Coalition Government regulate the supply of credit or restrict negative gearing? Unlikely.

So it looks like your super will have to go towards buying the kids a house: they’ll never be able to afford one.

Tagged , , , , , , , , , , , , , , , , ,

PERFECT STORM BREWING – 03 APRIL 2014

It’s all adding up….well, for me anyway, so let’s see how this pans out.

Retail stores are closing at an alarming rate in the USA and Europe, and yes, here in Australia.  My local large shopping centre has just had 5% of tenancies “walk” at the end of their leases, with strong suggestions from people I know who are “in business” but only just, in the same centre, that up to 10% of the tenancies could walk in coming months.  Unlike 2005 for instance, there aren’t 40 people waiting in the wings to get into this centre.  There is no-one.  No registers of interest, no active list, reserve list or any kind of list.

Large shopping centres are dinosaurs and some people just won’t admit it.  Ridiculous rents forcing retailers to charge equally ridiculous prices and therefore having no chance against online retailers with cheap-as-chips warehouse rent in the middle-of-nowhere.

There are otherwise intelligent people (I think) spending nearly AUD$700 million on rebuilding and revitalising another massive local shopping/destination centre.  The reasons they cite to try and justify their decision are plain ridiculous – the place will be an albino pachydermata.

If shopping centre owners drop their rents to a level where traditional retailers can once again run a half decent business, capital values will plummet.  Flow on to smaller commercial and industrial properties is sure. Lack of return, loss of jobs and its not hard to see residential housing taking a dive as well.  Don’t think so?

Massive interest rate cuts have failed to stem the drop in residential values.  The butchering of statistics continues.  I was recently challenged as to why my view differed from the those reported in the news and delivered startling “real results” to back up my view.  Yet again a number of properties in a suburb were quoted as delivering massive price rises that contributed to the percentage rises being quoted in the news.  Shallow analysis of each of these properties showed that there were, in each and every case, factors that impinged on the price rise and therefore those properties should have been excluded from the ‘results’ for that suburb.  Trouble is, you take those properties out, and the price FALL is dramatic.

Factors that made for selling prices being reported as UP from previous acquisition prices were as I’ve reported before in my blog.  Reconfiguring a home to cater for two families. Significant and costly renovations not taken into account. Rezoning of land adding to it’s base value.  And so on.  And… no IN and OUT costs taken into account to arrive at a nett gain (if any).

Make no mistake that fiscal policy makers are all out of ideas for getting our economy going.  The USA think-tank  has screwed up and nothing is working over there.  I know many people in the USA in business and they tell me it’s rubbish that side of the Pacific, more than a little scary and they’ve little to no confidence.

The USA 30 year mortgage rate when I was there in 2013, was about 3.4%.  A year later and its nudging 4.5%.  If the same rate of rise occurs here (and it will) our rates will jump 30%!  Imagine mortgage repayments for all those silly sods who dived in with their 90% plus loans on minimal deposit using their Mum n Dads place as extra collateral…  Most are paying over $500 a week – that could easily jump to $650 a week – and wipe out their ability to EAT!

An interest rate jump of that magnitude will cause a REAL and long overdue drop in house prices.

CHINA – for a start you can’t believe most of the numbers that come out of ‘Official’ China however the word from people I know who travel regularly to that mysterious land is that things are crap. I’ve heard it said that China is at about 2004/2005 on the Western GFC Clock.  When their house-of-cards comes down it will not be pretty and the flow on will be nasty.

Its all coming to  ahead.  If you have property, sell it NOW and take advantage of the pseudo reports and spin to get some sucker to cough up.  RENT, or take a long holiday.  And buy back in when the dust settles.  Go back in this blog to see just HOW CHEAP housing is in so many desirable areas of the USA – not the ghettos of Detroit but NICE PLACES TO LIVE.

We are waaay to expensive and need a correction… It’s coming…

Tagged , , , , , , , , , , , , , , , , , , , , ,

CHINA’s INFLUENCE ALL PERVASIVE

As I write about China’s insatiable appetite for real estate resources across the Globe, I’m sent the following article from the BBC UK.

http://www.bbc.com/news/world-europe-26639991

There are some serious problems for the countries mentioned therein as they seek short-term gain without analysing and planning for the long-term pain associated with their respective agendas.

I’ll leave you to reach your own conclusions on this.

Tagged , , , , , , , , ,

CHINA’S INFLUENCE

I’ve been banging on for nearly a year about the high level of Chinese buying in the market, especially in Sydney and Melbourne.  I’ve also said that their buying sprees are based on “get anything desirable at any price – just beat everyone to the property”.

I’ve been criticised for over stating the facts.  Thanks to all you who’ve “had a crack”.  Well now you are going to look rather foolish, and those of you who emailed me can now say “Sorry GW, you were right after all”.

Below, from the Sydney Morning Herald of 06 March 2014 by Reporter Max Mason….thanks Max!

Close to one-fifth of new properties in Sydney are being bought by wealthy Chinese investors and the flood of money is set to continue.

Using data from the Australian Bureau of Statistics and the Foreign Investment Review Board, Credit Suisse estimates that Chinese buyers account for 18 per cent of new property purchases in Sydney, and 14 per cent of the supply in Melbourne. This does not include second-hand homes.

”A generation of Australians are being priced out of the property market. Many face a lifetime of renting,” analysts Hasan Tevfik and Damien Boey said.

There are currently 1.1 million millionaires in China who could easily afford properties in Australia’s two most expensive markets, Credit Suisse said.

Wealthy Chinese buyers have purchased $24 billion of Australian housing in the past seven years, and over the next seven years an additional $44 billion will be spent on residential property, Credit Suisse estimates.

There was $17.2 billion worth of approved residential property investment coming in from overseas in the year June 30 2013, down from $19.7 billion in the previous period, according to the FIRB. Foreigners must seek approval to buy established real estate and rural land, but can buy up to 50 per cent of a new building ”off the plan”.

Of the 2013 total, $5.6 billion was approved for residential properties in New South Wales.

Read the rest of the article here – http://www.smh.com.au/national/locals-priced-out-by-24-billion-chinese-property-splurge-20140305-347oq.html

What this DOES NOT tell you, because its all Foreign Investment Review Board figures, is the number of properties being bought by Chinese Australian citizens and permanent residents, with money (not theirs by the way!) repatriated from China via Hong Kong.  Now that is a whole other story!

More as it comes to hand.

Tagged , , , , , , , , ,

I LIKE CHINESE

I like Chinese food, almost as much as I like the many Chinese people I’ve met and had stay in my house as a part of the “couch surfing” movement. Chinese people are no different to anyone else.  They have the same basic needs and wants as any of us on the planet, so individually they are not to be thought of any differently.

The only thing is that there are so many of them.  Lots.  Billions in fact.

When you gets “billions” of anything and that “anything” decides to shift its weight around, well, things can happen.  Its kinda like trying to turn a huge aircraft carrier around in a small harbour.  If it misses by even a little, a lot of damage can happen – and you just cannot stop it, because its so big and has so much force behind it.

Billions of anything can distort the environment in which it moves.  Billions of tonnes of ice dumped into Sydney harbour would probably make it too cold to swim in the summer…maybe.  I don’t really know – just saying…

So, you have to be careful where you put billions of anything and you have to mindful of the short term gains vs the long term pain, which is why I’m reproducing an article in full today from the pages of NEWS.COM.AU ….

CHINESE investors are driving up property prices in hot spot Sydney suburbs by as much as three times the city average.

Carl and Marie Mascarello sold their four-bedroom house in Strathfield for $230,000 more than they expected to an investor who had just stepped off a plane from Hong Kong.

“The house sold for $2.28 million. Far out, I was cheering when I heard. It was really unexpected,” said Mr Mascarello, who is downsizing because his two children have left home. “He was a Chinese investor who got off the plane from Hong Kong the day before. He had missed out at two earlier auctions and clearly did not want to miss out on this one.”

Strathfield is one of at least 10 hot spot Sydney suburbs that have been targeted by Chinese investors who are estimated to have spent $5 billion on Australian residential property last year. The average house price here has risen by up to 27.1 per cent — almost three times the Sydney average of 9.2 per cent.

Brian White, chairman of Ray White Real Estate, said that the Chinese property investment boom “is an absolute fact”.

Together with a number of leading estate agents, including McGrath’s, he has opened a China desk to improve liaison with buyers from the booming new market.

China had the second-highest number of immigrants settling in Australia last year with 27,334 people moving here.

Mr White said he is also opening offices in Beijing and Singapore, which funnels large sums of Chinese investment to Australia.

“A lot of Chinese are very keen to balance their investment portfolios with overseas investments because the Chinese government is restricting people buying in China to try and cool the market,” he said. “In many cases they are buying off the plan to provide homes for their children, who they are sending to Australia to be educated.”

Non-resident foreigners are only allowed to invest in brand new properties under Australian law. The rules have led to a boom in investment in units bought off the plan.

Peter Gray, manager of the 750-apartment Billbergia development at Rhodes, said more than 85 per cent of the development had been sold to Chinese investors. “The first block sold off the plan within a couple of months,” he said.

But it is not all good news. Marketing executive Lara Germane, 28, has been trying to buy her first unit with partner Olaf Wright but has been beaten out of the market.

“We have been looking seriously between Randwick and Maroubra for the last six months but the prices are up $100,000 on where they were last year. It seems to me that it is Chinese buyers who are moving into the area because that is the vast majority of people we see at inspections.”

TROPHY HOMES ARE MUST-HAVES Matthew Benns

CHINESE investors are also looking for trophy properties with Harbour views on the lower north shore and in the eastern suburbs.

Richard Simeon from Simeon Manners real estate agents sold a five-bedroom waterfront home in Pearl Bay Ave, Mosman, last week to a Chinese buyer for more than
$7 million.

“It is bigger than Ben Hur. In recent years I have sold more than $100 million worth of property to Chinese buyers,” he said.

“They are looking for trophy properties with the classic Opera House, Harbour Bridge view.”

“The highest price for a property in Mosman last year, 34 Julian St, Middle Harbour, was $13.88 million and that also went to a Chinese buyer,” said Mr Simeon.

He is now working with cashed up investors from the recent luxury property expo in Shanghai and also developing new, off-the-plan, apartment buildings in Burwood and Terrey Hills specifically for the Chinese market.

“The money from China is just extraordinary,” he said.

“It is a brave new world.”

Stupid, short sighted fools these agents.  The residential real estate market here in Australia needs to cool off and correct to where it’s historically been.  Some sectors of the market are cooling off and some are crashing back to pre 2001 prices (I’m not just saying this, I know and can quote hundreds of real life, real time examples) but to actively encourage this stupidity will do nothing but make the inevitable correction much more fierce, damaging and will embarrass us internationally.  Capital will flow out of here like a broken dam and the correction will bankrupt tens of thousands of Australians…

Just sayin’

Tagged , , , , , , , , , , , , , , , , , ,

CHINA AGAIN AND A QUICK NUMBER CHECK

Sotheby’s Real Estate is opening an Office here on the Gold Coast.  Mmmmm.  The Chinese are coming here in droves and buying up.  It looks like the Japanese rush all over again.  Dr Boldy, Sotheby’s main man in our region, is quoted as saying, “Our Sydney Office under Michael Pallier just posted $300 million turnover in its first year and recorded nine sales worth more than $10 million…. half of those sales were to Chinese buyers but others came from all over the globe.”

It’s an interesting but also ambiguous statement.  Does he mean 4.5 sales more than $10 million per property went to Chinese buyers or that $150 million of their total sales went to Chinese buyers?  In any case it’s a lot of Chinese buyers!

People are emailing and calling freaking out that they should “get in now whilst prices are low and interest rates are low” and that I’m just a scare monger.  Well let’s have a look at a statistic that pertains to this RISING CAPITAL CITY MARKET that everyone is quoting to me as a reason to GET IN NOW!  Australia’s capital cities’ property values actually FELL 7.4 per cent from October 2010 to May 2012, and ROSE 8.7 per cent from June 2012 to September 2013 .  Simple maths – say at October 2010 we give the values a value of 100.00. Take off 7.4% and you’re left with 92.6.  Take the new lower value of 92.6 and add 8.7% and you get 100.65.

WOW!  Back to SQUARE ONE plus a little for Grandma. No surge, no value increase, no need to panic and as I keep saying….watch for the steep and sudden correction when it comes.

Take out the Chinese action and its all downhill baby!

Our hearts go out to the thousands of Aussies who’ve lost their homes, possessions and in one case so far, their life, around Sydney this past week.

Tagged , , , ,

CHINA CONTINUES TO BUY UP BIG

Chinese buyers are really exerting their influence in my home town.  It’s different to the heady days of the Japanese though.  Many Japanese ‘investors’ were thoroughly lied to and screwed over by Gold Coast ‘sharks’ and paid the price years later when their investments sold for pennies on the dollar.  The Chinese are buying up distressed assets at the higher end of the market at bargain basement, ‘less than replacement’ cost.  Whilst there is still some downside risk, in most cases they are buying well.  That said, and as I’ve opined previously, some just don’t seem to care they are paying well over the asking price or reserve at auction, hence my questioning of their true motives.  There appears now to be two distinct types of Chinese buyers.

Anyway, back to the article below. I wonder if this Chinese buyer has even set eyes onf this penthouse.  Who in their right mind would live in the middle of Surfers Paradise is beyond me.  I am sure that living in the Penthouse would be lovely (I wonder if it and the Sky Homes have a dedicated elevator?) but having the share the foyer with the drunken ferals about to descend on the Gold Coast for the Motor Racing Festival followed by hoardes of out-of-control “Schoolies” would put me off.  Imagine living in that gorgeous penthouse and waking very early Sunday morning for a walk on the beach.  You’d step out to drunks, half-clothed foul-mouthed women, vomit and rubbish all the way to the beach.  No thanks.

And whilst this may not happen any time soon, the old real estate cry of ‘Location, Location,Location’ must always be applied to any purchase.  Most of the gorgeous views to the ocean could vanish over the years as massive high rises are built on the beachfront north and south of the already massive ‘SOUL’ building (another pricing disaster subject to many, many law suits as I write).  If you venture into a beach area with high rises, the ONLY position is absolute beachfront or across the road from a beachfront park that would/should never be sold off for development by local authorities.

Good luck to whoever bought this. Their first early Sunday morning walk may well see it back on the market!

Hilton Penthouse Article

Tagged , , , , , , , , ,

MORE ON CHINA

I reproduce in full, an article in my local newspaper, the Gold Coast Bulletin, published on the 17th October 2013 by Tanya Westthorp.  The publisher and writer are acknowledged in full.

Now local agents and the people at the Gold Coast Bulletin may think that Chinese based buyers flooding into the market and paying “over the odds” is a good thing but as I’ve written before, this surge of interest will eventually come at an horrific cost. Read and decide for yourself…

CHINESE buyers are splashing cash on Gold Coast properties, paying well above the asking price and adding pressure to an increasingly heated local market.

Real estate agents report the number of sales has doubled in recent months with properties fetching tens of thousands of dollars more than the expected price.

Asian investors are spearheading the interest with Ray White Broadbeach sales and marketing consultant Tiger Malan saying it has sold 23 properties in the first 16 days of October — six of which have been to Chinese investors, sometimes sight unseen.

Chinese buyers paid more than $20,000 above the expected price to secure a $1.4 million Clear Island Waters home and a $1.27 million Isle of Capri mansion.

A Paradise Waters block also recently netted top price when Chinese investors bought it for $4.2 million and a local Chinese buyer snapped up a Sorrento home for $1.9 million.

“When Chinese buyers see what they want, they are willing to pay a premium,” said Mr Malan.

The comments were echoed by Ray White Surfers Paradise principal Andrew Bell, who said his agency had sold more than $30 million of property this month, including nine homes in just three days.

One $2.15 million Currumbin home sold for 26 per cent above reserve last month while Chinese buyers snapped up 50 properties.

“It’s the strongest month we’ve ever seen on the Gold Coast,” he said. “It is up about 50 per cent on previous months …

“There is a lot of action in the sub-$1 million homes.

“About 15 per cent of buyers at our auctions are now Asian.

“Last year we sold $130 million of property to Chinese and this year it is likely to be more than $200 million. It just keeps gaining momentum.

“The Chinese are no fools — they do their research and don’t buy blindly but when they can see the capital growth, they buy.”

Tagged , , ,

CHINESE INVESTMENT IN AUSTRALIA

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 , , , , , , , , ,
Advertisements
%d bloggers like this: