Chinese Buyers Double Down Again
Yesterday I reported on the Chinese-sponsored property bubbles in Vancouver. Previously I commented on Chinese buyers overbidding on US west coast properties.
Once again, the spotlight turns to Australia, where Chinese capital flight first started.
Capital flight out of China is immense.
Chinese Buyers Double Their Aussie Property Investments, Again
Please consider Chinese Buyers Double Their Aussie Property Investments, Again
Chinese appetite for property in Australia shows no sign of waning after buyers doubled investment in the nation’s homes and offices for a second straight year.
Spending on Australian residential and commercial real estate rose to A$24.3 billion ($18.4 billion) in the 12 months through June 2015, up from A$12.4 billion a year earlier and A$5.9 billion in 2013, according to the Foreign Investment Review Board’s annual report.
All Chinese investors in a survey conducted by KPMG and the University of Sydney want to allocate more money to Australia, a separate report showed on Monday. Real estate is fueling inflows from the world’s second largest economy, which last year overtook the U.S. as Australia’s largest foreign investor.
“Overall we are seeing a strong story of Chinese investment into Australia’s broader economy which is in line with premium products, services and lifestyle-oriented themes,” Doug Ferguson, head of KPMG Australia’s Asia and International Markets and co-author of the report, said in a statement.
Purchases by foreigners, many with a connection to China, helped drive an almost 55 percent jump in home prices across Australia’s capital cities in the past seven years as mortgage rates dropped to five-decade lows. The rising demand has triggered community concern that locals are being priced out of the property market, prompting the government to tighten scrutiny of foreign investment.
China also stepped up administrative measures in January to slow the flight of capital that Bloomberg Intelligence estimates reached $1 trillion last year as the yuan was devalued and Chinese equities tumbled.
Growing Appetite
Canada “Beyond Bubble”
Canada is conspicuously absent in the above analysis.
For further discussion, please see Beyond Bubble: $9 Million Vancouver Teardown; Ordinary Houses Sell for $Millions Over Asking Price.
Mike “Mish” Shedlock
Lessee,,,in this hand I have a wad of green paper debt instrument Federal Reserve Notes, and in the other a real property that has value as a shelter and future inflation hedge, not to mention a safe haven to retreat to when the Red hammer comes down.
Maybe the Baltic Dry will soar when all those empty containers returning to China are filled with 3 wire bales of FRN’s? Must keep the dinero circulating. Export that inflation and repatriate all that lucre in the form of wealth effect property and stock bubbles.
I notice no one will sell them oil in the ground. Or refining capacity. Just overpriced real estate. Wait till they get jacked to the moon with property taxes. Same thing happened in the Great Depression. As Bloom says in The Producers: There’s no way out. There’s no way out. There’s …
.
Panic now and avoid the rush.
Apparently, Chinese in the know are getting their assets…
then eventually themselves… out of China.
What exactly do they know. Will the Chinese government
stop the outflow ??
.
…and getting their assets out of the dollar. Plus, RE is perceived an efficient means of money laundering by many in the “upper crust.” Dump shady money into it, then sell it later with capital gains exemptions and a high cost basis. Likely, they could come away with most of their investment tax free.
“The rising demand has triggered community concern that locals are being priced out of the property market, prompting the government to tighten scrutiny of foreign investment.”
These folks need to be bused, er, shipped to the ghost cities in …. china.
And, on account of the idiocies known as zoning, planning, managing, regulation whatnot; instead of the flood of money being spent on a meaningful upgrade of the building stock (performed by lots of good jobs), it just means regular Aussies will be stuck with twice the mortgage for half the house. And Australian companies saddled with competitiveness-destroying increased costs for space.
And then, these suckered Aussies, will keep supporting the same regulations, being applied even harsher, to those coming after them. So that those guys will have even fewer jobs, even less living space, and even more debt. Because the illusion of the “value” of the original suckers’ own overpriced ramshackle, can only be sustained by preventing anyone else from having access to less idiotic alternatives. Boosting the “value” of your own catpiss, by supporting government banning thirsty, dehydrated people from drinking water.
And so the “asset appreciation” / financialization “economy”/racket goes on and on and on. And down and down and down.
Mish it’s a lot like the effect that all the refugees in California had on the rest of the country (esp. states close by). When I left CA in 1995 it cost 3x as much to rent a Uhaul out as in. Everyone with a sense of preservation sold their home and went and bought much cheaper housing elsewhere. (The tract home I lived in CA mid-80s was once selling for $220K in early 90s; my father bought a nearly identical home but slightly better in OK for $39K in ’00.) Didn’t endear people in the other states to those fleeing with more money than they had for buying houses of course. But in the case of China — how many people are we talking about here and what kind of insanity is it to pay 3-9 mil for a little house? How are other people supposed to function in any economy where that disparity of wealth exists to drive up prices way beyond what anybody local could ever afford? Really makes me appreciate OK RE laws where at least one person on the buyer papers has to live in the house for a year.
If you build it, they will come … from China to buy it.
It takes a greater fool to buy not only stocks but also houses. The problem with houses is they are an illiquid asset. The Chinese haven’t figured that out yet. They still think people will rent at any price.
This is just a chinese trick to get money out of china since the government does not let money flow freely:
1. Buy an expensive apartment/house ->get money out of china.
2. Sell expensive apartment/house to another chinese so you cash the money
3. Another chinese sells expensive apartment/house to third chinese so they cash the money out of china.
4.Repeat many times
This is infact a scheme to get money out of china By “investing” it abroad and the point is keeping money out of china.
The higher the price of the apartment/house the better and then repeat, repeat,repeat By having many apartments/houses, selling them repeatedly in a chain to many chinese and also selling to australians/canadians/americans if crazy ones can be found.
In the end one chinese family needs just one apartment/house to escape to after getting a residence permit based on investment where especially canada is very lax.
When the chinese bureaucrats approving these money transfers out of china finally wake up both canada and australia will crash hard.
I remember when the Japanese were buying up American property back in the 80’s when their auto industry was taking our business. Look at them now. By the year 2032, residential real estate is projected to be 37% vacant. No children, no future and the Chinese just realized 20 years too late, that their 1 child per family thing was a huge mistake. They ended it last year.
I know from all the Singaporeans I work with that there is a big complaint there going on several years now about Chinese coming off planes and throwing money at a property to get it out of China. Price is not a factor. (And Singaporeans now are left unable to buy flats.) I wonder what the world wide correlation is to Chinese population in a city and the cost of housing to income ratio. My guess is that there would be a strong correlation.
I have an ocean front property in Hawaii. Where do I advertise to reach these Chinese buyers?
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