Understanding the high dollar and rising house prices

The Australian ran an above-the-fold front page story yesterday on Pitch to foreigners locks out locals before ‘for sale’ sign goes up. It is a pretty disturbing story, specially when it goes with this one on Our housing costs are out of whack, says IMF and this one, IMF warns over Australian house prices. Let me start with the last one:

HOUSING is less affordable in Australia than in any other country except Belgium, the International Monetary Fund says, warning that rising prices might point to an unsustainable boom.

The IMF is stepping up its analysis of housing markets around the world, having concluded that property booms and busts were implicated in two-thirds of the past 50 banking crises. “The era of benign neglect of housing booms is over,” deputy managing director Min Zhu said.

House prices, rents and incomes should, in theory, all move in tandem.

On this basis, the Australian real estate market is one of the most exposed in the world.

Let’s see if we can work out what’s happening in the property market. Back to that first story about locking out locals:

AUSTRALIAN real estate is being marketed and sold exclusively to foreign investors — including Chinese millionaires — with local buyers not even aware the properties in question are up for sale.

More than 100 real estate firms have sprung up in mainland China, exclusively selling Australian real estate — both fixed and off-the-plan — directly to wealthy Chinese investors, bypassing Australian buyers.

At the upper end of the fixed-home market, prestige Sydney property agency Simeon Manners — which says it has sold more than $100 million of Sydney property to “China’s most astute buyers and investors” — operates a sales site that cannot be accessed from within Australia.

Director Mark Manners said many of the listings on the site — sydneyluxuryproperty.com — could only be accessed from a foreign IP address and were private or off-market listings placed on behalf of owners who wanted a discreet sale to a foreign purchaser.

Even those geniuses at the IMF should be able to work out from this why Australian property prices are so high and perhaps also why the dollar is so high. Our locals are being driven out by money that is flowing into Australian property from overseas. I had a student in my class this year – it’s a graduate class so he was not young young but in his early twenties. And he was telling us about his experience in trying to arrange a loan for more than a million to buy a house. If you are trying to compete for houses with Chinese millionaires trying to park their American dollars, you will have your problems.

This is a genuine issue and it genuinely needs attention. Especially when you combine it with this from The Age a couple of days ago, Melbourne’s tiny flats would be illegal in other cities:

Melbourne is becoming a city of “super-dense” towers, packed with tiny apartments that would be banned in Hong Kong, New York and London.

A scathing report from Melbourne City Council shows some of the city’s newest developments are up to 10 times as dense as permitted by law in some of the world’s most urbanised centres.

Sydney, London and Adelaide all have rules that ban new one-bedroom apartments smaller than 50 square metres. But in Melbourne, 40 per cent of the city’s newest apartments are smaller than this.
The boom in shrinking homes is being driven by a market that satisfies the needs of overseas investors at the expense of residents, according to the Melbourne City Council’s draft housing strategy.

The report warns Victoria’s capital “is in danger of leaving a lasting legacy of poor-quality housing”, because of a lack of enforceable density or height controls.

Bang ‘em up and put ‘em out, specially since no one cares. They are buying off the plan, sight unseen. This lasting legacy of such poor quality housing is a catastrophe. The trouble with so many in politics is they think all investment is to the good. Their ignorance of what makes a great city great is going to leave this country with a legacy of very poor quality housing that will remain a blight for decades to come.

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110 Responses to Understanding the high dollar and rising house prices

  1. Robert Blair

    What remedy can there be that doesn’t impede the free flow of money?

    If the property market in Australia were not throttled by green tape, surely people would just sell their houses to the Chinese, and use the premium recouped to build a better one elsewhere?

    For mine, when (if) I retire, a possible plan might be to sell at a premium (to a Chines, if that’s who bids highest) and move to either Adelaide or Auckland.
    I would likely be 7 figures to the good there.

    Which 7 figures I would slowly leach out to the local SA or NZ economy before I finally go to meet my maker.

  2. Joe Goodacre

    What’s Steve arguing for:

    a) restricting the Chinese from buying property;
    b) capital controls; or
    c) planning controls?

  3. Rabz

    Sydney, London and Adelaide all have rules that ban new one-bedroom apartments smaller than 50 square metres. But in Melbourne, 40 per cent of the city’s newest apartments are smaller than this.

    But, hey – that’s a feature, not a bug. All part of the left’s ‘sustainable medium density housing’ dream. Alienated, claustrophbia crazed morons living in rat boxes with absolutely no amenity or privacy and paying through nose for the privilege of doing so.

    I was back in the part of Sydney I grew up in around Christmas and some of the hideously ugly neo-brutalist monstrosities that have gone up in Burwood left me absolutely gobsmacked. Seriously, the people responsible for approving and profiting from these blights deserve ignominious public executions.

  4. Demosthenes

    Sydney, London and Adelaide all have rules that ban new one-bedroom apartments smaller than 50 square metres. But in Melbourne, 40 per cent of the city’s newest apartments are smaller than this.

    Back when getting my mortgage, banks wouldn’t lend for property smaller than 50sqm.

    Like other commenters, I’m confused by Steve’s position. If tiny apartments are what developers are providing, surely tiny apartments are what people want? Also, I’m pretty sure we went over this a few weeks ago, when the media were running their scare stories about yellow hordes taking our jerbs flats.

  5. Luke

    Steve try getting this message through in Australia. No ONE wants to hear it! Our banks are massively exposed. All level of government are profiting from high housing prices. Councils from high rates, State government from stamp duty, and the federal government from GST on developers. And that’s to say nothing of the ‘approval’ industry of all three levels of government.

    No one seems to understand that as more and more of Australian’s income goes into a single commodity (housing), demand for everything else has to fall. 25yrs ago people could afford the average home on just 1 average income at 25% of that income (lending standards wouldn’t lend to you if you didn’t meet that criteria). Today young couples are spending 60 of 2 incomes on housing. And for most young people they have to choose between having a family or owning a home (having kids being something else that has increased in costs the more the government gets involved). Keeping in mind that these first home buyers typically need to live in areas where housing prices are highest (capital cities) for job opportunities.

    In Brisbane we have a massive building boom, with entire high density suburbs being built thanks to reclaiming former industrial land. But prices are not dropping.

    Remember this boomers, you can’t cash out of the property market unless someone else can afford to buy in. Although this explains why foreign ownership laws are being relaxed. Developers can only sell a percentage of a unit complex to foreign purchasers. But governments are increasing this number as builders are claiming they need the investment (mostly to secure further financing).

  6. Alfonso

    The idea of selling prime smaller commercial properties discreetly to a foreign buyer appeals.
    My biggest problem with marketing here is every man and his dog can know my financials, down to individual rents and leases, an unavoidable disclosure.
    Is any flash as a rat agency doing the same for commercial?

  7. Baldrick

    Melbourne is becoming a city of “super-dense” towers, packed with tiny apartments that would be banned in Hong Kong, New York and London.

    Let’s check out that claim by The Fage about those apparently ‘spacious’ apartments in Hong Kong.
    Nope, they’re certainly no banning small apartments in Hong Kong.

  8. Bruce of Newcastle

    Its a reflection of the lack of quality assets available worldwide that Chinese mainland people are driven to invest in Australian houses.

    They are desperate to put their money somewhere safe…but there aren’t many places they can. Bonds are all at stratospheric highs. Stockmarkets are at highs except Shanghai, which is the exception which proves the rule since they are trying to get their money out of China, not invest where capricious authorities can steal it.

    If the US and EU had sane policies we wouldn’t have this issue, since Chinese money would go to those much bigger markets.

  9. Token

    But, hey – that’s a feature, not a bug. All part of the left’s ‘sustainable medium density housing’ dream. Alienated, claustrophbia crazed morons living in rat boxes with absolutely no amenity or privacy and paying through nose for the privilege of doing so.

    Bang on. The lefty 2 step.

    Demonise the suburbs as unsustainable and inhumane

    …then demonise the slums that get created using the Green-filth written planning laws as they as unsustainable and inhumane.

    We all could see the centrally planned housing estate towers built in the 50s & 60s, so we all knew where this was going when this drive started.

  10. Max

    No one seems to understand that as more and more of Australian’s income goes into a single commodity (housing), demand for everything else has to fall.

    True

    Just think , if the cost of accommodating sheep or wagyu beef cows went thru the roof economists would correctly see it as a threat to productivity and competitiveness in those export industries.

    Something would be done to lower accommodation costs of animals.

    But people? Nah Fuck ‘em!

  11. Rob MW

    Steve – on a broader state of affairs much the same thing can be said about the price of agriculture land.
    I’ve been in agriculture all my life and from the previous 10 to 15 years or so farm land prices have in no way reflected the net earning capacity of mostly all farm enterprises envisaged, even to meet interest based on the owner having 80% equity and at relative low interest rates.

    It is actually quite intriguing the prices being offered and accepted for farm land. I have assumed that the people paying these prices must have a new sort of calculator than the one I have.

  12. Max

    It is actually quite intriguing the prices being offered and accepted for farm land. I have assumed that the people paying these prices must have a new sort of calculator than the one I have.

    Agree

    Its people hoarding for the inevitable flood of all those Chinese held Obama notes.

  13. Tapdog

    I’m a staunch advocate of free flowing capitalism. But a responsible society also needs to provide a regulated domain within which the market can operate relatively untramelled. Our architectural and social legacy should provide a prominent aspect of that regulatory framework.

    It’s the sort of thing that’s somewhat derided as ‘social engineering’ in these post modern days.

  14. nerblnob

    Plenty food for thought there but the claim about small flats is bullshit. Where I live in the UK, less than 50sqm for a 1br flat is the norm.

    Not only should Melbourne release more land for building but height restrictions in inner suburbs should be relaxed. These are the areas full of greenies going on about density and sustainability but the 1 and 2 storey terrace houses they like are nothing like the four and five storey terraces in Amsterdam or Berlin or even New York, many of which contain quite spacious apartments.

    But who is it opposing modestly higher buildings? I don’t mean high rise blocks. The very same fuckers going on about sustainability etc.

  15. Robert Blair

    I have been told that one reason the Chinese like Australian property is that it is freehold in perpetuity (said to be so anyway), whilst in China it is not so freehold, and not so perpetual.

    Does anyone know what the real situation is for real estate in China. Do you own it outright, or it it just leased from Government?

  16. Joe Goodacre

    Max,

    From what I’ve read, I don’t think the Chinese held US government bonds are going to flood the market anytime soon.

    That the Chinese hold so many US treasury bonds is not a sign of their financial strength, but of weakness because holding those notes is a consequence of their policy to help exporters and force saving by preventing the Yuan from rising. In order to prevent the Yuan from rising, they have to purchase US dollars from Chinese exporters with newly printed Yuan. Since the new Yuan is created from thin air, they can’t consume those US dollars without having currency within the Chinese economy backed by nothing. This means that they’re forced to hold their US dollars in a safe securities such as US treasury bonds.

  17. thefrollickingmole

    All of it comes down to our interest rates not keeping up with inflation.
    There is no asset an information poor punter can park their money in which will break even with the wonderful application of inflation/taxation than land.

    People might say “super” but thats subject to the whims of government.
    People may say “shares” but for many thats too buig a risk, and the share market is as crooked as a dogs hind leg.
    Under the mattress is out, inflation.

    People dont invest in housing because they love it (though some do) they do it because its the only investment left which will keep up or exceed inflation with minimal input.

    Name me another investment an information poor punter can make which will even exceed the inflation/taxation rate?

  18. Joe Goodacre

    This fellow has followed the situation closely till Jan 2013 while he was an economics professor at the Tsinghua University’s School of Economics and Management in Beijing, China

    chovanec.wordpress.com

  19. Alan Moran

    Not sure where that last paragraph is heading. Do we now need a vetting process for investment to keep out investments that we don’t like – and I am not talking about rights of standing that near neighbours might have? If so who is to be on it? I know who will end up controlling it , the same people who ban new building.

    Do we also want a surveillance unit to ensure that buyers are not spending their own money unwisely? Oh wait we have the ACCC and state consumer busybody equivalents. How are these government agencies travelling?

    The key thing is availability of cheap housing and what’s stoping this is planning restraints that raise costs of fringe housing which should be abundant starting at prices like $200 k, and excessive apartment costs due to a combination of nimby and unionised building workers doubling the building costs.

    Do we really want to stop affluent people buying houses and flats in our cities?

  20. 3d1k

    Speculation that foreign investment is a key driver increasing property prices is largely futile when insufficient data exists. There is a likelihood that the foreign investor market is active in certain geographic locales and may influence property prices in these areas.

    However we do know that some 1.8 million Australians are property investors, with around one third owning multiple investment properties. We do know that investor mortgage finance has reached record levels. We do know that the majority of investment properties are negatively geared.

    Based on this it would appear reasonable to suggest that the domestic investor market plays the major role in supporting and/or elevating property prices. Add to that RBA holding rates at a level that is low by Australian standards, but high comparative to most other developed economies and you can further explain (a) attractiveness to property investors and (b) carry trade currency inflows.

  21. 3d1k

    And having just read Alan’s post above – yes – the major role planning restrictions in every urban and regional area add to land prices a significant factor particularly in development of outer urban ‘affordable’ housing.

  22. Max

    Do we really want to stop affluent people buying houses and flats in our cities?

    if there are 7 of them for every dwelling then we will have to.

    Here is an article on the Chinese Situation

    http://online.wsj.com/articles/more-than-1-in-5-homes-in-chinese-cities-are-empty-survey-says-1402484499?mod=e2tw

    China is currently seeing a correction in its housing market, which is plagued by excess supply in many cities outside Beijing and Shanghai, and tightened credit.

  23. Max

    Speculation that foreign investment is a key driver increasing property prices is largely futile when insufficient data exists.

    What – the FIRB and the Land Titles office dont have Microsoft Excel?

    the data is being withheld for a reason.

  24. Joe Goodacre

    If what Steve says is true, a novel way to transfer wealth from Chinese millionaires to Australians would be to remove planning controls and expand supply.

    We get cheap shoes, clothes and solar panels and Chinese purchasers would have received a unit with paid including a premium for an artificially limited supply. Ingenious tactic by the NSW State government.

  25. Mr Rusty

    Simple question; can Australians, living in Australia buy property in China?

  26. Max

    From the WSJ comments

    Here in Central New Jersey Chinese are snapping up new and old homes like crazy. Many of them, either not yet citizens or in the country illegally, are buying the houses for cash. Talk to any of the local real estate agencies – they can’t hire Chinese-speaking real estate agents fast enough. The local community college offers non-credit courses to help people prepare for their state-issue real estate salesman license, and the ‘students’ in the classes, adults of course, are almost all Chinese. Some of them can read English well enough to take the test, but can barely speak it.

  27. johanna

    Quoting anything published in Pravda on the Yarra about urban planning is like quoting The Guardian on … well, just about anything.

    For a start, as nerblnob points out, flats that size (they used to be called bedsitters) are quite common in London – as they are in New York, and Hong Kong. And I don’t understand the implication that this is somehow terrible. How is it different from living in a room in a boarding house, or over a pub or shop, or even in a somewhat fancier hotel room?

    It is, as others have pointed out, inherently contradictory for the same suspects who hate large living spaces to complain about this. People of limited means, or who would just rather spend their money on something else, have lived in similar spaces forever. Not everyone regards a five bedroom, three bathroom house as nirvana. Me, for one. I’m quite happy living in a well appointed motel room, and have done so for months at a time.

    I have to be suspicious of the latest meme about nasty foreigners keeping dewy-eyed young homebuyers out of the market, and pricing farmers out etc, as well. It recalls the similar panic about Japanese property investment here in the 1970s. Well, we took their money, they couldn’t take the property anywhere, and eventually they took a bath and we bought it back for a song. And insofar as it relates to luxury housing, so what? It is a tiny market inhabited by people who are perfectly capable of looking after themselves.

    Certainly Chinese investors are looking for safe havens for their dosh, but surely the fact that this is one of them is a good thing, not a bad one. Unless, of course, Steve K. and others believe that foreign investment generally is a bad thing. Once we start getting into emotional topics like “they shouldn’t be allowed to buy our farms or houses”, which do not stand up to any sensible analysis, we are down the path of the worst of the agrarian socialists, Alan Jones in his senior moments, and bigots of all stripes.

  28. Joe Goodacre


    Simple question; can Australians, living in Australia buy property in China?

    There are restrictions, but what does it matter – who would want to – it’s in a massive bubble.

    What other country has a city like Ordos?

    http://www.policymic.com/articles/50451/17-haunting-images-of-china-s-ghost-cities

  29. 2dogs

    Are these Chinese investors paying land tax?

    Those who oppose the pokies or cash cow speed cameras know how hard it is to wean state governments off a source of revenue.

  30. H B Bear

    How many of those Melbourne apartments are being built and sold to house international students for the period they are studying?

    My experience of a couple of years renting in Melbourne is that developers are pretty good at targeting their end market. You could tell within half a minute of walking in to a building whether it was aimed at domestic owner-occupiers or a dog box sold to off-the-plan buyers who may never even set foot in the place.

    By the time you back out a few thousand dollars of strata fees, fixed utility levies and council rates apartment renting is good value. The CGT treatment of the family home is probably the only reason to buy one.

  31. Wozzup

    There are so many deficiencies in this area of policy that its hard to know where to begin. As others have pointed out more eloquently than I am able everyone is benefiting from this bad policy – from developers and the real estate industry to local, state and federal government that there is little incentive to actually do anything about it. But I would love to see the productivity commission doing some of its fine work looking at why Australian housing is so expensive and where we can make policy changes that will be beneficial. (How about starting with states not rationing land and driving up the price then “compensating” first home buyers by giving them money which is used to drive up prices further). The policy problems and market distortions in that market alone are eye watering. Combine this with states front loading developments with infrastructure costs and the over reliance of states on stamp duty for land transactions and land tax and the results speak for themselves. The other area that comes to mind as needing a good hard look at is the construction industry. Recent reports I have read state that to build (just about anything but particularly multi story developments) in Australia the inefficiencies in the construction industry make Australia one of the top 3 countries anywhere in the world for excessive costs.

    Without wanting to re-traverse the same old ground I will say this. I read somewhere recently that one factor driving up housing prices is the divorce rate. With divorces running at something like 40% what previously required one larger house for a family now requires two houses – quite often one of which at least is smaller. This may also help account for the market’s preference for smaller apartments. As do sky rocketing costs for heating water and other utilities. I know many people who have opted for a smaller home for this reason and are preferring to live in inner city or inner suburb locations due to the cost of travel.

  32. brc

    Really, this is just not a quality piece.

    So what if they are building lots of small apartment high rises with imported money?

    It’s keeping the local builders occupied, and the money can’t go back out.

    If they are so ugly and terrible in 20 years, well, just dynamite the thing and build something else.

    I don’t understand the argument. Is it for better planning, foreign investment restrictions, what?

    The major issue with Australian housing exists in the restriction of building new houses that ordinary families want to buy and live in. Chinese buyers might be thick in Sydney luxury apartments, but out here in the rest of Australia you wouldn’t find many. If a’Chinese millionaire’ wrote me an oversized cheque he’d have a new property on his hands faster than you can say ‘enjoy dealing with the council, sucker’. I’d even sign a 5 year lease to rent the joint back off him.

    The overinflation of Australian house prices is indeed a concern at many levels – at the cost input level, at the labor mobility level, and most particularly at the big-4-bank-exposure level.

    At the ‘chinese are buying all our houses’ level….nah, not so much. The value of the dollar remains linked to the interest rate differential and commodity prices, as it always probably will be.

  33. Max

    Recent reports I have read state that to build (just about anything but particularly multi story developments) in Australia the inefficiencies in the construction industry make Australia one of the top 3 countries anywhere in the world for excessive costs.

    About 10 years ago I did work with habitat for humanity building houses in the Philippines. Construction costs were USD $7000 a pop

  34. Leo G

    Bang ‘em up and put ‘em out, specially since no one cares. They are buying off the plan, sight unseen. This lasting legacy of such poor quality housing is a catastrophe.

    A local 4 hectare site is planned to hold up to 1000 apartments in a series of buildings of up to 8 levels, each with 5 levels of apartments. There are very great differences in the standards of construction and in the standard of site management, but I doubt those quality differences are observable to the off-the-plan buyers.
    I wait to see the outcome in a position on the site which is soon to be cleared for the construction of four buildings. It lies across a watercourse and is prone to flash flooding of up to 1.2m (6 major events in about 25 years). The building at the lowest point in the flood zone is planned to have an entry to car parking levels below the existing ground level.
    When do we expect the next La Niña flooding rain event in Sydney?
    Oh well, forget it Jake.

  35. Winny

    Am I understanding this correctly? Steve Kates is arguing for more regulation?

    As for apartment sizes, I live in Tokyo where a one bedroom 50 sqm apartment would be considered luxurious. Commonly 1 bedders would be between 20 and 40 sqm. Plenty under 20 sqm too.

  36. Winny

    The trouble with so many in politics is they think all investment is to the good. Their ignorance of what makes a great city great is going to leave this country with a legacy of very poor quality housing that will remain a blight for decades to come.

    shorter -> the gummint orta do summink abowdid.

  37. .

    What’s the point of this post?

  38. Myrddin Seren

    Recent reports I have read state that to build (just about anything but particularly multi story developments) in Australia the inefficiencies CORRUPTION in the construction industry make Australia one of the top 3 countries anywhere in the world for excessive costs.

    See the RC in to the trade unions and earlier reports about criminal figures involved with the CFMEU at Barangaroo.

    Fantastic, isn’t it. One area where Australia gets a podium finish on the world stage is how utterly dodgy the main players in one of most important economic sectors is – and how they can cheerfully kick the costs down the line to the mugs.

    I imply nothing about small operators in the sector, like our own esteemed calli – the problem is the unholy triumverate of Big Government, Big Business and Big Unions and the criminality that flourishes in the shadows they cast.

  39. EB

    I think UBS had something out last year showing the banks here on average were holding 1.4 cents in capital for every dollar they lent. And they’re borrowing from overseas with the implicit guarantee of the government.

    Raise any objections and it’s “blah blah, strong banks, that’s our super dividends, blah, can’t make them pay for being subsidised.”

    Shovelling out debt to people who never should have gotten it in the first place with the backing of the government, well you know now it will end eventually… well I’d say epic carnage, but we all know it will end with another levy on us to bail someone out.

  40. Infidel Tiger

    Doesn’t make sense.

    If you want to obtain the best price and sell in the quickest time, why only target Chinks? The story reeks of bullshit.

    Reminds me of this:

    http://m.youtube.com/watch?v=0YM9Ereg2Zo&feature=kp

  41. Robert Blair

    Johanna:

    we are down the path of the worst of the agrarian socialists

    Agreed. The real problem is the green nanny state regulations.

  42. Infidel Tiger

    My first property purchase was a 45sqm studio with a 20sqm courtyard.

    Good times. Got a fair bit of action in that pad. If you don’t believe me, ask the neighbours.

  43. Ashes

    Hey Folks,

    RBA appears to have a slightly different take on this…

    http://www.theaustralian.com.au/business/latest/foreign-buyers-not-to-blame-rba/story-e6frg90f-1226936660524

    Also, I suggest that at the end of the day it is not “demand side” problem – it is a “supply side” issue relating to planning and costs. The problem is demand side fixes are never going to adequately address a supply side problem.

    Further, the IMF appear (based on some of their research papers) to be interested in Macroprudential measures – do we really want to go there?

  44. OldOzzie

    Interestingly we have 2 houses in our street that were purchased 3-4 years ago by Chinese purchasers, nice people, , knocked down and new homes built, but neither has been lived in – lawns are kept neat, cleaners every 2 weeks – have not seen the original purchasers since the rebuilds.

  45. .

    Infidel Tiger
    #1345418, posted on June 13, 2014 at 10:52 am
    My first property purchase was a 45sqm studio with a 20sqm courtyard.

    Good times. Got a fair bit of action in that pad. If you don’t believe me, ask the neighbours.

    Close the fucking blinds you animal.

  46. Myrddin Seren

    As an aside, does anyone else get a bit sceptical about China being the ‘miracle/dominant economy of the 21st century’ when you see anyone in China who can possibly slip hard currency and often at least one close relative as a placeholder in to any non-Chinese market economy they can ?

    The ‘black’ capital outflows from China must be enormous.

  47. OldOzzie

    Infidel Tiger – our first apartment was a 1 bdrm 35 sq m flat in Moore St Harbord, I described it as “you could swing a cat and hit every wall in the lounge/kitchen” – only redeeming feature, short walk to Freshwater beach and was an interim, till we could afford to build on our land, then, was good rental investment

  48. Max

    As an aside, does anyone else get a bit sceptical about China being the ‘miracle/dominant economy of the 21st century’

    I’m sceptical – the demographics of the 1 child policy and the gender imbalance will smash 100′s of millions of them.

    But there will still be 100′s of millions of them with lots of cash travelling the world. So they wont be a “Miracle” but I think they will be “Dominant” — in fact go to Eastwood and Epping in Sydneys North west to see

  49. johanna

    You slumlord, OldOzzie! :)

    Seriously, if these bedwetters really cared about housing standards and affordability, they would be hopping into restrictive union practices, backward and primitive construction techniques, corrupt council certifiers, land release restrictions, taxes and so on.

    None of these things appear on their standard list of gripes.

  50. .

    OldOzzie
    #1345429, posted on June 13, 2014 at 11:02 am
    Infidel Tiger – our first apartment was a 1 bdrm 35 sq m flat in Moore St Harbord, I described it as “you could swing a cat and hit every wall in the lounge/kitchen” – only redeeming feature, short walk to Freshwater beach and was an interim, till we could afford to build on our land, then, was good rental investment

    Best suburb in all of Sydney, Freshwater.

  51. outsider

    I don’t see any sensible objections being able to be sheeted home to xenophobia; this business of exclusivity is appalling; and we are pauperising the young and less fortunate for what most would think ought to be an attainable public good – not a fancy asset class for endless speculation via dumbass TV programs.

    It was a mess, the existing underlay, and this on top while those in power exhibit their customary cowardice and insouciance. Yes to the Prod Com investigation and policy formulation. It will only get worse from here, we live in a great country, despite its flaws – a matter of relativity. The Chinese are the best of migrants and have been for 150 years.

  52. tgs

    I really don’t understand the point of this article.

    Why is very high density living a bad thing? If the consumers of this style of housing are happy and the publicly provided utilities can handle it then what is the problem? I mean I probably wouldn’t buy one but I’m not about to go and tell other people they can’t just because it offends my delicate sensibilities…

  53. James B

    Steve, mate, do you have any clue about anything?

    The problem with house prices is the price of urban-zoned and appropriately subdivided land, all down to government regulation.

    More money flowing into the country doesn’t need to mean higher house prices. If house construction could respond to demand, all it would actually mean is more houses built.

    But since supply is artificially constrained, prices go up. Not fucking difficult.

  54. James B

    tgs: It’s bad for raising a family, for one thing.

    Nobody wants to live in a high-density fashion, they’re forced to because land supply is restrained to such a degree by government laws.

  55. Perfidious Albino

    If the concern was there being no stock on the market here because it was all being marketed on China only websites, that would be one thing, but I don’t see that here. Can’t blame people trying to tap into the perception of ‘wood ducks’ prepared to pay too much, but again I think this is more perception than reality. How does the agents fee get paid via this China only marketing? It might just be a cheaper but effective means of marketing.

    As far as apartment sizes in Melbourne, developers are also building to an overall price point they can effectively market too ie: you can probably get a larger 1 or 2 bed apartment if you are happy to be outside the CBD, you just can’t have the location and size for the SAME price in the CBD. Best leave it to the market to determine, helps keep things affordable for the key workers, after all.

    Of course the meme on their ABC radio at the moment is how bad this high density living is for our mental health, what with all the flats which apparently have no windows nor ventilation (apparently).

  56. tgs

    Steve, mate, do you have any clue about anything?

    The problem with house prices is the price of urban-zoned and appropriately subdivided land, all down to government regulation.

    More money flowing into the country doesn’t need to mean higher house prices. If house construction could respond to demand, all it would actually mean is more houses built.

    But since supply is artificially constrained, prices go up. Not fucking difficult.

    Haha, I thoroughly enjoyed this post. Also agree that the issue is an artificial constraint on the supply of land due to state planning/zoning laws.

    tgs: It’s bad for raising a family, for one thing.

    Nobody wants to live in a high-density fashion, they’re forced to because land supply is restrained to such a degree by government laws.

    Right, but this type of housing is probably aimed at students and young professionals. I think it’s pretty stupid, and illiberal, to ban a certain type of housing simply because it doesn’t suit a certain type of consumer.

    And your second point is not really correct, imo. There will always be a certain % of the population who want to live in the CBD/inner suburbs. You’re only going to be able to do that in apartments.

  57. rebel with cause

    A lot of resentment against the Chinese because they work hard and know how to save. Fix the supply issues and even irresponsible ‘Aussie’ kids who pissed whatever income they earned in their 20s up against a wall might be able to get a place.

  58. Shauno

    Im pretty sure one of the first things Rudd did as Prime minister was relax the foreign ownership laws meaning the Chinese could buy up whole apartment blocks and leave a lot of them just empty.

  59. Perfidious Albino

    Massive shadow banking economy in China, partly what’s driving all the offshore investment. Central Government encourages investing overseas in ‘approved’ investments, also a good way to ‘launder’ money from the shadow banking sector.

  60. blogstrop

    The IMF are just a bunch of champagne socialists these days.

  61. Infidel Tiger

    I really don’t understand the point of this article.

    From the sounds of it we are suckering billions of dollars from Chines rubes to buy shitboxes that no local would want.

    It sounds fantastic. I want in on this action.

  62. James B

    Right, but this type of housing is probably aimed at students and young professionals. I think it’s pretty stupid, and illiberal, to ban a certain type of housing simply because it doesn’t suit a certain type of consumer.

    It shouldn’t be banned. But established suburbs shouldn’t be ripped up and replaced with it, either. Zoning and height controls act like private covenants would in a free market. There’s no automatic right to replace your home with an apartment block because of that development’s affect on surrounding property owners.

    Making suburbs with infrastructure designed for relatively low-density living into high-density areas just ruins them for fucking everyone in them. Retrofitting suburbs with better infrastructure to cope with the higher density is orders of magnitude more expensive than just making new suburbs with new infrastructure.

  63. Aristogeiton

    What’s the point of this article? Seems to hint at greater restrictions on planning and foreign investment; why would we do this? They are both costing us a fortune already.

  64. Peter from SA

    Yes I found some conflicting logic in this article too.

    In respect to the Chinese, I don’t think they care too much if their asset falls by even 10 or 20%. Just so long as they don’t wake up one day and the state has confiscated the entire thing.

    Selling to that type of buyer must be a positive for the country.

  65. .

    IMF?

    For Christ’s sake Christine Legarde was the head of it.

    Would you appoint an econometrician or finance professor as your barrister?

    etc…

  66. MT Isa Miner

    James B

    #1345477, posted on June 13, 2014 at 11:43 am

    tgs: It’s bad for raising a family, for one thing.

    Nobody wants to live in a high-density fashion, they’re forced to because land supply is restrained to such a degree by government laws.

    Some groups can and do live high density. But Steve Sailer argued somewhere that Anglo-Celtic’s need personal space to feel secure enough to have families. It’s a mental thing. There are also arguments that when men and women have families they vote turns more conservative. I’d say this is a real issue for Abbott and non-leftist thinkers.


    Sailer suggested that the relative costliness of owning a home in America’s large coastal cities, such as Los Angeles, led to later family formation, which partially explained the greater support for Democratic politicians in those cities and regions. In contrast, inland American cities like Dallas are able to expand outward all-but indefinitely, which keeps housing costs low and subsequently such cities more attractive to young families. …

    This article suggests that the geographical sorting of the United States along partisan lines results, at least in part, from differences in housing markets. Specifically, these results indicate that, in the 2000 presidential election, George W. Bush typically received a smaller share of the vote in counties where home values significantly outpaced incomes, and that this was, to a meaningful extent, due to the relationship between home affordability and marriage rates.

  67. Infidel Tiger

    There are also arguments that when men and women have families they vote turns more conservative. I’d say this is a real issue for Abbott and non-leftist thinkers.

    Except that the left found a way to turn them all into statist turds – socialised medicine, child care and family benefits.

  68. MT Isa Miner

    Even if we are making money now selling mostly flats to the Chinese, we need to plan ahead. It is the partly the Chinese and the Indians immigration that is pushing the flat building. Abbott needs to think about how Asians vote ( Indians and Chinese are Asians to the yanks) for our long term political lineup.

    Demographic analyst Arthur Hu suggests that voting patterns show that Asian Americans traditionally vote slightly more conservatively than their neighbors do—exactly as optimistic Republicans assume.

    The problem for the GOP, however, is that Asians tend to have highly liberal white neighbors.

    In 2000, 45% of all Asian-born immigrants lived in three heavily Democratic metropolitan areas: San Francisco, Los Angeles, and New York City.

    Because of the dual effects on the voting of both whites and immigrants, the spread of immigrants into the middle of the country puts once-solid Republican states into play.

  69. johanna

    Nobody wants to live in a high-density fashion

    Not everyone is “raising a family.” Indeed, the number of households with dependent children is less than 50% of the total.

    Plenty of people like living in flats and townhouses. They don’t want to be bothered with gardens and house maintenance, like to be in the thick of things near the city, they want to live in a particular area but can’t afford a house, and a multitude of other reasons.

    I suspect that “nobody” in your comment is based on a sample of one.

  70. MT Isa Miner

    johanna

    #1345443, posted on June 13, 2014 at 11:08 am

    You slumlord, OldOzzie! :)

    Seriously, if these bedwetters really cared about housing standards and affordability, they would be hopping into restrictive union practices, backward and primitive construction techniques, corrupt council certifiers, land release restrictions, taxes and so on.

    None of these things appear on their standard list of gripes.

    This is the guts of it, Johanna. But most of us don’t understand how an engine works we just want a car.

  71. rickw

    The really important questions that don’t seem to have been answered:

    - How is this likely to come unstuck and when?
    - How do I make money out of the situation right now?
    - How do I make money out of the situation when it comes unstuck?

    PS: Who cares about foreign investors, the pattern in the past has always been that in the end, they get seriously burned and I don’t see any reason why the current situation shouldn’t end the same way?

  72. James In Footscray

    Something sounds not quite right in Steve’s analysis. Why would millionaire Chinese want to buy crappy cheap apartments to live in?

  73. David C

    There is no need for increased regulation, my understanding is that the existing regulations are not being enforced. As I understand it foreigners need FIRB approval t buy existing homes. I don’t think that is being done, buyers are just ignoring the rules and the regulators (once again) are asleep at the wheel.
    I am also led to believe that the money flow from China is all a reaction to the increased crackdown on corruption in China, money is escaping, looking for a home. Once all that dies down a lot of this money will flow back.

  74. MT Isa Miner

    rebel with cause

    #1345484, posted on June 13, 2014 at 11:51 am

    A lot of resentment against the Chinese because they work hard and know how to save. Fix the supply issues and even irresponsible ‘Aussie’ kids who pissed whatever income they earned in their 20s up against a wall might be able to get a place.

    Not true that I resent the Chinese. The Chinese do work hard and save money- good stuff. But their first rule is to protect your own and it should be ours too.

    Maybe it is Chinese corruption like the shadow banking Perfidious Albino mentions. Anytime big mobs of Chinese are doing stuff the Chinese government seems to be behind it.

    Australia has to think ahead about what different groups of immigrants bring with them. What values do they have, what culture do they come from and how will it change us. If we let people in just for money we are whoring ourselves. How long does a whore last in the free market?

  75. Can’t see what’s the issue. “Their ignorance of what makes a great city great is going to leave this country with a legacy of very poor quality housing that will remain a blight for decades to come.”

    The greater the freedom to build, the greater the range of options on offer. Japan has FAR smaller sized apartments, and that’s fine, too.

    If you don’t trust the market (people) then whom would you like to trust? Bureaucrats?

    Let there be freedom to buy, sell, build.

  76. Perfidious Albino

    The average age of new parents has increased from 29 to 33 in the space of a decade, so another dynamic is that older parents starting families have had a longer opportunity to earn, save, move up the ladder and choose accommodation appropriate to their needs (important qualifier – unless they’ve mostly just been sucking on the teat of mother taxpayer all those years – but I did choose the word ‘opportunity’ carefully).

  77. Infidel Tiger

    PS: Who cares about foreign investors, the pattern in the past has always been that in the end, they get seriously burned and I don’t see any reason why the current situation shouldn’t end the same way?

    Exactly. Remember when the Japs bought half of Queensland?

    That worked out well for them.

  78. James B

    Exactly, Mt. Isa Miner.

    The “smart growth” plan to densify our cities, to make housing unaffordable, is related to a wider cultural Marxism, and it links all spheres of progressive politics.

    You have the feminists, because houses are so expensive you need two incomes to afford one, meaning traditional families with the man at work and the woman in the home can’t exist as easily.

    You have the greenies, because high-density cities use less bushland (1/10,000th of all land in the country instead of 1/5,000th). Women delaying childbirth and pursuing careers instead of husbands and families also means less people, and the goal of greenies is to de-populate the Earth and return it to “nature”.

    You have the actual Marxists, because less property owners means less people concerned about protecting the rights of property owners, and thus more support for Marxist politics.

    And then you have everyone else on the left because, as Mt. Isa Miner pointed out, less families means less conservative voting and more progressive voting.

    “Smart growth”, “urban densification”, and restrictive planning and land-use frameworks are literally a perfect way for the left to accomplish their goals. They need to be dismantled as a FIRST priority. Above EVERYTHING else. Above industrial relations laws, environmental laws, high taxes, carbon taxes, mining taxes, all that other garbage must take SECOND priority. We MUST get our housing supply in order or this country is as good as fucked.

  79. James B

    The average age of new parents has increased from 29 to 33 in the space of a decade, so another dynamic is that older parents starting families have had a longer opportunity to earn, save, move up the ladder and choose accommodation appropriate to their needs (important qualifier – unless they’ve mostly just been sucking on the teat of mother taxpayer all those years – but I did choose the word ‘opportunity’ carefully).

    Chicken and egg. People are delaying families until they have financial security, which takes a long time with the price of homes how they are.

  80. Tim Neilson

    House prices are supposedly “high” but I haven’t read anything that suggests that net rental yields are disastrously low. If interest rates went up considerably (totally hypothetical in the near term in my view) then presumably the investors would stay out or bid lower, and that might reduce prices, but apart from that why is there an assumption that there’s something badly wrong with today’s market?

  81. Pedro

    Exactly IT. What a ridiculous beat up of a post. We are exporting to the chinese the opportunity to spend time in Australian air space and they are giving us lovely foreign dollars for that dubious privilege. Naturally they won’t really want to sit in their apartments so they will rent them to australian residents and the cost of housing will decline.

    I don’t know if it is true that some projects are not even being marketed here. Certainly foreign buying is a very big part of the market at present and the only thing that is holding up prices. Without the foreign buying you would not have the same amount of development. Triguboff builds without presales but pretty much every other project is presold to a reasonable extent before the bank will give construction funding.

    As for supply constraints, for apartments they are not significant. Land for apartments is easy to find and a flood of them is hitting the market. The big issue is construction costs and smaller apartments are the principle effect of that cost problem.

  82. Helen

    Was it 20 years ago the Japanese were buying up all the real estate? Now it is the Chinese. In 20 years time, it will be someone else. It is merely a foreign investment cycle. The only way to bring house prices down is to build more accommodation.

  83. Aristogeiton

    Helen
    #1345660, posted on June 13, 2014 at 2:24 pm
    [...]
    The only way to bring house prices down is to build more accommodation.

    According to Steve Kates, greater planning restrictions will achieve this.

  84. Streetcred

    In my view this is a construct of Agenda 21 principles and the socialist planning instruments in local councils and state governments, implemented up to two decades ago. That it has manifest itself in foreign ownership does not mean that foreign purchases are inflating the prices … there aren’t the big margins that commenters seem to think exist. If property could be developed at locally affordable prices it would but just avail yourselves of construction costs circa $3,500/m2 … you need to sell at an average ~$7,000/m2 to make an acceptable profit. Do your sums, its easy, a 100m2 two bedroom apartment costs ~$700k.

  85. brc

    House prices are supposedly “high” but I haven’t read anything that suggests that net rental yields are disastrously low. If interest rates went up considerably (totally hypothetical in the near term in my view) then presumably the investors would stay out or bid lower, and that might reduce prices, but apart from that why is there an assumption that there’s something badly wrong with today’s market?

    A shortage of houses drives up both rents and sale prices. The yield is a reflection of the preference to rent vs buy, given all other constraints (finance etc). Renting is too expensive as well.

    Why is there an assumption that something is wrong?

    In the least densely populated continent on the planet, prices are among the highest on an income ratio basis.

    Ask yourself if Australia had the most expensive wool, wheat and coal in the world, yet some of the most abundant reserves. Would you think perhaps some type of problem exists in the market? Something driving artificial scarcity?

    There are not enough pieces of land available to put houses upon. All else stems from that.

  86. Streetcred

    Wendell Cox is right!

  87. sabrina

    Those criticising Steve should read these sentences in his post – AUSTRALIAN real estate is being marketed and sold exclusively to foreign investors — including Chinese millionaires — with local buyers not even aware the properties in question are up for sale.

    More than 100 real estate firms have sprung up in mainland China, exclusively selling Australian real estate — both fixed and off-the-plan — directly to wealthy Chinese investors, bypassing Australian buyers.

    Clearly this is wrong. But it is happening. Who is doing this – Australians screwing Australians.
    In addition, there is also subtle discrimination by real estate agents. Examples in Melbourne are the real estate agents in Glen Waverley, Mount Waverley or Box Hill; most good properties are mysteriously sold before auction

  88. Leo G

    “I really don’t understand the point of this article… Why is very high density living a bad thing? If the consumers of this style of housing are happy and the publicly provided utilities can handle it then what is the problem? …”

    The article merely reflects recently published newspaper stories. I think it is being suggested that the Australian realty industry is competing in an international market for Chinese investors and for lucrative property management contracts with Chinese buyers of Australian property.
    A consequence is that high density housing is going up in areas where high density is inadvisable and is thereby aggravating problems associated with population growth rather than ameliorating those problems.

  89. Greg James

    The properties that these Chinese nationals buy for their sons and daughters will either appreciate in value [unlikely] or not [more likely].

    I am not sure why the hell it matters?

    OK, there are a heap of butt ugly gray soviet style blocks down there at Docklands, but the market surely will sort this out. Surely, noone is buying this are they?

    If they are, then more fool them.

  90. 2dogs

    Having foreign investment is an excellent surety of peace. If war ever arose with China, all those properties would be confiscated.

  91. ar

    Building a house on a block in Sydney, stamp duty and GST will easily top $100k. Plus $5k development fee to local council ($20k if you add a granny flat), plus all the other approval fees, and on going costs of rates $2k+ per year and land tax on the vacant block, $4k+ per year… regulators aren’t going to be in a hurry to fix anything…

  92. .

    Clearly this is wrong. But it is happening. Who is doing this – Australians screwing Australians.
    In addition, there is also subtle discrimination by real estate agents. Examples in Melbourne are the real estate agents in Glen Waverley, Mount Waverley or Box Hill; most good properties are mysteriously sold before auction

    There is nothing underhanded about this. Do you understand the terms of an auction sale?

  93. Demosthenes

    A consequence is that high density housing is going up in areas where high density is inadvisable and is thereby aggravating problems associated with population growth rather than ameliorating those problems.

    The only problem with population growth is politicians’ seeming inability to build public infrastructure.

  94. johanna

    sabrina
    #1345699, posted on June 13, 2014 at 3:13 pm

    “Those criticising Steve should read these sentences in his post – AUSTRALIAN real estate is being marketed and sold exclusively to foreign investors — including Chinese millionaires — with local buyers not even aware the properties in question are up for sale.

    More than 100 real estate firms have sprung up in mainland China, exclusively selling Australian real estate — both fixed and off-the-plan — directly to wealthy Chinese investors, bypassing Australian buyers.”

    Clearly this is wrong. But it is happening. Who is doing this – Australians screwing Australians.
    In addition, there is also subtle discrimination by real estate agents. Examples in Melbourne are the real estate agents in Glen Waverley, Mount Waverley or Box Hill; most good properties are mysteriously sold before auction

    Why is it wrong? Nobody is obliged to offer something they want to sell to all and sundry – they are free to enter into a sale contract with anyone they wish, without telling anyone else. And so it should be. How is it “Australians screwing Australians?” Honestly, this is the sort of line run by protectionists, interventionists and bigots, but surely has no place here.

    Ah, properties “mysteriously” sold, presumably under threat of torture to inscrutable Orientals? I bet Dr Fu Manchu is behind it.

    Sheesh.

  95. Token

    …most good properties are mysteriously sold before auction…

    So if my mother sells the family house to me via a private sale (at a market price), is that “illegal & mysterious”?

    If so, there are thousands of such “illegal & mysterious” sales which the governments across Australia happily collect stamp duty upon every year.

  96. Token

    Examples in Melbourne are the real estate agents in Glen Waverley, Mount Waverley or Box Hill; most good properties are mysteriously sold before auction

    I remember when I was trying to buy into a property in 1998 in Box Hill and asking why so many Malay Chinese and other asians were so keen to buy in a suburb with a lot of dated houses which the “Skips” would not go near.

    How the world has turned.

  97. Leo G

    “The only problem with population growth is politicians’ seeming inability to build public infrastructure.”

    Population growth concentrated in areas of existing high population density requires much lower cost of public infrastructure per capita than population growth in areas of low population density.

  98. johanna

    That’s a myth, Leo G. For example, if you double the population in an inner city suburb, redoing the water and sewage and electricity infrastructure to double its capacity costs an absolute fortune, not least because you have to undertake the work in a way that doesn’t cripple businesses and inconvenience the existing residents too much. You can’t just do what you want when you want; you can’t cut off the water and power as and when it suits; you can’t block off road and foot access for days or longer and leave your equipment there; you have to dig up and replace roads, footpaths etc and so on.

    I had personal experience of this yesterday. The electricity mob were replacing a substation around the corner, so several hundred residents had no power for most of the day – not fun in a Canberra winter. Now imagine doing that, multiplied many times over, for densely populated areas which have shops and other businesses in them as well. And that’s just for one element of the infrastructure that has to be upgraded. Somebody has to pay for the closure of those shops and businesses.

    Much easier, cheaper and quicker to do a greenfield estate.

  99. Leo G

    Joanna, increasing the population density in an area which already has a high population density does not normally require replacement of services. However, increasing the extent of an urban area, with integrated services, tends to involve network-wide augmentation and new head works. The costs tend to increase with the square of the urban area- at an even higher rate for transport costs.

  100. johanna

    Leo, you are wrong, for two reasons.

    Firstly, when the older parts of a city were built, usage of those services was much lower anyway. My 3 bedroom house, built in the early 1960s, had exactly seven power points originally. Two in the kitchen, two in the lounge room, and one in each bedroom. It now has 14, and I could use a few more. In their unrenovated state, many terrace houses had no bathroom, and much of Sydney suburbia (including the inner city) had no sewerage. By now, every house has at least one bathroom and flushing toilet, and many of them have more. Most of those changes have occurred in the last 30 or 40 years, and the infrastructure in many of those areas is at peak capacity already.

    Secondly, by definition the disruption caused by increasing capacity, and even maintaining what is already there, is very great in terms of human inconvenience (try looking after a baby or toddler with no water or power) and to businesses. If the block which contains my local supermarket has to go without power for a day, what happens to the frozen food and the refrigerated food? Someone has to pay for a generator, or they have to chuck it all out. Not to mention the loss of trade, because even if they hire a generator, it may not be enough to run the lights, the registers, the aircon, the security systems, the automatic doors and all the rest. That might well mean another generator (or more). It could well be cheaper to just close the doors for a day and just keep the fridges running. And who is going to pay for all this?

    Replacing underground drainage pipes in a heavily populated area is not a one-day job. Roads and footpaths have to be dug up, and then reinstated. Access to homes and businesses will be impeded or blocked completely.

    One of Sydney’s dirty secrets is that the water reticulation and drainage systems are leaking and antiquated. Adding more strain to the older parts of it is in no way the cheap or easy option.

  101. Leo G

    Joanna, capacity of a service is not a measure of congestion, whether a sewage system or a bus service. We shouldn’t measure the effectiveness of a public carrier, or a sewage service, by the number of seats, but rather by the sum of number of bums on seats each multiplied by the distance travelled.

  102. Andrew

    Nope, they’re certainly no banning small apartments in Hong Kong.

    LOL @ the Age claiming 50 sq m is small by world standards. I recently stayed in a newish building in HK – Chineseguy laughed at my suitcase. I found out why when I realised that it needed to come to bed with me as there was no room for it on the floor. I estimate 10 sq m.

    Now I bought a smallish thing in south Melb a few years back – started with a “1″ and has a car park and small yard. It’s yielding me 11% on what I paid. Always in huge demand for rental, never vacant. Valuation around double my money. People WANT to live walking distance from the GPO, they don’t want to pay for huge space at CBD prices to do so, and in many cases are from countries where 50 sq m is considered a sports stadium.

    That’s good for transport and other services – a small shop is always busy if there’s 5000 units above it, you have the density for frequent buses /trams passing it. Everyone can live near the MCG / parks.

    Allegedly, the Chineeeeeeeze are overpaying for properties that no Aussies would want, off the plan, no competition. Yay! More fool them! More brilliance to us! I wish they would overpay for my shares – 50% more than an Aussie is willing to pay would be fantastic. If they’re such “poor quality” housing, they will deteriorate in condition quickly, falling in value. Even better for when they fuck off – our kids will be all over the cheap first homes.

    I’m really not seeing the case for any complaining here. (Or for my friends who never stop whining about the Chineeeeeeze.)

  103. Squirrel

    “Luke

    #1345289, posted on June 13, 2014 at 9:12 am

    Steve try getting this message through in Australia. No ONE wants to hear it! Our banks are massively exposed. All level of government are profiting from high housing prices. Councils from high rates, State government from stamp duty, and the federal government from GST on developers. And that’s to say nothing of the ‘approval’ industry of all three levels of government.

    No one seems to understand that as more and more of Australian’s income goes into a single commodity (housing), demand for everything else has to fall. 25yrs ago people could afford the average home on just 1 average income at 25% of that income (lending standards wouldn’t lend to you if you didn’t meet that criteria). Today young couples are spending 60 of 2 incomes on housing. And for most young people they have to choose between having a family or owning a home (having kids being something else that has increased in costs the more the government gets involved). Keeping in mind that these first home buyers typically need to live in areas where housing prices are highest (capital cities) for job opportunities.”

    I think that sums up the ugly truth of the situation very nicely. We have a hideous mix of the selective application of “market forces”, (so-called) planning and regulation – all driven on by the idiot belief that we (well, quite a few of us) can somehow have our cake, and eat it too, and that there will be no long term costs to the nation of the short-sighted, greed-driven fuckwittery of what is going on.

  104. wreckage

    NSW gov’t opened up some land recently, I hope they have the balls and foresight to keep doing so.

    Also, removing pretty much all clearing and zoning laws in rural areas would help; at the very least the State government could defend farmer’s right to subdivide and sell… usually from other, wealthier farmers who want to expand but don’t want to compete with development.

  105. Combine_Dave

    Step 1) release more land.

    Step 2) end wasteful red and green tape.

    Step 3) stop minding other people’s private dealings with others.

    Problem Solved.

  106. Combine_Dave

    Im pretty sure one of the first things Rudd did as Prime minister was relax the foreign ownership laws

    Evidence? I am sure that he increased restrictions on FDI from China to Australia. It’s one of the reasons the PRC Gov hated him and Gillard (that and lecturing them on human rights).

  107. Pedro

    FIRB rules for real estate were relaxed for the GFC.

  108. Streetcred

    #1345988, johanna posted on June 13, 2014 at 7:03 pm.

    Johanna, I do this for a living … I’m sorry but you are very wide of the mark. You should also know, that many of the old suburbs have very old services made from materials that are at the mercy of soil mechanics … sewerage mains and water supply mains in particular. These services in many instances have lacked maintenance by councils because non-existent “libraries” and “community facilities” are deemed more important … these services need to be replaced and councils have latched on to the idea that new development is solely to blame … let me tell you it is not, the councils are to blame.

  109. johanna

    Streetcred, on the contrary, I did not blame anybody. I just said that they are neglected, and that fixing them costs a motza.

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