Foreign Buyers

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Beulah executive Adelene Teh has said her group’s focus on downsizers and owner occupiers saw its Melbourne projects largely protected from the drop-off in foreign buyers.

“Australia has shown great resilience throughout the pandemic and this will be attractive to people who are looking to move,’’ Teh told a round table forum attended by some of the nation’s top developers hosted by The Australian for The List— Australia’s Richest 250.

William Deague, the chief executive of the Melbourne-based Deague family, William Deague, noted the apartment market had been transformed by policy changes before COVID, now followed by the loss of Chinese investment and immigration.

“I don’t think the future is just punching these little towers straight up, 500 or 600 (units) at a time. “It’s got to be more thought out than that,’’ he told the forum.

[smartcode_project:default project_id=27728]

Melbourne developer Tim Gurner suggested developers were “kidding themselves” if they launched apartment projects of 300 units or more in Melbourne.

Gurner not only expressed concern about the collapse in immigration caused by the COVID-19 pandemic, but had fears about the Chinese government taking capital away from Australia, which would mean a “complete systemic change to our market”.

“It doesn’t matter if you’re selling high end in Toorak or wherever you are, it still affects you. 

“The big difference we’re seeing is the investment apartment, the 300 apartment stuff. I mean, you’d be kidding yourself to try to get something off the ground today.”

Sam Tarascio, managing director of the Salta Properties group, said there was a rental shortage before the onset of COVID, but it had “vanished”.

[smartcode_project:default project_id=5559]

“We’ve got a huge oversupply of apartments available to rent. Rents have gone down — 30 to 40 per cent in some cases.”

Tarascio also noted apartment construction costs were rising 5 per cent a year.

“And we can‘t do anything about it." he said.

Last month it was reported Melbourne’s 2040 population will have half a million fewer people than forecast as the coronavirus pandemic closed the door on migrants.

A special feature from the developer roundtable event will be published in The List in The Weekend Australian on Saturday. 
 
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Beulah executive Adelene Teh said her group’s focus on downsizers and owner occupiers saw its projects largely protected from the drop-off in foreign buyers

jchancellor

Downsizers and owner occupiers the key to Melbourne apartment sales

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Few things make me more cynical than the sound of a politician mouthing concern about housing affordability.
In my lifetime, there have been hordes of politicians and governments claiming to want to solve the problem, but none willing to take any real action.
When it comes to improving affordability, many politicians talk a good fight, but none is capable of delivering a knockout punch.
The latest masquerade in this regard is being led by MP Kelly O'Dwyer.
O'Dwyer has obviously watched a few episodes of Yes Minister before deciding on a course of action: bring on an inquiry, issue lots of press releases, target an unpopular minority and take "strong action" against these alleged perpetrators of the perceived problem – but essentially do nothing meaningful so that the status quo remains intact.
The truth is, 40% of the cost of a new house in Australia comprises government fees, charges and taxes. Remove those and the cost of a $400,000 house-and-land package would drop to $240,000.
In all the froth and bubble coming out of the federal inquiry, we haven't heard O'Dwyer or any other politician confront this reality. Why not? Because if they did, their advancement within the party would suffer a sharp U-turn.
Governments are addicted to the revenue they milk from their favourite cash cow, the real estate industry. That's sacred and the possibility of scraping stamp duty, for example, is not up for discussion.
So what to do? How to create the illusion of doing something while changing nothing?
<blockquote>
Many Australians have a big issue with Chinese investors, although they don't seem to mind American, British, Dutch, Italian or New Zealand investors.
</blockquote>
The answer, as always, is this: target an unpopular minority, talk tough, issue lots of press releases, look strong, do nothing. Works a treat every time.
O'Dwyer has a bee in her bonnet about foreign investors. I'm not sure whether she truly believes that foreign investors are the cause of the perceived affordability problem. I seriously doubt that she does, because someone armed with all the relevant information, as she should be, must know that foreign investors are not impacting the price of suburban houses in Australia.
But foreign investors are a great scapegoat, particularly as this currently means Chinese investors. And many Australians have a big issue with Chinese investors, although they don't seem to mind American, British, Dutch, Italian or New Zealand investors.
So tough-talking Kelly is going a come down hard on Chinese investors. It'll be good for some media sound bytes and it'll help to advance the career of a politician no one had heard of until recently.
But will it make housing more affordable? No, it won't change a thing.
A quote from Shakespeare comes to mind: "It is a tale told by an idiot, full of sound and fury, signifying nothing."
Chinese investors are not impacting the price of houses in first-home buyer markets in Australian cities. Overwhelmingly, they are buying high-rise apartments in the CBDs of Melbourne and Sydney, as well as the Gold Coast, which is a perennial favourite for Asian investors who enjoy losing money.
If they're buying suburban houses, it's primarily top-end homes in the millionaire suburbs.
The Federal Government could pass a law tomorrow banning all foreign investment in Australian residential property – and the price of houses in the suburbs of Sydney and Melbourne would not change.
But if they removed the taxation component of a house-and-land package, that would make a dramatic difference.
Any chance of that happening? Not remotely.
This is a publicity exercise. Meaningful change is not on the agenda.
Terry Ryder is the founder of <a href="https://hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email</a> him or contact him on <a href="https://twitter.com/hotspotting" target="_blank">twitter</a>.
 
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terryryder-YECXbqmri2

Pollies prefer to milk the property cow than to make meaningful change

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Recently, the House of Representatives Economic Committee Report on Foreign Investment in Residential Real Estate was released.
The report made 12 key recommendations, one of which was better funding of the Foreign Investment Review Board (FIRB), because currently there is a complete lack of creditable information on the true extent and nature of foreign investment into residential property. As might be expected the report has received a mixed response. It has not been welcomed by the majority of public comments posted on various news websites.
Let’s examine some of the background that led to the committee looking at this area of policy. In a recent post I noted that the local housing construction industry was worth almost $70 billion, employing some 1,037,412 people in 2014. When talking about foreign buyers and residential property I use these figures as a starting point to help illustrate how important this sector is as a driver of our economy, and it’s a point that was repeated in Friday’s report.
The role of foreign investment in our market can be an emotional subject, and it remains so. It is also a very complex issue for a country with a growing population and a somewhat mixed economic outlook.
The Plight of First Time Buyers
There has been clear evidence for some months now that first time buyers are being squeezed out of the housing market. Australian Bureau of Statistics (ABS) finance statistics show that in September 2009 first time buyer finance stood at 26.1%, by September 2010 that figure had fallen to 15.5%. In the most recent ABS figures there was a slight increase but the figure is now down to 12.0%, and the average loan has increased to $326,500, which in the Sydney market would not stretch that far.
Also, in the most recent ABS figures, investment finance for the month grew by 1.7% and owner occupier finance only grew by 0.1%, and this continues a long-term trend. The reasons for these trends are very complex, but on the surface, they do create an emotional picture of the plight of some sections of the housing market.
The emotion is partly illustrated by a <a href="https://www.change.org/p/the-executive-members-toughen-the-regulations-for-foreign-investment-in-australia" target="_blank">current online petition</a> posted on change.org. The petition started in response to the Economics Committee’s review which called on the Federal Government to "toughen the regulations for Foreign Investment in Australia". It attracted some 32,300 supporters (signatures) and a wide variety of mainly sympathetic followers. A key element of the petition was the fact that only 33 of the reported 5000 sales of established homes to foreign buyers over recent years have been investigated by the FIRB.
That’s a very small number and so, understandably, it makes the FIRB rules an easy target. However figures from the FIRB show that in the first nine months of the last financial year foreign residential property investment was $24.8 billion – a 44% increase over the amount approved for the whole of the 2012-13 financial year, which only further points to the fact that the FIRB may be under-resourced.
In the report the committee also made reference to these figures and agreed the FIRB was not doing an acceptable job, which it recommends be fixed.
The petition and the concerns of its sponsor (Simon Hosking) had been brought to the attention of Kelly O’Dwyer, Federal Member for Higgins and Committee Chair of the Parliamentary Business Committee’s House Economics Foreign Investment in real estate. In part of her response, published on the petition’s website and issued ahead of the main report, O'Dwyer states:
“… The Committee is taking a holistic approach to examine whether the current policy settings are delivering the best outcomes for the Australian economy and increasing housing availability, as they are designed to do. Australia’s foreign investment policy, as it applies to residential property, is intended to boost the supply of new housing and thus provide both economic and social benefits. The policy seeks to channel foreign investment in the housing sector into activity that directly increases the supply of new housing (such as new developments of house and land, home units and townhouses) and brings benefits to the local building industry and its suppliers…”
 This article continues on the next page. Please click below.
<hr class="system-pagebreak">
Blame game or market reality
The debate around foreign investment in residential property comes at a time when prices and demand have both been increasing, a very obvious trend in Sydney and Melbourne and to a lesser extent in Brisbane and other centres. These cities are also attracting the bulk of foreign buyers and foreign development capital and investment.
In part, the trend is being ‘blamed’ for higher prices and at one end of the market. That blame extends to the trend locking first time buyers out of the market.
Again, ahead of the main report, here’s what Committee Chair Kelly O’Dwyer said in response to the Simon Hosking petition. The  same views were reinforced in the main report:
“…Consistent with this principle, foreign investors are able to seek approval to purchase new dwellings and vacant land for residential development. Foreign investors cannot generally buy established dwellings as investment properties or homes; however, temporary residents can apply to purchase one established dwelling to use as their residence while in Australia. The acquisition of residential real estate by foreign investors is regulated by the Foreign Investment Review Board (FIRB). It has become clear from evidence presented to the Committee that FIRB has not prosecuted a single case since 2006. It is also clear that there are problems with processes at FIRB, resources and the penalty regime. The Committee is due to report later in the year…”
However only last week ahead of Friday’s report, this same committee knocked back a proposal that foreign property buyers be levied an extra stamp duty as a possible way of helping to fix the housing affordability crisis, and dampen offshore demand.
There seems to be a fairly entrenched ‘hands-off’ approach being adopted, although a purchase application fee of $1500, that would raise $158.7 million over four years, appears to have general support. Such a fee would by no means act as a penalty.
Returning to the idea that foreign investment is somehow having a negative impact on the market (by forcing up prices), I think we should also look at how different the Australian economy has become over the past two decades.
Because the housing market is part of a big picture and it has to be seen in the wider context. The importance of direct foreign investment across our economy is illustrated by the fact that in 1990 Direct Inward Investment Stocks was US$80,333 million, however, in 2012 that figure had grown to US$604,257 million. Over the same period Australia’s outward flow of Direct Investment Stocks has grown from US$37,491 million to US$424,489 million. I quote the figures to illustrate the fact that the international flow of investment funds is a fundamental to any economy.
The rush to secure Free Trade Agreements is further evidence of this fact. Last week Australia and China signed an FTA, and it is yet to been seen if this will have any impact on the flow of funds into residential property both buying existing projects and for new developments, and if this will be a positive or not for the market.
On first reading of the China/Australia Free Trade Agreement, because of the freeing up of many of the service sectors, this may well be a positive for Sydney and Melbourne, because these two cities are so closely aligned to the professional services. Law, finance, education, tourism, health, engineering and manufacturing are all seen as having potential benefits and growth in these areas plus other key areas should create more demand for commercial and residential accommodation in Sydney and other cities.
However, again illustrating how emotional this topic has become, there are suggestions that the various free trade agreements will further harm the prospects of ‘local’ would be home-buyers. But I do not see any foundation for this assumption.
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pchittenden-eLqUUC8TWW

The housing market and foreign buyers: A blame game

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If one was looking for a single word that is missing from the ongoing property debate, look no further than 'perspective'.
Some are looking at the property market from a perspective that has lead them to a conclusion which is totally and completely wrong.
Investors have got it completely right given (in the case of Sydney) we are suffering from a chronic undersupply which explains why the vacancy rate in a 10 kilometre radius from the CBD has sat below 2% for the best part of a decade.
Never before have we seen a better time to convene an inquiry into the Australian real estate markets because nobody has an accurate perspective as to what is actually happening. Earlier this year I was one of the first to write that something was not right with the influx of overseas buyers.
This brought about an inquiry (that is still going) although it has exposed the Australian Foreign Investment Board (FIRB) to be in total disarray.
Last week, Federal MP Kelly O'Dwyer told ABC Lateline:
"What we've found out though, through the evidence that our committee has received, is that these rules have simply not been enforced through prosecution since 2006 by the FIRB. I think there has been a failure of leadership of the FIRB on this. I think they have dropped the ball. I think if we have rules in place, those rules need to be properly enforced. That is the only way we can give confidence to the Australian people that our foreign investment framework's working as it should. So we would be looking to tighten up exactly what occurs in terms of enforcement penalties that can be applied, but also to make sure that FIRB is doing its job."
Well it's very clear that FIRB have not been doing their job, so in the meantime Ms O'Dwyer should be introducing a temporary ban on all overseas purchases until such time that the government can fully determine how big this matter is.
In my opinion there is no better person qualified to chair the inquiry than Bill Moss who is a former Macquarie Group banker and head of property. Speaking to The Weekend Australian, he said:
"This is the first (property) cycle we've seen where there's a deregulated global market,where capital is free to flow from Asia to Australia. We have a free floating dollar, equity makers are global and now our residential markets are going the same way."
The major concern in Australia is that nobody knows just how many properties have been acquired given nobody has a perspective as to the exact number.
Although, negative gearing presents a much bigger problem in the Australian property markets than overseas investors.
Another person who must be appointed to an inquiry is Saul Eslake, who this week called on Canberra to put an end to negative gearing for new investors as the best way to dampen frothy property markets in Sydney and Melbourne.
It should be noted that he referred to them as 'frothy' not a 'bubble'. He accepts that it is not politically feasible to abolish negative gearing because around 15%of voters are currently taking advantage of negative gearing – which explains why no politician should participate in the inquiry given they have vested interests.
Australian investors are smart and can sense a change to the property tax landscape in Australia, which I pointed out <a href="robert-simeon/36284-a-broken-system-investors-are-laughing-all-the-way" target="_blank">last week</a>.
It is important to note the recommended measures are nothing more than temporary until such time that the government can get a correct perspective on the Australian property markets.
Bill Moss went on to say in his interview that our housing markets were better tackled at a state or local government level, with the federal government or the Reserve Bank of Australia's (RBA) macro prudential tools such as restricting how much banks can lend to investors. "Rather than react to what's happening, what the government needs to do is understand what is going to happen."
The interview keeps getting better, when he commented that "governments should look how to make money from a real estate bubble."
In my opinion, overseas buyers should be paying a much higher Stamp Duty and a Vacancy Tax for all properties where the owners decide to landbank by locking them up. All these taxes should be flowing into new infrastructure strategies.
The problem is that governments have neither perspective nor understanding about real estate machinations. So they need to establish an inquiry to better understand what exactly is going on as against merely flying from the seats of their pants.
 
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robertsimeon-hRNTwJyXkQ

The new 'P' in property is perspective

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I was invited to speak at a recent property event in Singapore. I was booked and ready to go – and then pulled out when it became clear it wasn’t a research-based seminar for investors but an event designed to flog Brisbane off the plan units to Asian buyers in an oversupplied market. 
The event organisers wanted to censor my presentation, eliminating any information deemed unfavourable to the selling objective – particularly the vacancy rate figures.
Vacancy rate data is unflattering for central Brisbane – and is set to get considerably worse, given the high level of new supply in the construction pipeline. The Brisbane inner-city unit market is one of the locations I warn about in my No Go Zones report.
Marketing companies who are earning big money selling inner-city Brisbane units to unsuspecting foreign investors have been putting a politician’s spin on the situation – with some even claiming the city isn’t building enough apartments.
A research paper published by Matusik Property Insights puts those claims into perspective. It confirms that Brisbane’s inner-city areas already have high vacancies and the city is making matters worse by building too many new rental properties.
According to the Matusik report, the highest vacancies are all in the inner-city and near-city suburbs, headed by 6% in upmarket Ascot/Hamilton and 4.6% in the CBD/Spring Hill precinct.
The lowest vacancy rates in the Brisbane City Council region, between 1.5% and 2%, are all in the outer reaches of the municipality.
Overall, says Matusik, the Brisbane LGA has about 155,000 rental properties, of which an estimated 4,600 are vacant. This makes the city's overall vacancy rate about 3%, up from 2.5% a year ago. 
“The vacancy rate is rising and Brisbane is already adding more new rental properties than is required,” the report says. “This trend is likely to accelerate as more new rental dwellings are built across the city.”
The number of Brisbane rental properties has increased by 3,725 over the past 12 months. The current rate of rental supply in Brisbane is growing at twice the rate than is needed. Two thirds of this new rental supply is apartments and a further 30% is in townhouses. 
“Apartments now dominate the rental market in Brisbane, with a 45% market share. Houses come in second with 38%, followed by townhouses with 11%.”
The average vacancy rate across inner Brisbane is 3.6%, compared to 3.1% in the middle-ring suburbs and 2.4% in the outer suburbs. 
“Typically, a rental market is tight (rents rising) if the vacancy rate is under 2%,” the report says. “Between 2% and 3% represents a balanced market and over 3% suggests oversupply. 
“An increasing number of locations in Brisbane, typically the inner-city postcodes, already have rental vacancy rates over 3%. And new rental supply, especially new apartments, is snowballing across Brisbane. 
“Brisbane is unlikely to see much in the way of generic rental growth for some time to come.”
Brisbane is not alone. The No Go Zones report also warns about the inner-city apartment markets in Melbourne, Perth and Darwin, while noting that the Gold Coast is hurtling towards another boom-bust scenario.
TERRY RYDER is the founder of <a href="https://www.hotspotting.com.au/">hotspotting.com.au</a>. You can <a href="mailto:%20&lt;script%20type='text/javascript'&gt;%20/n%20&lt;/script&gt;&lt;script%20type='text/javascript'&gt;%20%20&lt;/script&gt;This%20email%20address%20is%20being%20protected%20from%20spambots.%20You%20need%20JavaScript%20enabled%20to%20view%20it.%20&lt;script%20type='text/javascript'&gt;%20%20&lt;/script&gt;">email him</a> or follow him on <a href="https://twitter.com/hotspotting">Twitter</a>.
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Brisbane inner-city vacancy rate to get considerably worse: Terry Ryder

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Foreign investors are facing a tax crackdown under the Budget package.
As of Tuesday's budget, foreign and temporary tax residents will no longer be exempt from a capital gains tax when selling their main residence in Australia.
Capital gains tax rules are being tightened for foreign investors, who will no longer be able to access the main residence exemption.
The new rule starts on budget night but will be grandfathered for existing properties until June 30, 2019, suggesting there might be an exodus arise to avoid paying the extended tax.
The Australian tax law is already complex when it is applied to domestic transactions, but its complexity increases when multiple jurisdictions and foreigner taxpayers are involved.
Accountants advise when evaluating Australian property as an investment, a foreign investor needs to fully understand their taxation obligations in both Australia and their own country of residence, which often requires the engagement of tax specialists in both countries.
It is suggested an individual will be an Australian tax resident if they reside in Australia or in Australia for over 183 days in the year of income.
Even though Australian tax residents will be taxed on worldwide income and the individual top marginal tax rate is relatively higher, there had been benefits of being tax residents until the budget announcement, including:
<ul>
<li>Access to the 50 percent CGT discount if the CGT asset is held for greater than 12 months;</li>
<li>Their main residence will be exempt from CGT upon sale (this would generally not apply to non-residents); and</li>
<li>There is no foreign stamp duty surcharge.</li>
</ul>
The withholding rate on capital gains tax that foreigners must pay when they sell property will increase to 12.5 percent from 10 percent beginning from July 1.
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j.ballantyne1990-6AQqhLzZaK

Foreigners lose capital gains tax exemption on main residence 

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Q: Is there a housing bubble?
A: Nationally no, but if we are talking about Sydney, Melbourne and new inner Brisbane apartments, then yes.  That's a YES, in case you somehow missed it.
Sydney and Melbourne have been distorted by an influx of 'grey' money coming from China. Many don't like to hear this, but it is happening. No hard statistics, but our groundtruthing is looking worthy of a hefty bet.  And of late, some of this grey has shifted north, along with local superannuation funds looking for cheap property &amp; a longish timeframe to settle, in the hope of double digit price growth.
Brisbane always follows Sydney, right?  Property is so cheap in Brisbane, hey! You can buy two in Brisbane for the price of just one in Sydney. Bris Vegas here we come.
Sidebar
I have an internal debate several times each month – it's fun, like talking to an imaginary friend – about whether or not to write on a certain topic. 
Do I let blast about China? Publish my thoughts about smaller apartments?  Call out all those BS artists promising double digit price growth &amp; rental increases?  And this week, it's a yes.  Write something about the Reserve Bank (RBA), Foreign Investment Review Board (FIRB) and how we will all be rooned.
We'll all be rooned
Now, there is nothing wrong with a global property market, nor being in the recovery phase of the property cycle and having closer ties to China – or any of our major trading partners for that matter.
But a housing bubble is a different story.
Property values have almost trebled over the past two decades, while wages have not kept pace. House prices in both Sydney, Melbourne, some parts of Perth and now across inner Brisbane, are often over 10 times household earnings. In many cases, weekly rents also far exceed 30% of a renter's income.
And things can start getting out of hand when the proportion of investors buying accounts for around half of all residential sales – double the 25% of the housing market made up by private renters. This happens every cycle, but its current trajectory is unsustainable.
Got some doubts?
Well this year alone, housing credit and house prices have climbed at, respectively, more than two and three times the rate of household income growth. It isn't the actual rate of credit and price growth that is the problem, but their relationship with our ability to afford this inflation.
It's true that this is mostly a Sydney and Melbourne phenomenon, but we only have a few blunt tools in the back of our ute to temper the times. And besides, we have never been that good at small, fiddly renovations. Slash and burn is more our style.
The good and the bad
Yes, there are reasons for property demand to be improving – we have record low interest rates, relatively low vacancy rates, high population growth and a strong penchant for owning property.
But on the flip side, we have falling commodity prices, an employment baton change which, for the life of me, I cannot see happening smoothly nor correspondingly, little wage growth, ageing demographics, high debt, an increasingly economically wobbly China and a close to epileptic Europe. Not to mention what may or may not happen with the rest of the world.
For those who only hear good news, you might have missed that Australia's federal budget deficit last year (2013/14) was close to $50 billion &amp; yet the Palmer United Party wants to keep the red ink flowing until the early 2020s. 
If that happens, then our prized AAA sovereign credit rating could be at risk, especially if something goes wrong with our economy – or that of a major trading partner.
In short, we might see the vulnerable economic conditions of southern Europe down under.
This article continues on the next page. Please click below to continue.
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True blue
But in true ocker fashion – it's all "she'll be right mate", "nothing to see here". Those questioning our "property at all costs" mentality need to take a double dose &amp; retire to bed early. Keep on moving on. Bid higher at that auction. Buy something tiny and off-plan. Doesn't property double in value every seven years? You cannot lose.
Too far-fetched?
Well, our real wages are falling. Yes, falling, as average earnings rose just 2.3% over the last 12 months – that's 0.3% lower than inflation. Unemployment is over 6%, without counting the 700,000-plus on disability pensions.
True, the RBA does predict higher economic growth next year, real wage growth in some distant future and lower employment one day, maybe, but this is predicated on the assumption that nothing economic will go bang or that China's economy won't slow down further.
Excuse me for being a skeptic, but trying to predict an economic future, these days, is almost impossible.  I would just love to read or hear one of those talking eco heads say something like, "well, frankly we don't have a bloody clue".
If you ask me what's going to happen, your guess is as good as mine.
But I do like to guess, so here goes.
<ul>
<li>Government will not reign in spending; we (the senate) won't allow it.</li>
<li>No workplace reforms, for fear of a union campaign.</li>
<li>The RBA will continue jawboning and keep interest rates where they are (when looking at the whole of the Australian economy – not just housing in Sydney and Melbourne – they really need to fall).</li>
<li>Plenty of talks about macro-prudential action – like higher investment loan to value ratios; changes to property taxation or minimum product sizes – but nothing done. Maybe that is a good thing?</li>
<li>No enforcement by FIRB regarding illegal overseas buying – and it has almost all been illegal in recent years.</li>
</ul>
And it's the last point that is the most pertinent right now.  If you want to slow down the Sydney, Melbourne and inner Brisbane property markets without stopping the rest of the country, then you must enforce offshore buying laws.
Inert FIRB
An inert FIRB has done nothing to inhibit the grey economy that exists to get money out of China (ironically, helping them deflate their own housing bubble) &amp; into safer overseas havens like Australia.
It's true that the Chinese government imposes a $US50,000 a year limit that can be sent out of the country, but cashed-up Chinese bypass this system via personal relationships rather than transparent bank transfers. Heaps of property – just how much is unknown (but it shouldn't be) – is being bought this way in Sydney &amp; Melbourne, Perth, and now in Brisbane and starting to again on the Gold Coast.
Also, the Significant Investor Visa (SIV) is dominated by mainland Chinese who meet the $5 million requirement. They are paying stupid prices for potential development sites (with site values doubling in the past five years), but property economics do not apply here, as the SIV is really a fast-tracked qualification for a permanent visa. Dual nationality is the want, but sadly, too many Chinese just want an Aussie passport as an insurance policy, not a new way of life.
Lower down the chain – much lower, if you ask me – is another sheltered workshop – property spruikers flogging Chinese investors little high-rise boxes in Sydney, Melbourne and now Brisbane. Entire high-rise buildings are financed, built and sold for the Chinese market, with local buyers and developers rendered irrelevant. Small, one-bedroom dogboxes are the norm. The more the merrier. How divine, indeed!
And all of this should be illegal. If only FIRB would enforce the law!
All of this illicit activity is creating a demand that would not otherwise exist. Well at nowhere near the levels that it is increasing spruiked. Quarterly newspaper lift-outs about Australia's sudden urge to live on top of each other – I mean, come on.
And this, coupled with local superannuation investors – many of whom appear to have been sold a pup – has created valuations that are dangerously detached from average weekly earnings &amp; sustainable owner-resident demand.
But then again, it is Australia mate; stop all this fussing; she'll be right; tyranny of distance and all that stuff.
But seriously folks
But seriously, something has to be done.  We are now entering some serious hot water.
Here's another guess.  Nothing will happen until this gets political; economic sense doesn't seem to cut the mustard around here anymore.  The political wedge, for mine, come next federal election, is overseas buying.
But between now then, I will take Terry's advice – <a href="terry-ryder/36256-headline-obsessed-writers-need-a-reality-check" target="_blank">take a couple of aspirin &amp; have a good lie down</a>. 
Michael Matusik is the founder of Matusik Property Insights, which has helped over 550 new residential projects come to fruition.  Read Michael's <a href="https://matusik.com.au/missive/" target="_blank">Blog</a> or follow him on <a href="https://www.facebook.com/ThinkMatusik?fref=ts" target="_blank">Facebook</a> and <a href="https://twitter.com/michaelmatusik" target="_blank">Twitter</a> or connect via <a href="https://www.linkedin.com/in/michaelmatusik" target="_blank">LinkedIn</a>.
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michaelmatusik-49YzLvdmNv

Is there a housing bubble? Or should we all take a wee lie down?

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The Australian housing market ended 2019 on a firm footing, with NAB’s Residential Property Index climbing to its highest level in nearly 6 years.
NAB's survey expectation is for price growth to accelerate in all states in 2020-2021, led by NSW and VIC.
Property professionals also see price growth overtaking rents for the first time in 2 years, suggesting yields will compress in the future.
With mortgage rates falling and the new First Home Buyers (FHB) Loan Deposit Scheme taking effect from January 2020, FHBs dominated sales in new housing markets and increased their market share in established markets. Meanwhile Foreign buying activity was again relatively subdued.
NAB's Alan Oster said, "Tight credit remains the biggest constraint on new housing development, and access to credit the biggest impediment for buyers of existing property, but property professionals indicated their impact on the market was less severe in the final quarter of 2019."
NAB’s forecasts on residential prices
NAB’s view is that while prices have rebounded more strongly than expected in the second half of 2019, dwelling price growth will slow in an underlying sense in 2020 and 2021 in Sydney and Melbourne.
Mr Oster said, "Outcomes for the other capitals are likely to be more mixed, driven by state specific factors."
"Overall, we expect nationwide dwelling prices to rise by around 4% in 2020 before growth slows to around 2½% in 2021."
"Low interest rates are expected to continue to provide support, as is the low level of unemployment and still healthy population growth in Sydney and Melbourne, however affordability constraints will arise as prices reach their previous peak," he added.
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FHB's to play a key role as foreign buyers remain subued: NAB

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There were very few Chinese property buyers flying out of Sydney after the recent Golden Week.
It is the annual early October period when Chinese tourists, taking advantage of their national holiday, have often departed Sydney with an investment property.
Agents advise there aren't as many Chinese apartment buyers, and those interested don't have the same buyer intensity they once did. There is also the desire for privacy which appears to becoming a paramount concern.
Prior years saw Australia's top agents pull out all stops with their welcoming red carpet. Chauffeurs in Bentleys were at the airports to then tempt the Chinese holidaymakers to make a residential investment purchase, sometimes even then throwing in apartment site inspections by helicopter.
For a few years now, data from the Foreign Investment Review Board (FIRB) has shown a reduction in investment.
There have been changing push and pull factors over recent years. Consecutive federal governments headed by Kevin Rudd, through to Malcolm Turnbull and Scott Morrison have obliquely or expressly sought to dampen Chinese investment to allow locals to have a shot at buying.
In 2010, the Assistant Treasurer Senator Nick Sherry announced a hotline for members of the public to report suspicious property buyers, amid measures to ensure foreigners did not put "pressure on housing availability for Australians".
The former Treasurer Joe Hockey ratcheted up the issue when he suggested one of his Hunters Hill neighbours be investigated by the FIRB after he became suspicious of the circumstances surrounding a purchase.
The sentiment of successive governments had been accompanied by a string of new and higher fees for foreigners.
The past few years have also seen significant policy changes in China, including tighter capital controls, such as limiting the outflow of foreign currency.
All these changes are likely to prevent foreign buyer activity rebounding anytime soon to its previous peak.
But it is significant that buyer website search activity from Hong Kong on realestate.com.au has been rocketing over the past six months.
Due to unfolding political unrest in Hong Kong, buyer search interest sits at its highest level ever recorded on the site, REA Group chief economist Nerida Conisbee has noted.
But while searches from Hong Kong are up, the same cannot be said for China.
Over the past 12 months it has dropped by over half.
Conisbee suggests factors at play include there being fewer Chinese developers being active in Australia.
She says there was also "a general negative sentiment towards Australian property".
The current Hong Kong turmoil reminds many of the heightened purchasing interest in Sydney property in the lead up to the 1997 handover of Hong Kong, when the United Kingdom ended administration of the colony.
For several years after 1997, the property market in Hong Kong did fall sharply, in part because of the unease about China's political grip on its regained territory. 
But the 2020 econo­mics of migrating and investing in Sydney, or the cheaper capital cities like Melbourne, makes sense to many in Hong Kong and China who are looking for a more affordable place to live.
Earlier this year, the Econo­mist Intelligence Unit ranked Hong Kong as the equal most-­expensive city in the world.
And a modest two bedroom apartment in China with no car park costs at least $1 million in most places in Beijing/Shanghai/Guangzhou/Shenzhen, according to Michael Yang at the GiFang website.
This article first appeared in The Daily Telegraph.  
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Potential property buyer numbers from Hong Kong soar

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FOREIGN BUYERS
The boom in Australian real estate sales to foreign investors has run its course, according to the NAB survey of property industry participants.
These results highlight a continuing decline in foreign buying activity resulting from policy changes in China on foreign investment outflows and tighter restrictions on foreign property buyers in Australia.
In Q3, there were fewer foreign buyers in the market for Australian property, with their market share falling to a seven-year low of 8.1% in new housing markets and a survey low 4.1% in established housing markets.
<img src="https://www.urban.com.au/images/2018/10/10/Foreign%20Buyers%203.JPG" alt="">
The share of sales to foreign buyers fell in all states except VIC where their share rose to 13.0% (11.7% in Q2), but still well below the record highs approaching 33% in late-2014.
The share of foreign buyers in NSW was unchanged at 7.5% but also well down from a high of 21.0% in Q1 2015.
The share of foreign buyers in QLD also fell to 6.2%, down from 22.8% in Q2, to its lowest level since mid-2014.
<img src="https://www.urban.com.au/images/2018/10/10/Foreign%20Buyers%201.JPG" alt="">
A similar trend is evident in established markets with the shares of sales to foreign buyers falling in all states.
Property professionals in VIC reported the highest share of buyers in established housing markets at 5.5%, followed by NSW (4.5%), WA (3.7% and QLD (3.7%).
Moreover, the share of foreign buyers has well fallen below survey average levels in all states.
<img src="https://www.urban.com.au/images/2018/10/10/Foreign%20Buyers%202.JPG" alt="">
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