In 2003 my wife and I were looking to buy our first home – something bigger in a nice suburb with a good school nearby. During the inspection for a three-bedroom unit in Killara I said to my wife "Wow, look at this, there's no other Chinese buyers here. I think we can get this one!" And indeed, we did.
Unlike those cash-loaded, overseas Chinese buyers you see at property auctions, my wife and I are new migrants living on monthly Australian salaries. In addition to the normal frustration of being defeated at auctions by the super-rich Chinese, we also suffer from the common criticism today that "the Chinese" have and are pushing up property prices in Australia. I can't blame people who put it that way because, the truth is, Chinese home buyers have lots to do with the property market in Australia.
Across China, both the super-rich minority and growing mid-class Chinese are responsible for the increasing property prices in major cities. With a global economy and investment opportunities, this inflation in property price has quickly transferred from Beijing to Sydney, as more and more rich and mid-class Chinese realise that Australia is a great place to study, work, live and invest.
It is important to note that Chinese people can't "buy" land in China (but only leasehold for 70 years) because the state owns all lands.
It's easy to blame the Chinese for home affordability, but from time to time I wonder why didn't our government do more to protect local families, including local Chinese families? My theory is that it was probably in Australia's best interest to get the investments in Australia first – to boost the construction industry and everything related.
Last year I read that Sydney has the second largest number of active construction cranes in the world, right after Dubai. This is probably true just from observation. These cranes represent jobs for construction workers, electricians, plumbers, spreading right through to other industries.
It's good to know that the NSW government just decided to double the stamp duty "surcharge" for overseas property buyers. It should have been done two years ago. A combination of financial and political reasons probably meant that they didn't act faster.
It was interesting to find out that at one stage, in one of the local councils in Sydney, the majority of all councillors were property developers! It is only my guess that property developers have a significant influence on government policies - more so than the Chinese buyers.
What's going to happen from here?
Anything related to China is hard to guess given the size and sophistication of the economy. But I do know that the Chinese government is working hard to stop "hot money" from leaving China.
From the 1st of July 2017, strict overseas banking transaction rules will become effective; the government is hitting hard on underground banks. It is becoming increasingly difficult for Chinese buyers to bring cash to Australia. In the Chinese financial news last week, it was reported that from the 1st of September all Chinese bank card/credit card transactions over 1,000 yuan (about A$200) will be reported back to the Chinese central bank.
I was not sure why this was occurring until I had a chat with a friend working in a major bank. He has a da ma (Chinese for a mid-age woman) who comes to the branch every morning to withdraw A$1,000 cash from her Chinese account, to then deposit to her Australian account. She's been doing that for the past three months. This is a technique referred to by Chinese media as "ants moving house" money laundering, a bypass of Chinese foreign currency regulation.
Apologies to the da ma, but I hope from 1st of September this loophole can be closed firmly, hopefully meaning fewer Chinese buyers in the Australian property market.
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