House prices
Craig wrote::o
And what's going to happen for those same Chinese investors who own property in Aus? They're going to fire sale their Aussie houses to fund their losses from their china housing investments. And once a fire sale starts, that becomes the new benchmark for the house next door that's just gone on the market........see a spiral coming here!!!!
Showed the vid to the Ms and she asked, if China has capital controls and much of their investing is only allowed at home, how come they can buy up so many properties in Australia and Canada and others?
Aslo: comparison with Japan and S Korea - they misallocated capital into actual productive industries, so when their collapse happened, they could still build and sell (for eg) Nissans and Panasonic products over the 30 year fallout. If you misallocate into housing, once built it produces nothing...
donweather wrote:Craig wrote::o
And what's going to happen for those same Chinese investors who own property in Aus? They're going to fire sale their Aussie houses to fund their losses from their china housing investments. And once a fire sale starts, that becomes the new benchmark for the house next door that's just gone on the market........see a spiral coming here!!!!
Woudln't it be better to move the whole family to Australia and avoid the economic fallout in China? And maybe buy another house for your in-laws?
velocityjohnno wrote:donweather wrote:Craig wrote::o
And what's going to happen for those same Chinese investors who own property in Aus? They're going to fire sale their Aussie houses to fund their losses from their china housing investments. And once a fire sale starts, that becomes the new benchmark for the house next door that's just gone on the market........see a spiral coming here!!!!
Woudln't it be better to move the whole family to Australia and avoid the economic fallout in China? And maybe buy another house for your in-laws?
I don't know as I'm not Chinese.
velocityjohnno wrote:If you misallocate into housing, once built it produces nothing...
Even more so if they're all empty!!!
Think of the money you saved by not putting any fixings or windows or plumbing in tho
velocityjohnno wrote:Showed the vid to the Ms and she asked, if China has capital controls and much of their investing is only allowed at home, how come they can buy up so many properties in Australia and Canada and others?
Of course not everything is as we're led to believe when it comes to the Middle Kingdom.
China's fairly strict capital controls are targeted at the country maintaining a relatively fixed exchange rate.
You also might remember a lot of worrying particularly by Aus property investors in 2017/18/19 when China tightened its capital controls in 2017, including cracking down on Chinese property investors (illegally) getting around the controls to invest overseas.
I always love it when the media does another round of "Chinese property investors are to blame for the property bubble" hysteria. From this 2021 Guardian article: Data compiled by the National Australia Bank shows foreign investors made up only 3.7% of new home sales and 2.2% of established homes in the March quarter. And Chinese investors are again only a portion of this, so they don't really buy that many properties in Aus in terms of the overall market size.
Here's some additional University of Technology Sydney commentary discussing and trying to quantify the effects of the 2017 capital controls and concluding that Chinese investors have little impact on our property prices.
So answering another question by donweather of the Chinese fire-selling their Aus houses to fund their losses in China: I don't believe they'd do that since they're not really able to get the money back into China easily due to the capital controls, and I don't think it would really have much impact anyway since Chinese investors are only a tiny portion of the whole Aus property market.
just watched another news reel of high rises being dynamited to the ground in china
money and finance issues aside... I cannot believe no one talks of the environmental impact of such madness. the embedded energy in the initial construction, then in the blowing up and clearimg of rubble and disposing of it somewhere...
for a smart, seemingly switched on culture, all those high rises being built and razed before completion is just plain odd
No, but seriously if you’re not walking around talking Mandarin to the guys setting demolitions charges and eating noodles bought from street vendors how do you even know this is happening?
thanks gsco, so it's <3.7% of the market in Australian property sales, and concentrated in some areas affecting other areas not so much, if at all.
yes basically.
After China reopened its borders post covid at the start of this yr their property purchases in Aus have increased a bit, but are still only a tiny portion of the overall market and the capital controls are unchanged since 2017 (but have very recently been relaxed for foreign investors).
btw I didn't watch the Zeihan video, really not sure if he's a reputable source.
etarip wrote:No, but seriously if you’re not walking around talking Mandarin to the guys setting demolitions charges and eating noodles bought from street vendors how do you even know this is happening?
I wouldn't have known without that ABC news in depth report with said demolition at the start of the story
Taking the piss VJ. Clearly not very well.
on the empty apartment blocks, I can definitely confirm that there's no rental crisis in China!
Earlier this yr I rented a top floor 2 bedroom apartment overlooking a nice mountain area and park near the uni I was working at for about AUD250/wk. The community had about another 6 or 7 buildings (like in the video) and there was over 300 apartments available for rent just in that community!
Lesson for Australia?
It's a stark contrast - here we are sub 1% rental vacancies!
gsco wrote:velocityjohnno wrote:Showed the vid to the Ms and she asked, if China has capital controls and much of their investing is only allowed at home, how come they can buy up so many properties in Australia and Canada and others?
Of course not everything is as we're led to believe when it comes to the Middle Kingdom.
China's fairly strict capital controls are targeted at the country maintaining a relatively fixed exchange rate.
You also might remember a lot of worrying particularly by Aus property investors in 2017/18/19 when China tightened its capital controls in 2017, including cracking down on Chinese property investors (illegally) getting around the controls to invest overseas.
I always love it when the media does another round of "Chinese property investors are to blame for the property bubble" hysteria. From this 2021 Guardian article: Data compiled by the National Australia Bank shows foreign investors made up only 3.7% of new home sales and 2.2% of established homes in the March quarter. And Chinese investors are again only a portion of this, so they don't really buy that many properties in Aus in terms of the overall market size.
Here's some additional University of Technology Sydney commentary discussing and trying to quantify the effects of the 2017 capital controls and concluding that Chinese investors have little impact on our property prices.
So answering another question by donweather of the Chinese fire-selling their Aus houses to fund their losses in China: I don't believe they'd do that since they're not really able to get the money back into China easily due to the capital controls, and I don't think it would really have much impact anyway since Chinese investors are only a tiny portion of the whole Aus property market.
1. Does the data take account of cash sales? if not then its undercooked.
2. Does the data take account of temp residents allowed to buy existing (non-new build) property. If not then its undercooked
3. Does the article acknowledge that housing was a crisis before Covid stimulus. If not then then your analysis is undercooked. Off-shore including Chinese buyers were one of several factors -welcomed with big fat migratory and purchasing incentives that have contributed to housing crisis in this country.
can you woke it.
I dont know bout the numbered points but I’ll try to woke it..
Edit: actually your last point doesn’t seem correct since the housing market was starting to cool in 2018 and 2019.
yes, started to cool in 2018/19 you'll recall due to tighter lending standards in Aus:
(Shane Oliver graph)
Shirley you can’t be serious. A temp blip in the scale and longitudinal trend of the problem
bonza wrote:Shirley you can’t be serious. A temp blip in the scale and longitudinal trend of the problem
would have been interesting to see what happened to the property market (and inflation/cost of living) if covid didn't come along and Australia didn't implement the most ridiculously irresponsibly gigantic pump-n-dump of money into the economy:
and regarding the cost of living, I'm sure we all recall the unbelievable commodity price spike that we lived through:
I know Australia's Labor cartel wants to pin all of Australia's problems on greedy corporations, the exploitative capitalist system, and China, but for some things they just need to stop deflecting and distracting, and face the actual facts.
Yeah cool comrade. And one of those facts was that Chinese offshore buyers were a factor despite your “hysterical” dismissal otherwise. It was cute you referencing ultra woke socialist propaganda the guardian thought. Don’t let your cover slip
Here's an eye opening data point from the RBA, showing financial pressure on 6 figure families:
https://www.news.com.au/finance/money/costs/secret-rba-documents-reveal-...
"The new cohort of “solid middle to upper income callers” is among a “significant number of callers” now relying on credit cards, loans from family and friends or by now, pay later schemes to get by.
Some are avoiding obligations to the Australian Taxation Office or deferring their utilities and council rates bills, the memo also noted.
“Additionally, underinsurance was becoming an increasing problem – borrowers did not have enough spare income to pay insurance premiums for their homes, cars or personal belongings – and some borrowers were asking about how they could qualify to tap into their superannuation balances.”
(By the way that engine looks neat, orderly and perfectly constructed, he's wrong about it being woke)
Australian productivity vs Snail Girl
https://www.news.com.au/finance/work/at-work/inside-the-snail-girl-work-...
I'm so far out of that world these days (#snailyfe), any of you seeing this at work?
Jeez that article is so cringeworthy, anything for a new label and some Tiktok content I suppose.
Kids working slower has been a "thing" for a long time, it seems to be generational and I think is based on a couple of things - first, kids have been told for the duration of their schooling about their rights, and how special they are.
Next, the days of the angry boss yelling at his employees is over.
Young crew won't put up with it and in any case, bosses seem to be extremely wary of being demonstrative.
I've seen another element involved although it's more of a theory.
The theory is (and this is with people in lower paid jobs like hospo and service industries) that they're never going to be able to afford a house and they're really quite disappointed with society and why should they work hard because it's never going to pay off.
They're just going to cruise and have a good time.
Maybe young Sienna slows down because she comes from a place of financial privilege but I've seen Swayde, Wylde, Talon and Onyx go slow because they feel it's pointless to work hard.
Just a broad theory and I've worked with some awesome young people who work hard if not for their boss then for themselves and their self-respect.
It's absolute that AndyM. Nothing about my own experiences has shown me that hard work in itself pays off. Parents worked hard in the normative sense their entire life - ADF, trucking, aged care - and have nothing to show for it after 40-50 years of work. Income inequality has worsened more in the last 3 years than it did in the last 15, the wealthiest 5% control a third of the nation's wealth, the average wealth of the top 20% has grown four times the rate of the bottom 20%, and that top 20% are now on average 90 times wealthier than the bottom. Social mobility is stagnant, meaning that if you are born poor then you will almost always stay poor. People will love to put out individual cases, or appeal to dumb ideas of common sense/stop playing the victim/you just gotta grind etc, but the data speaks for itself. Wealth begets wealth, poverty begets poverty.
Yep and even your average teenager understands this, especially if they’re from a working class or blue collar background.
Although as I’ve pointed out before, there were signs of hope coming out of the last federal election.
At the same time I wonder how those inner city voters who moved decisively away from the two majors would react to significant changes to neg gearing etc.
In other words, they talk a good talk about post materialism, but I suspect that might change their minds if it really came down to it.
How many people would vote to several thousands of dollars more tax?
I think that's always tricky to gauge. Instinctively we say not many, but perhaps that's just a convenient narrative (elections are rarely decided on single issues, no matter how much commentators say otherwise). A lot of wealthy people have voted for the party I worked for, and they'd all stand to lose a fair whack if the policies we pushed for came into being. And plenty of people open up their wallets when given a reason to. We're probably more generous than we think (even if selectively) and if governments gave people a good reason to perhaps they would vote in favour of higher taxes. We even have landlords that support rent freezes so anything is possible!
arcadia wrote:How many people would vote to several thousands of dollars more tax?
Dont need to vote - bracket creep is real ! All those wage rises are feeding the ATO coffers !
Dont hear too much whingeing about "stage 3 tax cuts" any more.
The tax a man in a million understands...
AndyM wrote:Jeez that article is so cringeworthy, anything for a new label and some Tiktok content I suppose.
Kids working slower has been a "thing" for a long time, it seems to be generational and I think is based on a couple of things - first, kids have been told for the duration of their schooling about their rights, and how special they are.
Next, the days of the angry boss yelling at his employees is over.
Young crew won't put up with it and in any case, bosses seem to be extremely wary of being demonstrative.
I've seen another element involved although it's more of a theory.
The theory is (and this is with people in lower paid jobs like hospo and service industries) that they're never going to be able to afford a house and they're really quite disappointed with society and why should they work hard because it's never going to pay off.
They're just going to cruise and have a good time.
Maybe young Sienna slows down because she comes from a place of financial privilege but I've seen Swayde, Wylde, Talon and Onyx go slow because they feel it's pointless to work hard.
Just a broad theory and I've worked with some awesome young people who work hard if not for their boss then for themselves and their self-respect.
Have seen exactly your theory when family members were working Hospo. One young fella went to assistant manager and also took on a second job (partner doing same) and they could barely afford a house. But they got in, just - before covid too. Point of example (after reading Dan's post) is to point out how ridiculously difficult it is in this situation.
"Swayde, Wylde, Talon and Onyx"
I swear those are actually Pokemon, Andy. Ever worked with a Snorlax?
I hear some pretty funky names around here, so I usually jot them down :)
Gotta say that Bentley sounds like the name of a fat dog.
Swayde
Havana
Justice
Wylde
Ruby Tuesday
Rocket
Mars
Holiday
Siam
Talon
Bayce
Bentley
Onyx
Tyga
Lion
Phiebi
Atlas
Dante
Aaliyah
Legend
Indyia
Summa
Ocean
Bodhi
Chilli
Kenya
Lennix
Zephyre
You should see the Bentley's rolling in to work at 8:45 in the City of London (they seem to get to sleep in so much longer than us, who are up before dawn)
OK here'a bit of chart porn on the US 10 year and a great little perpendicular technique from Rick Santelli, a legend in that world:
Could 10-year Treasury rates hit 13%?@RickSantelli charts the path to much, much higher yields, and warns that the Fed is running out of tricks pic.twitter.com/51DfL2R6HF
— CNBC's Fast Money (@CNBCFastMoney) October 2, 2023
Tantilising potentials that he considers: a US10yr yield of over 13% this decade (!) Imagine where the RBA will have to go in that scenario
Re-emergence of bond vigilantes (remember them? I don't, too young. But they were a moral force constraining governments from spending too much in the 1980s I think)
Wouldn't that throw a cat amongst the pidgeons?
Also note when someone makes a moonshot call, that sometimes rings the bell on near term extremes...
Fck me the world would be in a serious Fcking amount of pain if yields got to 13%!!!
The FED is certainly not running out of tricks !
If you are into Twitter (sorry, X) and have an interest in global monetary plumbing (where the US Fed is the master plumber) then @concodanomics is worth a follow. Warning though - you're either into it or your not it can be a little nerdy.
Whilst I posted this link in the Bitcoin thread obviously a USD collapse has bigger implications outside of just gold and Bitcoin.
https://www.forbes.com/sites/digital-assets/2023/10/08/us-dollar-collaps...
dandandan wrote:It's absolute that AndyM. Nothing about my own experiences has shown me that hard work in itself pays off. Parents worked hard in the normative sense their entire life - ADF, trucking, aged care - and have nothing to show for it after 40-50 years of work. Income inequality has worsened more in the last 3 years than it did in the last 15, the wealthiest 5% control a third of the nation's wealth, the average wealth of the top 20% has grown four times the rate of the bottom 20%, and that top 20% are now on average 90 times wealthier than the bottom. Social mobility is stagnant, meaning that if you are born poor then you will almost always stay poor. People will love to put out individual cases, or appeal to dumb ideas of common sense/stop playing the victim/you just gotta grind etc, but the data speaks for itself. Wealth begets wealth, poverty begets poverty.
The bank of mum and dad and the fall back position of family wealth plays a huge role in entrepreneurship.
Those nerdy internet start ups where they work for nothing for years are full of people with the sense of family backed financial security to allow them to take risks and even waste years on speculative ventures - even if no direct family money investment occurs.
Hard work and foresight, however, does produce benefits. I remember a guy way back who saved and invested 20% of his income from age 23 years onwards when no-one else had even considered such a far sighted sacrifice. That was back pre internet and before the investment culture of today existed. His dad must have drummed the concept into him. Lost touch but I bet he was set up nicely by his mid 40s.
We have taught the same to the kids Andy, from month to month I encourage a review to see if the savings are being saved. Even then to look at average house prices on apprentice wages, far out it's like the bar has been raised.
Almost impossible might seem 50% - this science grad's blog from tracking his path from the 00' and 10's might be of use to people, it's a different perspective for sure. Wish I could save 80%...
http://earlyretirementextreme.com/how-i-became-financially-independent-i...
There are many good opportunities out there, I know some kids who are doing really well.
Actually got an inspiring and a bit humourous take on that idea from the US Flollo:
https://www.zerohedge.com/markets/gen-zer-buys-200-plot-land-desert-afte...
Well done to the young Gen Z fella - now he has something, a beaut little camping pad of land that is his own title, for $200. He's definitely seeing the glass half full.
"Today, we can only cheer as Canberra looks on in horror as, once again, Beijing begins to crack down on capital flight that is ending up in Aussie property:"
https://www.macrobusiness.com.au/2023/10/beijing-blocks-chinese-bid-for-...
one comment:
"Watched three Auctions in inner east Melb – have played out the same way in the last two weeks I’ve seen in person. Auction opens with asking for mid-top end of range. No bids. 5 mins of calling ‘are we done?” Going Going Going……… Then inside for a chat. Comes back out to do it all over again. Then finally, one bid from a Chinese head of a group with a translator/3 Chinese around them. One bid. They go inside to negotiate. Sold to the only bidder for mid end of the range in the end.
If it wasn’t for these Chinese ‘We Chat chatterers;, bid would be 20% lower, overnight. Locals have nowhere near the money or the willingness to buy at the current fake levels. So watch this space as capital dries up, and rates go higher for longer."
I'll believe it when I see it; gsco in here explained that the Chinese bid for Aussie property was a) not as big as we assume and b) concentrated in certain locations. The anecdote above is interesting tho.
"Clancy Moore, CEO of Transparency International Australia, told Michael West Media that “Australia is one of only three countries in the world without Tranche 2 requirements for our anti-money laundering / counter terrorism financing laws”.
“Unfortunately, when we look at these organised crime schemes more than half the money moves through real estate in Australia”, said Nathan Lynch, financial crimes expert and author of the book “The Lucky Laundry”."
https://www.macrobusiness.com.au/2023/10/chinese-money-launderers-pile-i...
I truly hope there's a Royal Commission into this at some point into the future, and includes why we have not adopted Tranche 2 money laundering requirements. Knowing that young Australians will be competing in a RE market against this kind of money is absolutely disgusting.
Hopefully we can see some movement in policy to address these issues VJ. This whole year was lost on the referendum, government’s got another 18-ish months before the next election, they better make some moves to demonstrate that they’re doing something.
velocityjohnno wrote:"Today, we can only cheer as Canberra looks on in horror as, once again, Beijing begins to crack down on capital flight that is ending up in Aussie property:"
https://www.macrobusiness.com.au/2023/10/beijing-blocks-chinese-bid-for-...
one comment:
"Watched three Auctions in inner east Melb – have played out the same way in the last two weeks I’ve seen in person. Auction opens with asking for mid-top end of range. No bids. 5 mins of calling ‘are we done?” Going Going Going……… Then inside for a chat. Comes back out to do it all over again. Then finally, one bid from a Chinese head of a group with a translator/3 Chinese around them. One bid. They go inside to negotiate. Sold to the only bidder for mid end of the range in the end.
If it wasn’t for these Chinese ‘We Chat chatterers;, bid would be 20% lower, overnight. Locals have nowhere near the money or the willingness to buy at the current fake levels. So watch this space as capital dries up, and rates go higher for longer."
I'll believe it when I see it; gsco in here explained that the Chinese bid for Aussie property was a) not as big as we assume and b) concentrated in certain locations. The anecdote above is interesting tho.
VJ it would only drop by 20% if the vendor is in a position where they had to sell. And for that you need a lot more economic pain than what we’re currently having. I know of a few properties that didn’t get the desired offers. But the final outcome was just taking the property off the market. At the end of the day, people see the hype about the prices and give it a go and if it doesn’t work out they simply don’t sell. Best I’m seeing right now is negotiating a discount within 5-10% range of the advertised price.
If they don't it'll be an NZ style wipeout.
edit: reply 2 posts up
flollo wrote:VJ it would only drop by 20% if the vendor is in a position where they had to sell. And for that you need a lot more economic pain than what we’re currently having. I know of a few properties that didn’t get the desired offers. But the final outcome was just taking the property off the market. At the end of the day, people see the hype about the prices and give it a go and if it doesn’t work out they simply don’t sell. Best I’m seeing right now is negotiating a discount within 5-10% range.
Locally we are seeing more on the market and can't work out if it's spring or they are there by necessity. We're seeing houses that we know were bought in the last 2yrs/18 months coming back on. The quick sales have certainly stopped for now, and things have the signs up longer. Flip side is the tradie's workmate chatter is that people aren't hurting, are still spending on kids/entertainment, not under that much pressure and the work pipeline has continued with finishing some high end stuff going on now.
I follow used cars cos OCD and notice some that I like are coming down or getting a 15-20% reduction on their asks - not mainstream brands. Some have really fallen after covid bumped their depreciation curve right up into the sky. So maybe the luxury loan $ is more scarce.
House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers