SQM Research founder and property market analyst, Louis Christopher, says much of the focus on a Chinese investor 'takeover' of the Australian housing market has been based on anecdotal evidence...
The Chinese community has been part of our culture and society since the early 1800s. It is a community that has worked hard and contributed extensively in building this country. It is a cohesive community that has helped shape the Australian way of life.
Of course, it means many Chinese living in this country are actually third, fourth and fifth generation Australians.
Sadly, however, throughout this time, many within the Chinese community have been subjected to prejudice and fear, in particular when it comes to the real estate market.
This notion that the Chinese may buy everything up and leave the rest of us with nothing is a false prejudice that has been in existence for quite a long period of time now. Indeed, the White Australia Policy was established in 1901, with a view to minimise the number of Chinese immigrants that were coming here due to the Gold Rush.
We can look back over 100 years ago and gasp at this concept; however to some extent many of these beliefs have continued to trickle down through the decades and are still rife within Australian society. This current fear that the Chinese might buy all our property once again is nothing but xenophobia.
So far, the reports have mainly come from columnists, some real estate agents and property buyers who have missed out on the purchase. I would very much like to know how these participants have managed to work out that the Chinese-looking buyers they have been referring to (who were successful bidders) were not Australian citizens.
And this is the problem with this current fear – there is no hard data at all to back up the severity of the concern.
To this end, the Foreign Investment Review Board has been rather secretive in not providing actual data to the public on direct purchases of local real estate by foreign investors.
They would certainly have the data to publish. But they refuse to do so. Perhaps if the department was a little more transparent, these fears, such as the ones expressed in this article by Paul Sheehan, may subside.
As you will read, all Paul Sheehan could provide is hearsay. That’s literally all the evidence he had to rely on – a friend who had to compete with Chinese-looking persons at a number of auctions. Plus $16 billion dollars in “fund flow” which no doubt covers all assets – not just real estate.
I don’t want to pick on Paul, as this is one of the many pieces we have seen from agents, property investors and columnists alike.
And I do agree that having a situation where real estate prices are pumped up by foreign investment is not good for local residents. Obviously, we need to watch for this.
However, the rules regarding foreign investment into existing property are very clear – one can’t do it.
If you are a temporary resident, you need to apply to the Foreign Investment Review Board and, assuming you are given permission, you can only buy one property and you must sell that property once you leave the country.
Foreign investors are able to buy into property developments, which I think is perfectly acceptable as that demand gives the developer the pre-sales required to construct the property and therefore add to the supply of real estate in this country.
In summing it up, no one has given me hard evidence that foreigners, whether they are Chinese or not, are flouting our rules.
And until we do get hard evidence, I think those who are fearmongering should be seen as purely that – fearmongers.
This article was originally published by Streetnews http://www.streetnews.com.au/chinese-property-investors-taking-over-the-australian-market-fact-fiction-or-fearmongering/