Below is an extract from a property newsletter that I pay for. In the past 18 months or so there has been much discussion about the Australian property market crashing, a couple of private contacts on this site have talked about it and made enquiries to me about it. Obviously we have had a correction but it has been nothing like a crash and our markets have started the next phase which is one of the reasons I am putting this blog out there. 

Take note of it if you like and everyone will no doubt have their own social perspective of the evils and such of property and who can and can't afford it. My personal advice is too look to anything with a land base (house and land) and low level town houses and units (two story's max). Sydney people would be well aware of the dangers that have emerged in high rise.

Here is the extraction!

‘In the current environment, Australia appears as a safe harbor — both comfortably close and far from home.’
These words come from the CEO of Juwai.com — a Chinese website that lists overseas property.
He was commentating on the surge in interest in luxury Australian real estate from wealthy investors in Hong Kong.

Hong Kong tops the list for world’s most expensive real estate. The average price of a small apartment is over US$1.2 million.
And by the way, Hong Kong has now officially surpassed New York City as the place with the highest concentration of super wealthy people.
Juwai.com — the largest property portal for Chinese investors — recently reported that enquiries from Hong Kongers wanting to purchase Australian houses has increased 50-fold over the last three months.
Most of these enquiries focus on Sydney and Melbourne.

Why? think of the current protests.

It’s by far the most significant and widely publicised protest we’ve seen in the region since the pro-democratic demonstrations in Tiananmen Square over 30 years ago.

Of course, as you know by now history repeats, or rhymes, in set time frames.
In financial markets, it’s easier to observe this because we can chart both time and price.

Take a major event in the market and count forward, 30, 60, 90, or 120 degrees — in a period of days, weeks, or years — and markets are likely to turn or pause on (or close to) those counts.

We can do the same with historical events.

The Tiananmen Square protests in 1989 lasted nearly eight weeks.
Today, we’re several months into the current Chinese/Hong Kong unrest and it shows no sign of stopping.
The consequence's are predictable. More Asian money will flow into Australian property.
Cross boarder investment is always a major feature of the real estate cycle.

In 1990, the banking crisis in Tokyo led to a flood of investment from Japanese buyers into Thailand, Malaysia, and Indonesian real estate markets.
Money also fled to the ‘safety’ of US real estate when Thailand and its neighbours experienced their banking crisis in 1997 — especially to cities such as New York and LA.
Sometimes policymakers do this this quite deliberately.

In 2008, former Aussie PM Kevin Rudd removed restrictions on foreign purchasers to stop our property market crashing. Real estate values boomed by 25%.
30 years ago, after the Tiananmen Square massacre, Bob Hawke opened the gates and allowed 40,000 Chinese students to stay in Australia.

Will current PM Scott Morrison be facing a similar situation?
There are currently over 100,000 Australian’s living in Hong Kong. They own about 600 of the nation’s firms.
Most of the expatriates are Chinese Australians (or Hong Kong Australians).

Hong Kong has no private land ownership.
It was set up on the right premise. Britain acquired the territory from China on a lease. Residents paid 5% of the property value per annum to reside there.
The costs of administration were taken from the rent. That meant that taxes on productivity were low — and as such the economy thrived. The people of Hong Kong had more to spend in their pockets.
Of course, the system has broken down over the years. Less of the rent is collected — and property speculation is rife.

Hong Kong are the most levered nation in the world, with the most expensive real estate in the world.

Our property looks cheap in comparison. Furthermore, it’s on a freehold title.

Australia has restrictions on overseas buyers purchasing established homes — and there are a range of higher taxes for those that do choose to invest.
However, demand is increasing, and non-bank lenders are out in force offering alternative streams of finance.

Here’s the forecast: This potential wave of money could inflate our property markets and carry us into an almighty real estate boom into 2026. You’re well placed to take advantage of it.

 

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Replies

  • Thanks for putting this up mate. I have been getting to obsessed with the Finals and probably need a bit of a diversion till Saturday. I know your info is good. I had an Indian Kidney specialist who lives up the road from me say that if ..00 something of Chinese or Indians who are loaded decided to come to Australia our real estate prices would skyrocket. Lots of political uncertainties around the world and I can understand many would love to come to a more secure and safe haven like Australia. Lots of uncertainties everywhere and I am sure you info has made all these assessments as you have described.

    The elephant in the room---something people maybe don,t want to talk about

    You will get different opinions about how climate will affect the planet in the near future --say 50 years. Ice is melting quite rapidly and many countries will be affected which will cause chaos.I have read some material which says that technology is developing rapidly which may reduce the worst effects. Other Scientists have said that we can expect about 1 billion people to survive Climate change. Not sure what timeline he said. He did say that we can expect billions of people will not survive. This Scientist I believe is not a nutter as he spoke at some UN conference. Whatever you may think of Science around Climate you have to Factor in what is happening around the world today which is undeniably climate-related. Climate-related records are broken. very frequently. We may not be around to see the worst of it and your article advice may also need to be viewed in that context.

    If you have the patience Pops there is a lot on the internet about Climate Science. This seems to be a good one on Water rises and how it will affect large Population numbers

     

    • Thanks for your thoughts Tad.....notwithstanding those you need to get over climate change.

      A wise person once said to me you cannot control the uncontrollable....if for one minute if you think human kind can do anything about climate....you are "batty".

      Is climate change real ....YES

      Can mankind change it....NO

      What can we do? Question is you are asking the wrong people....try asking the polluters and the people that count in the countries with environments that cause same.

      The economic reality is that Property markets and wealth creation are just a passtime for many human beings, they will never have the chance to do anything about property markets. In the interim the ones that are interested in their material well being I offered this article.

      We have a situation today where apparently thousands of school student's and other's  are going to protest about totally impractical happenings....they obviously have no understanding of the practicalities and we are going to teach our children (reference is where they get this shit from ..presumably their teachers) how to ignore economic reality and whistle "dixie" why the earth melts. Its a shame these same kids didn't do a one day course on economic management and their teachers likewise....the financial ignorance in this country is appalling.

      Maybe this is the answer to the worlds population crisis, half the planet drowns.....if you can't feed them or supply them with energy (power) do the kids understand they won't be able to power their game machines, my god! lets see how they go in the fields sowing rice by hand and harvesting instead of playing the latest version of "Donkey Kong" or whatever.

      Tad you are a worry wart, you asked me for investment advice for your kids who were venturing into property, I bet they are not overly concerned because they are doing something practical.

      Wake up Australia the concept of Australia doing anything about climate change other than sending the country broke is the greatest myth in History!

      PS Please don't put up any charts or pictures, the science is not in question, its the cure that's fcuked. Good house keeping is all and our only responsibility....that good house keeping means practical harvesting of our resources and using same.

      I would be far more comfortable seeing the energy and wastage of renewables applied to infrastructure to help us harvest water and make our country drought proof. Does not matter what causes the drought, they (droughts) have been happening for millions of years.....we are not going to change climate!

       

      • People are worried about a 2 degree increase. I read that some are saying we are on track for a 4.5 degree increase. That is catastrophic. If it gets close to that it will everyman for himself. Thanks for your input mate. Sorry to be so pessimistic. What will give me a lift is a win tomorrow

        • Stop reading Tad, people are always worried about something, it is only meaningful if you can do something about it. 

          Actually a win for tomorrow will be great but it pales into insignificance over the fact we have school teachers scare mongering our children over this shit!

          PS Honestly what action do you think can be taken within our country to help the situation of a 2 or a 20% increase ......in the meantime we need to economically stabilise ourselves to survive with what we do have.

          • the fact we have school teachers scare mongering our children over this shit!

             

            Totally agree Poppa.

            It'll all be fine though, we'll just fix it with another tax.

            C52nBFhWQAEpN-c.jpg

            • Luckily we don't need bear control ME

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          • Too  Late  Poppa I probably will get  crucified  but  my dear  wife  insisted  I go  to the march today. Wonderful to  see  child activism. Reminds  me  of the hippy days. I don't  often  see little kids. Nice to get in touch with dreamers again. Cheers 

            • Child activism .....Hmmm I think of young brainwashed children in Nazi Germany being indocrinated into "hating" the Jews.....there is an opprtunity for you to explain to these kids Tad that they have been indocrinated by the left wing imperial army of the greens and the teaching community......disruption has its place.....its not with these children being bainwashed!

              • Poppa  Trying to keep  to the  relevance of your  blog. Just saw this kid walk past  with  a anti Climate placard  on the  back of it was a For Sale  real-estate sign

                Yes the kids  probably  are  being  brainwashed.  Not much  difference in  so  many  other things we are all being brainwashed about.  It's what you  are  being  brainwashed about. This is not about doing harm to anyone. 

                • Yes it is, it has a detremental effect on the economy and the next line of non thinking robotic children.....lets give them all a gun and make them productive!

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