Sunday, September 15, 2013

Competing for a home

Locals wanting to buy a home in Sydney face a problem. They have to compete now with very large numbers of overseas investors, particularly from China:
Home prices in Sydney are being pushed up in part by unprecedented levels of Chinese demand, according to McGrath Estate Agents.

As much as 80 per cent of homes in parts of Sydney are being sold to Chinese buyers, said chief executive John McGrath.
...At a recent property auction in Eastwood, all 38 of the registered bidders were of Asian ethnic origin, Mr McGrath said. The three-bedroom house with a double lock-up garage and two sun rooms opening on to the back yard, sold for $2.39 million, more than $1 million over the reserve price, after 62 bids by eight hopeful buyers, according to the agent.

The median house price in Sydney is now about $700,000. I'm not sure how first home buyers are supposed to afford such a median price. Even if both a husband and wife work full-time they would have trouble paying the mortgage.

If we are to establish traditionalist communities somewhere, I doubt that it's going to be in Sydney. We need to find an area of cheaper land, build good quality housing, but then aim to keep the price of this housing as low as possible - as close as possible to cost price.


  1. My brother works in a Melbourne council and recently had some interaction with members of a Chinese business council establishing themselves in Melbourne.

    It seems that not only are they buying homes but that these indivuals are actually the 'front men' for Chinese government managed investment funds. As foreign corporations can't by domestic houses in Australia, they are using a back door mechanism of business Visas to buy through individual proxies.

    It seems the Chinese government is divesting itself of US dollars through micro markets and the Australian government is turning a blind eye to prop up the inflated housing prices.

  2. You could pool money as the Chinese do.

  3. Affordable Family Formation


  4. Foreign investment via individuals or corporate money is a large factor in the inflation of house prices.

  5. Much of this FDI (Foreign Direct Investment) is money laundering of profit from graft and other illegal activities. It is being parked in the West to remove it from the sight of law enforcement in the holder's country of origin and it is creating a house price speculative bubble and deserted, uninhabited areas of empty streets in Western cities.

    What is the Government doing to check on the legality of the source of this cash flooding the property market? It should be a political priority to restrict foreign property ownership in the West for both individuals and corporations. A speculative property price boom fueled by dirty foreign money is a recipe for another economic crash.

  6. This problem of foreign cash of dubious origin should face more scrutiny as it can have a considerable destabilizing effect on the economy creating severe problems for the ordinary citizen who is subject to fluctuating house prices.