The pond is a great believer in atmosphere.
"Atmosphere, darling, atmosphere", the pond's favourite theatre director used to say. So here's a few mood setters before we get down to business. Click on to enlarge:
Now on with the business of the day.
Paul "Magic Water" Sheehan has yet another bite at the Chinese real estate cherry today.
But wouldn't you know it, the tone from the header down is a tad different, a tad positive, as you can read in Plenty of positives in foreign investment in housing.
Or is it?
Soon after 3pm on weekday afternoons, the bright kids who attend the state's most venerable selective high schools, Sydney Boys High and Sydney Girls High, pour out of the gates. One can only be struck by their homogeneity. Where these schools traditionally had a student body that looked like a school in England, today they look like schools in Singapore. A new meritocracy is being created in Australia that looks Asian.
This is because the best import Australia has received from Asia is brainpower.
A new Asian elite in Australia is also beginning to express itself physically in wealthy suburbs where the weight of Asian investment, or Asian-Australian investment - predominantly Chinese - is being felt in the real estate market.
Eek, we're being swamped by a new meritocracy, a new elite, brainpower smart Asians with lots of money, and they're taking us over and swamping us, and we're doomed, doomed I tells ya ...
Yep, forget the header, there's no positives in the rest of the story.
Asian buyers are all over Sydney, from Turramurra to Parramatta (how soon before a suburb is called Dimsumatta or Yumchamurra?), and Juwai.com has Australia up for sale, and first home buyers - who used to routinely queue to buy a four bedroom apartment overlooking Circular Quay and the Opera House - are now struggling.
Oops, steady, the pond might have been mis-reading the purpose and the intent:
The problem with any discussion of potential curbs on foreign investment in housing is that it invites utterly spurious claims of racism simply because the bulk of the new money comes from Chinese buyers. This is the terrain of goons.
Ah yes, that's code for Paul Sheehan, making an odd couple with Clive Hamilton, and still saying that the bulk of the money comes from Chinese buyers, confirming once again he infests the terrain of goons.
It was a week or so ago that Bernard Keane in Chinese real estate invasion? Not according to the data, fellas (mobile version) made the bizarre discovery of a Clive and Paul consensus:
It’s rare to see the Left and the Right reaching consensus, but it appears nothing can pull Australians together as much as the threat posed by Chinese property buyers.
Today Paul “Magic Water” Sheehan offered his take on the impact of Chinese buyers on the Sydney residential property market. He warned darkly in today’s Sydney Morning Herald (forced video at end of link):
“The growth of the Chinese middle class has been so explosive, and on such a scale, that it has the capacity to affect Australia in ways that will need to be controlled if some trends continue to accelerate. Notably home buying.”
Sheehan, it seems, is was most worried about young people:
“First-time buyers, young buyers, are now caught in a pincer movement between superannuation and Chinese investment.”
A pincer movement. Wow. But Sheehan was merely echoing Clive Hamilton, who recently wrote an article for The Guardian originally headlined “Wealthy Chinese buyers are making Sydney’s housing problem worse”. Hamilton’s piece commenced:
“Every weekend in Sydney, young Australian couples are turning up at auctions excited at the prospect of finally owning their own home, only to find that other bidders are wealthy foreign buyers with money to burn.”
“Cash pouring in from China” was responsible, Hamilton claimed — a “flood of unregulated investment”. It touched on the same themes as Sheehan’s piece later would: young people priced out of the market, official indifference, how Hong Kong doesn’t let the same thing happen.
But the headline on Hamilton’s piece was changed to “Foreign demand is making Sydney’s housing problem worse” after an outcry from readers. The Guardian offered an apologia almost as long as the article itself admitting a number of problems with Hamilton’s article, although “the author stands by his opinion”.
Keane then did something truly alarming and went on to consider actual facts, a dangerous tendency for any journalist.
Where does the investment come from? Residential property investment from China is substantial. Chinese buyers are the biggest foreign real estate investors: in 2012-13 they purchased just under $6 billion in real estate — but that includes commercial real estate, which is twice as large a target for foreign investment as residential real estate. But Canada and the United States aren’t far behind the Chinese; Canadians invested just under $5 billion in Australian real estate, and Americans $4.4 billion. Singapore was next with $2 billion, then Malaysia with $1.6 billion; in between were the British, on $1.7 billion.
So, even arbitrarily and xenophobically combining all Chinese, Singaporean, Hong Kong and Malaysian real estate investment under a “Chinese” stereotype means “China” is only just ahead of North American real estate investment (and again, remember that these figures include commercial real estate). And if you lump in the Brits and the Kiwis, investment from “white” foreigners exceeds that from “Chinese” foreigners.
Read many stories about white people driving up Sydney real estate prices? Of course not. Hard to get a good anecdote about white people showing up to an auction and bidding successfully for a property. “Chinese” buyers, even if their families have lived in Australia for a century, are easier to spot and complain about.
But let’s assume that all “Chinese” property investment — just over $10 billion of it in 2012-13 — was for residential property, which we know isn’t true. How much of an impact does that have? The total value of housing finance commitments (which isn’t all housing purchases anyway) was $264 billion in 2012-13, so our “Chinese” stereotype is investing less than 4%.
And even if you think 4% is too high and is placing too much pressure on prices, ask sellers in Sydney and Melbourne what they think of foreign residential buyers. Chances are they’re perfectly happy to be getting higher prices.
This is outrageous, shocking stuff.
Happily today the Magic Water man puts Keane back in his blathering box:
The discussion has nothing to do with ethnicity and everything to do with weight of money. Sydney and Melbourne do not want to follow the path of London, where prestige real estate prices are stratospheric, relative to Britain's average household income, and the city can no longer handle the density of traffic and has to impose drastic restrictions.
You see! It's got nothing to do with ethnicity, it's just that Asians - in particular the Chinese - are going to turn Sydney into London, and increase the density of traffic, and soon enough there'll have to be drastic restrictions, and it's all the bloody fault of Asian drivers.
Oi vey, don't get the pond started on Asian drivers, though it should be noted it has absolutely nothing to do with ethnicity, and just the weight of numbers ...
As for that apology by The Guardian, mentioned by Keane?
It's as funny as an article by the Magic Water man:
Editor’s note, 25 February 2014: This article generated strong response when published on 18 February 2014, including concern about racist undertones in its original headline “Wealthy Chinese buyers are making Sydney’s housing problem worse”.
The author and Guardian Australia disclaim any racist intent. Both are conscious of Australia’s racist past. Neither believes that legitimate issues for public debate - here, housing affordability - should be avoided simply because the discussion may be viewed through the prism of that past.
However, Guardian Australia accepts that where a reasonable person could infer racism in an adverse reference to any national or ethnic group. Guardian Australia must be especially vigilant to ensure that the evidence underpinning such content is solid. We have concluded that in this instance we were not vigilant enough. With assistance from our engaged readership, we have found that evidence originally cited in this article was not solid enough to support the original headline, which is now amended.
The author acknowledges that he erred in his reporting of Foreign Investment Review Board data. The secondary source on which he relied conflated figures for residential and commercial investment and overstated the increase in investment from China in 2011-12. This has been corrected. The author stands by his basic thesis, which refers to investment over the last two or so years, though he recognises there is as yet no public FIRB data to support it.
Two pieces of anecdotal evidence from real estate agents also appeared to support the original headline, but on closer examination they are not strong enough to do so. The author was not at fault; in the editing process, Guardian Australia itself did not draw sufficiently precise distinctions between references to Asian buyers in the housing market and those who are ethnically Chinese. Nor did we distinguish properly between ethnically Chinese buyers from abroad and those ethnically Chinese buyers who are local and may, of course, be several-generations Australian. The amended article paraphrases more precisely what the estate agents were reported by other media to have observed.
As various contributors to the comment thread for this article show, the causes of fluctuations in housing prices are several and varied. Foreign buyers, and among them Chinese investors, may be a greater or lesser cause from time to time. Guardian Australia has concluded that, on the evidence presented, it was wrong to imply through the original headline that wealthy Chinese buyers are disproportionately a factor compared to any other national or ethnic group. The author stands by his opinion, as he is entitled to. Guardian Australia believes it must correct the evidence base underpinning that opinion and label it less emphatically in order to give readers assistance in weighing it and to avoid any inference of racism.
Uh huh. Now there's a comedy of errors. A mess of errors and anecdotes, but still an opinion's an opinion.
The question now remains, when is Fairfax going to do the same for the Magic Water man?
Sure that would mean an equally long screed at the end of each column, clarifying, rebutting, modifying, and providing an alternative view of the world. But hey, it'd be way more fun than reading the unvarnished dribble offered up by Sheehan on a bi-weekly basis.
How about starting with Sheehan's blather about traffic? What about him repeating the old saw that the bulk of the buyers are Chinese, and never mind all the Keane quibbles needed before you can swallow that data wgike?
It's apparently got nothing to do with ethnicity, yet Sheehan's piece is entirely about Chinese and Asian buyers, and invaders, and traffic, and yet there's not a mouse squeak about all the other buyers noted by Keane who are contributing to the traffic?
Or for that matter the state government doing diddly squat about public transport ...
And it's all saved by the invention of a spurious and misleading header, which purports, as does Sheehan, that there are plenty of positives, only to be followed by a series of negatives, ending with yet more blather about the suffering of first home buyers, as if that's all the fault of the invading Chinese and Asians?
Meanwhile, the fuss about Arthur Sinodinos goes on, as it should.
Is there any upside to the stench that keeps emanating from the foul body odour of NSW politics on a bipartisan basis?
How silly to ask. The cartoonists are having a field day, and remember there's more Rowe here, and more Pope here.
Well maybe the Pope isn't strictly about the Sinodinos matter, but there's a more than passing irony that Sinodinos was gifted the job of de-regulating assorted arenas, while right under his nose sundry assorted Sydney rats and sharks frolicked and made hay ...
And the deregulation news gets jollier by the day, as in ASIC will not take action against financial planners who flout advice law ...
On with the atmosphere and the mood setters ...