Land Dragons. The Impact Of Chinese Buyers On Australian Property Prices

Transcription

1 Land Dragons The Impact Of Chinese Buyers On Australian Property Prices October 2017

2 2 A special thanks to Angie Zigomounis of BIS Oxford Economics for the housing price data used in this report, as well as his keen insights into the market dynamics of each particular suburb. BIS Oxford Economics is Australia's leading provider of research and forecasting about key industries. Their off-the-shelf, multi-client reports are provided by subscription and syndication. Filtering the large amount of data available about industries into a format that is succinct, and which clients can put to practical use, is part of what they do. Most of their industry reports are published annually, with many also adding half-yearly or quarterly updates. Each new edition is based on completely revised forecasts. This document provides general information which is current at the time of production. The information contained in this document does not constitute advice and should not be relied on as such. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received and that it will continue to be accurate in the future. Professional advice should be sought prior to any action being taken in reliance on any of the information. CBM and CT Johnson disclaim all responsibility and liability (including, without limitation, for any direct or indirect or consequential costs, loss or damage or loss of profits) arising from anything done or omitted to be done by any party in reliance, whether wholly or partially, on any of the information. Any party that relies on the information does so at its own risk Cross Border Management Pty Ltd and CT Johnson. All rights reserved.

3 Land Dragons: The Impact Of Chinese Buyers On Australian Housing Prices 3 What We Do Cross Border Management (CBM) is a consultancy focused on the trade, investment and business between Australia and China. We do three things: Business Intelligence. We provide market analysis, research and insights on the Australia- China commercial relationship. China Consulting. We give Australian businesses practical ways to spot and execute on China- related business opportunities. China Business School. China Business School is a 6- month program that gives Australian SMEs a step- by- step process for selling 10 times more goods, services and IP into China than they ever thought possible. China Business School has two tracks - one for property professionals and one for small- and medium- sized businesses selling products and services. CT Johnson Managing Director ctjohnson@crossbordermanagement.com

4 4 Are Chinese Buyers Driving Up The Price Of Australian Real Estate? A common public perception is that Chinese buyers have converged on the Australian market and are driving up the prices of Australian properties. But is it true? To say that Australian s have a conflicted view of Chinese investment and trade is an understatement. Decrying the lack of reasoning behind the government s rejection of a Chinese consortium s bid for the Kidman ranch, ABC News Chris Berg thundered, We were told Australia was open for business, and yet when a Chinese group bid on (the) S Kidman & Co. estate, Scott Morrison stood in the way and gave us little more than a hazy national interest explanation. 1 A month later, Ian Verrender, another journalist at ABC wrote, On any conventional reading, Australia's economic development has gone backwards and is too reliant on shipping iron ore to China. This at a time when the Middle Kingdom's debt bomb is set to detonate. 2 The idea that Australia is being taken over by Chinese residents and investors is both popular and widespread. In 2014, well- known Australian businessman and politician Clive Palmer spoke for many when he said, I don t mind standing up against the Chinese bastards and stopping them from (taking over)." 3 The idea of malevolent effects from Chinese investment has gained a significant following in relation to the property market, where it s become commonplace to attribute the rapid growth in Australian housing prices to the insatiable appetite of Chinese buyers. Indeed, groups like Pauline Hanson s One Nation and the Party For Freedom have made opposition to Chinese investment in Australian real estate one of their signature political 1 Rejecting a Chinese bid for land is in 'the national interest'? Show me how, ABC News, 1 May /berg- why- fear- foreign- investment/ We've left ourselves hopelessly exposed to China, ABC News, 6 June /verrender- weve- left- ourselves- hopelessly- exposed- to- china/ Chinese bastards want to take over Australia: Palmer, AFR, 19 August bastards- want- to- take- over- australia- palmer j8vpx#ixzz4prqjxly9

5 Land Dragons: The Impact Of Chinese Buyers On Australian Housing Prices 5 issues, and with some success: One Nation has four senators in the 45 th Australian Parliament. 4 But the idea that the Chinese are the driving force in the Australian property market, while durable and popular, is conspicuously short on supporting evidence. As we ll show in this report, Australian property prices are not driven by the actions of Chinese buyers, they are driven by low interest rates and sustained population growth. To demonstrate our point, we ll look at a number of related areas. l l l l l First, we ll look at levels of Chinese investment into Australia, and show that it s relatively small compared to countries like the US and UK. Second, we ll show that population changes in Australia have made Chinese residents more visible, and driven perceptions that Australians of European heritage are being overwhelmed. We ll do this looking at Australian census data from 2006 and Third, we ll demonstrate that the housing affordability crisis in Australia is real and that housing is becoming progressively less affordable for everyday Aussies. We ll do this by comparing average housing prices with average wages. Fourth, we ll take a suburb- by- suburb view of the impact of Chinese buyers on housing price growth, and show that the two are in no way correlated. We ll do this by comparing average annual price growth in both houses and units with the proportion of Mandarin- speaking residents in each given suburb. Finally, we ll track the impact of interest rates and population growth on the Australian housing market, and show that these factors are highly correlated with price growth. We ll do this by comparing interest rates and population growth with average housing prices. Looking at these factors, it s clear that Australian house prices are being driven by conventional factors like population and mortgage interest rates, rather than the nefarious actions of Chinese buyers. 4 One Nation website, Senate Team

6 6 Growth Of Chinese Investment In Australia While the growth in Chinese investment has been significant, it pales in comparison to investment flows from other countries. By any measure, the growth in Chinese investment in Australia has been swift and dramatic, from just $6.2 billion in 2007 to $87.2 billion in Total&Chinese&Investment&In&Australia&($&Billion),&by&Year China0(excludes0SARs0and0Taiwan) Source: ABS, Cross Border Management However, compared to other major sources of foreign investment, Chinese capital flows into Australia have been almost negligible, accounting for just 2.7% of inbound investment. In comparison, the US (Australia s top investor) has invested five times more than China over the past 10 years, doubling its total investment from $433B in 2007 to $861B in 2016.

7 Land Dragons: The Impact Of Chinese Buyers On Australian Housing Prices 7 $1,000 Total&Foreign&Investment&In&Australia&By&Country&Of&Origin&($&Billion),&by&Year $900 $800 $700 $600 $500 $400 $300 $200 $100 $ United3States3of3America Belgium Hong3Kong3(SAR3of3China) China3(excludes3SARs3and3Taiwan) United3Kingdom Japan Singapore Source: ABS, Cross Border Management Focusing more closely on just real estate investment paints the same picture. A 2014 study by two University of Sydney professors 5 estimated that just 2% by value of total real estate transactions in Australia involved a Chinese party. A 2016 working paper by the Australian Federal Treasury came to a similar conclusion, stating that out of an average $12,800 price increase for Sydney and Melbourne housing each quarter, only between $80 and $122 was attributable to foreign buyers 6. 5 Chinese investment in residential real estate amounts to just 2%, The Conversation, 14 September 2015, Hans Hendrschke and Wei Li investment- in- residential- real- estate- amounts- to- just Foreign buyers have only slight impact on property prices, study shows, Domain.com, 2 December foreign- buyers- lift- prices- between- 80- and on- average- per- quarter gt2u07/

8 8 Population Growth And Chinese Immigration Into Australia Although the number of Australian residents who were born in China grew dramatically between 2006 and 2016, they are still a small minority, and not even the fastest growing nationality. One of the most dramatic and visible changes to the demography of Australia over the past 10 years has been an increase in the number of residents who claim Chinese ancestry, a group that accounts for 14.1% of the total increase in the nation s population during that time period. This has fed the widely held perception that Australia is facing a flood of Chinese immigrants and money. This perception has been amplified by three factors. First, although Chinese account for 55.0% of the immigration from East Asia, many residents from countries like Japan, Korea, Vietnam and Malaysia are mistakenly identified as Chinese. Counting all the groups together nearly doubles the number of Chinese in Australia. Indeed, as a cohort, East Asian ethnicities account for 25.6% of the total increase in the Australian population since 2006, second only to English. Where East Asians used to account for only 1 in 18 Australians, now they are 1 out of every 12. Proportion of Residents of East Asian Ancestry in Australia Source: ABS, Cross Border Management Second, Chinese residents are highly visible and highly concentrated. Like previous waves of immigration from European countries like Ireland, Greece and Italy, the Chinese are readily identified by more established groups as not really Australian. This fact is further

9 Land Dragons: The Impact Of Chinese Buyers On Australian Housing Prices 9 emphasized by the degree to which the Chinese congregate in certain neighborhoods, like Clayton in Melbourne, where nearly 1 in 4 residents speaks Mandarin, and Burwood in Sydney, where the ratio is 1 in 3 7. Third, a large number of the Chinese who have immigrated to Australia in the past 10 years are relatively well off, which represents a huge change from previous waves of East Asian immigrants, many of whom were poor. David Chin, the ethnically- Chinese head of the Sydney- based consultancy Basis Point, often tells audiences, 20 years ago if I came to an event dressed in a black suit, everyone thought I was a waiter; today they think I m a Chinese billionaire. The fact that many of today s Chinese immigrants are wealthy has also drawn attention to them as a group. Ethnically Chinese Australian Residents 1,125,916 Ethnically Chinese Australian Residents 625,204 Of which, born in China Of which, born in China 509, , Source: ABS, Cross Border Management However, this marked growth in East Asian and ethnically Chinese residents draws attention from the growth in other groups. For instance, the number of Indian- born residents in Australia increased more than the number of Chinese- born ones (308,279 vs 302,970). The increase in Australian residents born in Australia is five times the increase in the number 7 ABS

10 10 born in China (1,541,888 vs 302,970); if you assume that Australian- born residents also includes those who failed to state their country of birth on the census form, the ratio jumps to 10 times (3,160,950 vs 302,970). Source*of*growth*in*Australian*population*between* 2006*and*2016,*by*Country*of*Birth All*Other,* 39.3% Australia,* 43.5% India,* 8.7% China,* 8.5% Taken together, our conclusion is that it s not Chinese investment that has generated the public perception of Australia being taken over, but the increase in Australian residents from China and other parts of Asia. (For more detail on the population data quoted in this section, see Appendix 2 and Appendix 3.)

11 Land Dragons: The Impact Of Chinese Buyers On Australian Housing Prices 11 Increase In Housing Prices Australian housing prices have jumped significantly in the past decade, nearly doubling in some capital cities. The increase in Australian housing prices in recent years has been staggering. While prices in a few of the capital cities has been relatively modest (housing in Perth, which is still recovering from a decline in commodity prices, has only risen 27% since 2006), Sydney and Melbourne have seen housing jump by 85.7% and 81.1%, respectively. $1,000.0 $900.0 $800.0 $700.0 $600.0 $500.0 $400.0 $300.0 $200.0 $100.0 $- Median House Price, $000 Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra 2011 $490.0 $345.0 $330.0 $286.0 $415.0 $270.0 $349.5 $ $910.0 $625.0 $500.0 $441.5 $528.0 $365.0 $560.0 $625.0 Source: ABS

12 12 These prices make Australia one of the least affordable markets in the OECD. 115% Median'House'Price'As'%'Of'Median'Income,' Selected'OECD'Countries,' % 105% 100% 95% 90% New) Zealand Canada UK Australia OECD) Average Japan France Ireland South) Korea Source: OECD, Cross Border Management Perhaps worse than comparisons with other markets is the trend for Australians over time. A comparison of median house prices to median income shows that for the average Aussie, housing is indeed getting less affordable. 110% 100% 90% 80% 70% 60% 50% 1970 Median'House'Price'As'%'Of'Median'Income,' Australia,'1970< Source: OECD, Cross Border Management The decrease in housing affordability is, therefore, not merely a perception, but a reality that confronts all Australians, particularly at lower income levels

13 Land Dragons: The Impact Of Chinese Buyers On Australian Housing Prices 13 The Impact Of Chinese Buyers On Australian Housing Prices Despite public perception, there s no evidence that the Chinese are having a significant impact on Australian property prices. To understand the impact of Chinese buyers on Australian property price, we first had to see where the Chinese are buying. To do so, we used 2016 census data to isolate the neighborhoods with the highest proportion of Mandarin speakers. We focused on Mandarin speakers and ignored other Chinese dialects (e.g. Cantonese) to isolate the impact of buyers from mainland China (many Cantonese speakers in Australia immigrated from Hong Kong). We then compared this with the average rate of growth of house and unit prices by suburb. If Chinese buyers were driving price growth more than other buyers, we d expect to see higher price growth in suburbs with more Mandarin speakers, like this: 35.0% %"Mandarin"Speaking"Households"vs"%"Annual"Price"Growth"In"Units," by"suburb"@ EXPECTED"RELATIONSHIP 30.0% 25.0% 20.0% 15.0% Average annual price growth for houses 10.0% 10.0% 5.0% 0.0% Mandarin.Share.2016 Annual.Price.Growth.< Units

14 14 However, after looking at the 79 neighborhoods in Sydney, Melbourne and Brisbane with the highest proportion of Mandarin speakers, we didn t find this at all. Rather than a correlation between the number of Mandarin speakers and the average annual price growth in an area, we found an uncoordinated mix of average price growth rates. Sydney 35.0% %"Mandarin"Speaking"Households"vs"%"Annual"Price"Growth"In"Sydney"Houses," by"suburb 30.0% 25.0% Sydney"Average"Annual Price"Growth"For"Houses"@ 12.7% 20.0% 15.0% 10.0% 5.0% 0.0% Mandarin.Share.2016 Annual.Price.Growth. < Houses Source: BIS Oxford Economics, Cross Border Management 35.0% %"Mandarin"Speaking"Households"vs"%"Annual"Price"Growth"In"Sydney"Units,"by" Suburb 30.0% 25.0% Sydney"Average"Annual"Price"Growth"For"For"Units"A 9.9% 20.0% 15.0% 10.0% 5.0% 0.0% Mandarin.Share.2016 Annual.Price.Growth. < Units Source: BIS Oxford Economics, Cross Border Management

15 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 15 Melbourne 30.0% %"Mandarin"Speaking"Households"vs"%"Annual"Price"Growth"In"Melbourne" Houses,"by"Suburb 25.0% 20.0% Melbourne"Average"Annual Price"Growth"For"Houses"@ 8.8% 15.0% 10.0% 5.0% 0.0% Mandarin.Share.2016 Annual.Price.Growth.< Houses Source: BIS Oxford Economics, Cross Border Management 30.0% %"Mandarin"Speaking"Households"vs"%"Annual"Price"Growth"In"Melbourne" Units,"by"Suburb 25.0% Melbourne"Average"Annual Price"Growth"For"Units"A 3.3% 20.0% 15.0% 10.0% 5.0% 0.0%!5.0%!10.0% Mandarin/Share/2016 Annual/Price/Growth/! Units Source: BIS Oxford Economics, Cross Border Management

16 16 Brisbane %"Mandarin"Speaking"Households"vs"%"Annual"Price"Growth"In"Brisbane"Houses," by"suburb 30.0% 25.0% Brisbane"Average"Annual Price"Growth"For"Houses"A 4.2% 20.0% 15.0% 10.0% 5.0% 0.0% Mandarin.Share.2016 Annual.Price.Growth.< Houses Source: BIS Oxford Economics, Cross Border Management 0.3 %"Mandarin"Speaking"Households"vs"%"Annual"Price"Growth"In"Brisbane"Units," by"suburb Brisbane"Average"Annual Price"Growth"For"Units"B 1.2% !0.05!0.1 Mandarin.Share.2016 Annual.Price.Growth.! Units Source: BIS Oxford Economics, Cross Border Management This lack of relationship between where Chinese people live and where price growth is highest indicates that Chinese investors are not, in fact, having a major impact on the Australian property market.

17 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 17 Other Explanations Australian housing prices are much more correlated with interest rates and population growth than with Chinese investment. Unraveling the mysteries of what makes the property market go up and down is the full time occupation of developers, bankers and real estate investors, and beyond the scope of this report. However, having established that Australian property prices are indeed increasing and dismissed the idea that Chinese investors are driving that increase, we wondered about more traditional drivers. One of the most frequently discussed drivers of real estate values is interest rates the lower the rate the higher the property prices. In this context, it s worth noting that Australian interest rates are not merely low, they are at at an all- time low, down to 1.5% in 2017, from a high of 17.5% in January of 1990.

18 18 Comparing Sydney housing prices with interest rates does, in fact, show just a strong relationship between lower interest rates and higher. $1,000, Sydney&Median&House&Price&($000)&(bars)&vs&Interest&Rates&(line) 1.50% $900, 2.50% $800, $700, $600, $500, 3.50% 4.50% 5.50% $400, 6.50% $300, % Median,Price,9 Sydney Interest,Rates Source: Trading Economics, ABS, Cross Border Management The Reserve Bank of Australia has even suggested that protecting housing prices is one of the key justifications for keeping interest rates low. In explaining the August 2016 decision reducing the cash rate to 1.5%, the bank s governor said, The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy would be improved by easing monetary policy at this meeting. 8 This effect of low interest rates driving high housing prices is at work in the Australian market, and likely to remain so for some time to come. 8 Statement by Glenn Stevens, Governor: Monetary Policy Decision, 2 August releases/2016/mr html

19 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 19 The other major factor in housing price growth is population relative to available land. It s simply a geographical fact that most of Australia s population is concentrated around the coasts, where cities are hemmed in by geographical features like oceans and mountains. This makes it challenging to develop new land in response to population growth. At the same time, Australia has had strong population growth, with the number of residents increasing by 18% since Australian5Population5 (millions) Population Source: ABS, Cross Border Management

20 20 This combination of limited land and growing population drives Australian prices higher. $1,000* $900* $800* $700* $600* $500* $400* $300* Sydney* Med.*House*Price*($000)(bars)* vs*australian*population* (millions)(line) Median*Price*G Sydney Population Source: ABS, Cross Border Management This was also the conclusion reached in a 2015 paper issued by the Reserve Bank Of Australia, which stated, Since the mid 2000s, strong population growth has played an increasing role in explaining housing price growth. 9 Hence, we can see that Australian housing prices are driven by interest rates, geography and population growth, rather than by foreign investment. 9 Long- run Trends in Housing Price Growth, RBA Bulletin, September 2015, Marion Kohler and Michelle van der Merwe pdf

21 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 21 Conclusions The growth in Australian property prices is being driven by conventional factors like interest rates and population growth rather than by Chinese investors coming into the market. We can draw a number of conclusions from the analyses we ve presented in this report: l l l l l l l l Chinese buyers have almost no impact on Australian housing prices, accounting for less than 2% of all residential real estate transactions nationwide, and adding less than 1% ($122 out of $12,800) to the average quarterly housing price increase. Chinese investment in Australia is very small compared to investment from the US and UK, accounting for only 2.7% of total investment in Australia. The US has invested five times more in Australia than China has ($433B vs $81B) over the past 10 years. The number of East Asians in Australia has jumped dramatically over the past 10 years, going from 1 in 18 residents in 2006 to 1 in 12 residents in The Indian population in Australia has grown faster than the Chinese population (308,970 new residents vs 302,970 new residents) over the past 10 years. It s not your imagination housing really is getting harder to afford. There s no link between price increases and the number of Chinese in any given area. In some areas (e.g. Melbourne units) the relationship is actually appears to be inverse (more Chinese buyers = lower prices). Price increases in the Australian housing market are driven by historically low interest rates, and by significant population growth. We welcome any thoughts or questions you may have on this topic and this report.

22 22 Appendix 1 Excerpts from ABS TABLE 2. Foreign Investment in Australia: Level of Investment by Country and Country Groups by type of investment and year ($million) United States of America $433.2 $419.1 $469.4 $499.3 $520.3 $626.8 $715.9 $782.6 $877.5 $860.9 United Kingdom $411.7 $440.4 $497.0 $474.6 $465.1 $397.0 $449.4 $477.7 $482.6 $515.5 Belgium $11.7 $11.9 $13.9 $15.6 $14.2 $192.6 $206.9 $225.8 $247.1 $270.1 Japan $63.4 $88.9 $102.6 $118.7 $125.7 $158.5 $164.1 $181.2 $200.8 $213.5 Hong Kong (SAR of China) $45.9 $55.7 $42.7 $42.0 $44.4 $53.2 $63.6 $74.1 $85.9 $100.9 Singapore $39.2 $43.2 $41.3 $42.1 $49.6 $65.3 $73.5 $87.4 $98.8 $98.9 China (excludes SARs and Taiwan) $6.2 $8.4 $16.5 $19.4 $19.7 $23.1 $52.2 $66.4 $75.9 $87.2

23 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 23 Appendix 2 ABS Census Data 2006, 2011, 2016 Top 10 Countries of Birth, Total Counting: Persons, Country Of Birth Change from 2006 to 2016 % of change in population % of total population Australia 14,072,946 15,017,846 15,614,834 1,541, % 43.5% Not stated 3,630 1,195,729 1,622,692 1,619, % 45.7% England 856, , ,568 50, % 1.4% New Zealand 389, , , , % 3.6% China (excludes SARs and Taiwan) 206, , , , % 8.5% India 147, , , , % 8.7% Philippines , , , % 6.5% Vietnam 159, , ,351 59, % 1.7% Italy 199, , ,042-25, % - 0.7% South Africa 104, , ,450 58, % 1.6% Total Population 19,855,287 21,507,719 23,401,891 3,546,604

24 24 Appendix 3 ABS Census Data 2006, 2011, 2016 Top 10 Countries of Ancestry, Total Counting: Persons, Ancestry Change from 2006 to 2016 % of change in population % of total population English 6,268,145 7,223,457 7,811,847 1,543, % 43.5% Australian 5,309,618 4,921,933 4,833, , % % Not stated 1,609,441 1,475,230 1,632,686 23, % 0.7% Irish 1,044,225 1,170,147 1,243, , % 5.6% Chinese 625, ,291 1,125, , % 14.1% Scottish 699, , , , % 5.5% Italian 714, , ,552 46, % 1.3% Indian 201, , , , % 9.7% German 460, , ,150-16, % - 0.5% Greek 296, , ,145 1, % 0.0% Vietnamese 158, , ,086 95, % 2.7% Filipino 128, , , , % 3.1% Total Population 19,855,241 21,507,719 23,401,891

25 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 25 Appendix 4 Selected Comments About Chinese Investors From Australian News Reports In dollar terms, residential property owned by foreign investors (particularly mainland Chinese) is the main game. How is it that a overseas Chinese student in Sydney can afford to buy a $2.5 million house in Sydney. How much of this overseas Chinese buying residential property backed by mainland Chinese capital using the local Chinese resident as the front? If mainland Chinese are willing have mock divorces in order to buy additional property in China I'm sure they have no problem skirting the rules in Australia. Start doing something Canberra, and FAST. Mark commenting on Dutch, Canadian investors dwarf Chinese buyers: Scott Morrison, The Australian, 7 September 2016, Rachel Baxendale 10 I'm going nuts! First you tell us residential property pricing depends on our population growth: I damn well thought it is dependent on foreign buyers especially the Chinese. Nowww... you tell me Chinese ownership of agricultural land is ONLY.38 percent. Ok, ok, I get it... the Chinese ownership is by their government not so much private. So I can still hang on to my belief this country is going to be controlled by the Chinese government, eventually. Thank god we have the British and American private investors who have so much of Australian interests in mind. I can now retreat to my xenophobic shell which by the way is not made in China. Garry commenting on Dutch, Canadian investors dwarf Chinese buyers: Scott Morrison, The Australian, 7 September 2016, Rachel Baxendale Dutch, Canadian investors dwarf Chinese buyers: Scott Morrison, The Australian, 7 September 2016, Rachel Baxendale affairs/dutch- canadian- investors- dwarf- chinese- buyers- scott- morrison/news- story/48c0f9ab1b965e1c441b413d71e6a Dutch, Canadian investors dwarf Chinese buyers: Scott Morrison, The Australian, 7 September 2016, Rachel Baxendale affairs/dutch- canadian- investors- dwarf- chinese- buyers- scott- morrison/news- story/48c0f9ab1b965e1c441b413d71e6a243

26 26 How many of the land holdings by the Chinese are held by state owned corporations subject to strategic directions from the Chinese government? Given Australia's heritage and history it is not surprising that the major investors in Australian agriculture are British. Given China's political system and increasingly militant stance in the South China Sea it is not unreasonable to be more cautious on Chinese investment in key areas of production and services. Thomas commenting on Dutch, Canadian investors dwarf Chinese buyers: Scott Morrison, The Australian, 7 September 2016, Rachel Baxendale 12 Of course the Chinese loves investing in our property. Our government loves selling off our land and homes to them. The Chinese have been notorious in spiking up property prices all over the world, from Singapore, Hong Kong, Taiwan, Canada, New Zealand, San Francisco and other leading cities. However, Australia is probably the worst and suffers a cruel fate due to our poor policies and regulations that somehow are inadequate to protect the locals from being priced out of a home. It's quite sad to see locals working here and paying phenomenal taxes but struggling to afford a home 16kms to 20kms out of the city. Hoorah commenting on Chinese buyers double down on Australian property, Sydney Morning Herald, 12 April 2016, Narayanan Somasundaram 13 Property developers win while the Australian public loses. What a joke. Oh, and how much of this money flowing in from China is from legally questionable sources? Tom commenting on Chinese buyers double down on Australian property, Sydney Morning Herald, 12 April 2016, Narayanan Somasundaram Dutch, Canadian investors dwarf Chinese buyers: Scott Morrison, The Australian, 7 September 2016, Rachel Baxendale affairs/dutch- canadian- investors- dwarf- chinese- buyers- scott- morrison/news- story/48c0f9ab1b965e1c441b413d71e6a Chinese buyers double down on Australian property, Sydney Morning Herald, 12 April 2016, Narayanan Somasundaram economy/chinese- buyers- double- down- on- australian- property go3gue.html 14 Chinese buyers double down on Australian property, Sydney Morning Herald, 12 April 2016, Narayanan Somasundaram economy/chinese- buyers- double- down- on- australian- property go3gue.html

27 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 27 Yeah bricks and slaughter. They did used to do the same thing. But there are ten times as many Chinese as Japanese. And when the Japanese did it, our cities were much smaller, were easier to get around and property values only really spiked on the Gold Coast. And the Japanese didn't move here en masse to then put pressure on our infrastructure and environment. This is much, much worse for Australians who were born here, or have lived here for a long time than that was 30 years ago. Grinja commenting on Chinese buyers double down on Australian property, Sydney Morning Herald, 12 April 2016, Narayanan Somasundaram 15 the sale of Australia to communist china must stop and now! Mrs comment on Chinese investment: property, private sector top $15bn investment surge, Australian Business Review, 11 April 2016, Rowan Callick 16 Most gained from corruption. No wonder that the housing supply available for Australians to purchase is plummeting. If Australians cannot buy residential property - or businesses or land - in China, then Chinese should not be allowed to purchase any in Australia. It's called reciprocity. Max commenting on China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley Chinese buyers double down on Australian property, Sydney Morning Herald, 12 April 2016, Narayanan Somasundaram economy/chinese- buyers- double- down- on- australian- property go3gue.html 16 Chinese investment: property, private sector top $15bn investment surge Australian Business Review, 11 April 2016, Rowan Callick services/chinese- investment- property- private- sector- top- 15bn- investment- surge/news- story/e3d1c5fdc373c7b22bec2226b5b8cfe7 17 China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley dodgy- 1- billion- in- property/news- story/ff9abde7689e2c863f3a c2b0

28 28 Well how about we play hard ball and conviscate the property and cash involved with money laundering. The Chinese are playing us on a break and taking over our country by stealth. We know it is happening and do nothing about it. Lynda commenting on China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley 18 The Chinese influx continues to distort the market. Why is supply of property listings so thin, yet prices so high? It's because the Chinese are wading into the market and paying overs (ie premiums) for some but not all properties. That leaves everyone that is selling demanding high and inflated prices in order to compete for their next house purchase. The cycle is actually crimping turnover and therefore economic and social allocation of resources in this country. GFC commenting on China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley 19 Gross mismanagement from inept politicians has severely reduced the standard of living of a large portion of Australian citizens who can no longer afford house. It is an unforgivable disgrace. Half my suburb is chinese now and money is no object to them at auctions. Andrew commenting on China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley 20 Just ridiculous- its clearly immigration and chinese investment that are forcing up prices. Hiousing affordability is code for the destruction of Sydney by developers building a rats 18 China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley dodgy- 1- billion- in- property/news- story/ff9abde7689e2c863f3a c2b0 19 China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley dodgy- 1- billion- in- property/news- story/ff9abde7689e2c863f3a c2b0 20 China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley dodgy- 1- billion- in- property/news- story/ff9abde7689e2c863f3a c2b0

29 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 29 nest of apartments which the state government loves because of the tax kick backs. People will soon work it out. Jason commenting on China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley 21 And politicians wonder why housing is so expensive. Those with property cash in when Chinese buyers come calling. dexxter commenting on China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley 22 What a great decision. This country is going to the dogs. I know lets just not sell off Australian jobs lets just sell all our assests as well. After all we produce so much. Not. If you combine that with all the lazy dole bludgers in this country then we are looking more and more like Greece every day. Good luck to the next generation. Your headed for the not so lucky country. Now we also have more foreigners coming to join our dole queues. Grizza8 comment on Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group, Sydney Morning Herald, 19 April China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley dodgy- 1- billion- in- property/news- story/ff9abde7689e2c863f3a c2b0 22 China s dodgy $1 billion in property, The Australian, 30 January 2017, Paul Maley dodgy- 1- billion- in- property/news- story/ff9abde7689e2c863f3a c2b0 23 Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group Sydney Morning Herald, 19 April giant- s- kidman- - co- sold- to- chinese- interests- led- by- shanghai- pengxin- group goa12z.html#comments

30 30 Australians won't be able to afford beef as it will all go to China now. Pottymouth comment on Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group, Sydney Morning Herald, 19 April Another reason not to vote for the Libs, they'll flog our nation, what's left of it, to the Chinese old ozzer comment on Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group, Sydney Morning Herald, 19 April Another 1.3 percent of Australia's total land area sold off to the Chinese. Does Shanghai Pengxin by any chance have any connections with the Chinese Communist Party? Darwin port already sold and who knows what else. I hope that our government realises that the more land and infrastructure the Chinese own here, the more their government may feel inclined to protect those interests if they feel that they are threatened. A bit like Russia and the Ukraine. Pax Us comment on Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group, Sydney Morning Herald, 19 April Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group Sydney Morning Herald, 19 April giant- s- kidman- - co- sold- to- chinese- interests- led- by- shanghai- pengxin- group goa12z.html#comments 25 Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group Sydney Morning Herald, 19 April giant- s- kidman- - co- sold- to- chinese- interests- led- by- shanghai- pengxin- group goa12z.html#comments 26 Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group Sydney Morning Herald, 19 April giant- s- kidman- - co- sold- to- chinese- interests- led- by- shanghai- pengxin- group goa12z.html#comments

31 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 31 The problem here is that, for all intents and purposes, Chinese demand and funds to buy our land from us is inexhaustible. They are so much bigger than us economically, with so many more people, they'll just keep buying it so long as we're stupid enough to keep selling it to them. FIRB and the Government dudding future generations once again. Tom comment on Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group, Sydney Morning Herald, 19 April The Chinese government are laughing at us selling our future, and this was allowed on the lib watch, labor take note and do something about allowing this to continue. Tom comment on Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group, Sydney Morning Herald, 19 April The Chinese buyers (and other foreigners with cash looking for a washing machine) have been keeping the prices up because they are willing to pay the higher property prices. As they disappear we are left with normal wage earners and the remaining local cashed up buyers who will not be willing to pay the extra. Tom comment on Australia's property boom showing signs of slowing as buyers hold back, Sydney Morning Herald, 6 February 2017, Jonathan Barrett and Byron Kaye Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group Sydney Morning Herald, 19 April giant- s- kidman- - co- sold- to- chinese- interests- led- by- shanghai- pengxin- group goa12z.html#comments 28 Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group Sydney Morning Herald, 19 April giant- s- kidman- - co- sold- to- chinese- interests- led- by- shanghai- pengxin- group goa12z.html#comments 29 Australia's property boom showing signs of slowing as buyers hold back Sydney Morning Herald, 6 February 2017, Jonathan Barrett and Byron Kaye economy/australias- property- boom- showing- signs- of- slowing- as- buyers- hold- back gu65mz.html#comments

32 32 Funny how these stories tend to appear just before Reserve Bank meetings, in case anybody wants to do the right thing and put interest rates up. And so much for the Chinese "tourism boom." They are not here to see our sights or our way of life, they are here to buy our property, much of it illegal given this Government's and the previous Labor government's failure to implement the international agreements on money laundering to apply rules to real estate agents, lawyers and accountants. Funny how if I open an account at the TAB I have to provide all sorts of info before I can deposit money. But when it comes to a foreigner buying property they can pay in suitcases of cash. A lot of our so called property boom is based on criminal money, in other words the human suffering of many people. And what does our government do about it? Nothing. w ch comment on Australia's property boom showing signs of slowing as buyers hold back, Sydney Morning Herald, 6 February 2017, Jonathan Barrett and Byron Kaye 30 Millions of Chinese multi millionaire investors bought property in Vancouver and now none of the locals can buy real estate and many houses are left empty. The super rich children have been bought businesses by their wealthy parents and money is no object. They have the latest in every mod con and every luxury and arrogantly think the locals should be grateful for the money they brought into the country. Do we want equality in Australia or do we want the Chinese multi millionaires to take over. And can our health care system stand the pressure on it from ageing Chinese parents. We already pay billions for the elderly parents of immigrants from all over the World. Do we need an influx of Chinese parents in our nursing homes, or should we keep all of those facilities for our ageing population. Turnbull needs to stop sitting on his hands and do something about this issue before our children end up without any future whatsoever. If Scott Morrison et al don't do something about this we'll be the new poor in our own country and we will have willingly sold it off to the Chinese just like they have in Canada Teena commenting on China s rich to pour millions into Australian property The Australian, 7 November 2016, Maggie Lu Yueyang Australia's property boom showing signs of slowing as buyers hold back Sydney Morning Herald, 6 February 2017, Jonathan Barrett and Byron Kaye economy/australias- property- boom- showing- signs- of- slowing- as- buyers- hold- back gu65mz.html#comments 31 China s rich to pour millions into Australian property The Australian, 7 November 2016, Maggie Lu Yueyang rich- to- pour- millions- into- australian- property/news- story/00d8c9f7a adaa5b948b4a8c0

33 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 33 Soon, all our children will be priced out of our own cities and we will only have our politicians to blame (both Liberal now and Labour which did nothing about it while in power for 6 years). To make this (increasingly) ConcentratedWealth of ours a giant monopoly board. Blindly forgetting that the biggest by far, entity on this earth, is the (un- elected) Chinese government that is strangling all Western democracies with its not octo-, not mega-, not giga-, but terrapus tentacles, while we all sit back smug and "enjoy" the values of our homes increasing. What fools we are. Good morning Australia. Wake up before its too late. Karen commenting on China s rich to pour millions into Australian property The Australian, 7 November 2016, Maggie Lu Yueyang China s rich to pour millions into Australian property The Australian, 7 November 2016, Maggie Lu Yueyang rich- to- pour- millions- into- australian- property/news- story/00d8c9f7a adaa5b948b4a8c0

34 34 Bibliography Apartment market going flat The Australian, 11 September 2017, Turi Condon and Elizabeth Redman affairs/apartment- market- going- flat/news- story/bcf b3d71ac380e668bb1e53a2 Australia forces foreign owners of 15 properties to sell The Age, 6 February 2017, Su- Lin Tan forces- foreign- owners- of- 15- properties- to- sell gu6etr.html Australia's property boom showing signs of slowing as buyers hold back Sydney Morning Herald, 6 February 2017, Jonathan Barrett and Byron Kaye economy/australias- property- boom- showing- signs- of- slowing- as- buyers- hold- back gu65mz.html#comments Banks and regulators have created the perfect storm for Chinese property buyers News.com, 17 May 2016, Dana McCauley estate/buying/banks- and- regulators- have- created- the- perfect- storm- for- chinese- property- buyers/news- story/ f baf8b92341dfe942 Busted: Six myths about Chinese property buyers Domain.com, 29 May 2016, Christina Zhou six- myths- about- chinese- property- buyers goi2jv/ Cattle giant S Kidman & Co sold to Chinese interests led by Shanghai Pengxin Group Sydney Morning Herald, 19 April giant- s- kidman- - co- sold- to- chinese- interests- led- by- shanghai- pengxin- group goa12z.html#comments CHARTS: Here are the top 10 foreign land owners in Australia Business Insider Australia, 7 September 2016, Simon Thomsen here- are- the- top- 10- foreign- land- owners- in- australia China s dodgy $1 billion in property The Australian, 30 January 2017, Paul Maley dodgy- 1- billion- in- property/news- story/ff9abde7689e2c863f3a c2b0

35 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 35 China s rich to pour millions into Australian property The Australian, 7 November 2016, Maggie Lu Yueyang rich- to- pour- millions- into- australian- property/news- story/00d8c9f7a adaa5b948b4a8c0 Chinese buyer demand up in Melbourne, but down nationally Herald Sun, 24 August 2017, Samanthan Landy buyer- demand- up- in- melbourne- but- down- nationally/news- story/a43d854b1d85324d52e7c46137b9cfe4 Chinese buyers don t occupy properties, survey finds The Australian, 23 August 2017, Roseanne Barrett and Ben Wilmot buyers- dont- occupy- properties- survey- finds/news- story/d63434d7db59f7f621536c0a97a6f435 Chinese buyers double down on Australian property Sydney Morning Herald, 12 April 2016, Narayanan Somasundaram economy/chinese- buyers- double- down- on- australian- property go3gue.html Chinese buyers to prop up Australian housing market: Credit Suisse Sydney Morning Herald, 24 March 2017, Myriam Robin property- cheap- for- chinese- buyers- credit- suisse gv5ets.html Chinese investment: property, private sector top $15bn investment surge Australian Business Review, 11 April 2016, Rowan Callick services/chinese- investment- property- private- sector- top- 15bn- investment- surge/news- story/e3d1c5fdc373c7b22bec2226b5b8cfe7 Chinese investment in residential housing slowing: FIRB adviser The Australian, 13 September 2017, Sue Neales investment- in- residential- housing- slowing- firb- adviser/news- story/165b2bd3c36e8d606d05e00bc384bc3a?login=1 Chinese investment in residential real estate amounts to just 2% The Conversation, 14 September 2015, Hans Hendrschke and Wei Li investment- in- residential- real- estate- amounts- to- just

36 36 Chinese property investors getting wary of buying in Australia Sydney Morning Herald, 20 May 2016, Philip Wen and Simon Johanson economy/chinese- property- investors- getting- wary- of- buying- in- australia gozd5s.html#comments Chinese property investors may be forced to sell as bank finance dries up ABC News, 28 November 2016, Bill Bertles 28/chinese- property- investors- worried- after- big- banks- change- rules/ Decline In Chinese Investment Offset By Other Countries Your Investment Property, 29 August 2017, Michael Mata in- chinese- investment- offset- by- other- countries aspx Dutch, Canadian investors dwarf Chinese buyers: Scott Morrison The Australian, 7 September 2016, Rachel Baxendale affairs/dutch- canadian- investors- dwarf- chinese- buyers- scott- morrison/news- story/48c0f9ab1b965e1c441b413d71e6a243 Fear or greed: what drives the response to Chinese investment in Australia? Sydney Morning Herald, 19 August 2016, Kelsey Munro politics/political- news/fear- or- greed- what- drives- the- response- to- chinese- investment- in- australia gqvdvc.html Foreign buyers have only slight impact on property prices, study shows Domain.com, 2 December foreign- buyers- lift- prices- between- 80- and on- average- per- quarter gt2u07/ Foreign Investment Review Board Annual Report FIRB- Annual- Report.pdf Foreigners pile back into Australian property, reigniting bubble fears Sydney Morning Herald, 25 November 2016, Swati Pandey and Jonathan Barrett economy/foreigners- pile- back- into- australian- property- reigniting- bubble- fears gsx97i.html Full steam ahead for Chinese despite market restrictions Australian Broker, 28 March 2017, Miklos Bolza news/full- steam- ahead- for- chinese- despite- market- restrictions aspx

37 Dragons Down Under: A Guide For Australians Doing Business With The Chinese 37 HOUSING PRICES IN AUSTRALIA: 1970 TO 2003 Peter Abelson and Demi Chung _9_04.pdf No evidence of vast pool of foreign- owned vacant apartments in Australia: experts Domain.com, 23 August 2017, Jennifer Duke buyers- keeping- apartments- empty- an- urban- myth gy1zzd/ Report on Foreign Investment in Residential Real Estate House of Representatives Standing Committee on Economics, November nvestment_in_real_estate/tabled_reports Singapore now the biggest foreign investor in Australian property, as Chinese investment drops 69 pc Sydney Morning Herald, 28 August 2017, Carolyn Cummins now- the- biggest- foreign- investor- in- australian- property- as- chinese- investment- drops- 69pc gy4fqj.html UK tops list of foreign investments in Australian farmland; China owns 0.5 per cent ABC News, 7 September 2016, Lucy Barbour 06/uk- owns- biggest- proportion- of- foreign- owned- farmland/ We've left ourselves hopelessly exposed to China ABC News, 6 June 2016, Ian Verrender 06/verrender- weve- left- ourselves- hopelessly- exposed- to- china/ Why Chinese investors keep buying Australian property: it's cheap ABC News, 24 March 2017, Stephen Letts 24/why- chinese- investors- keep- buying- australian- property/ Why Chinese property buyers are here to stay News.com, 16 August 2016, Frank Chung estate/buying/why- chinese- property- buyers- are- here- to- stay/news- story/1c1ccd51cf863393eb24fe45542ed269

38 38 CT Johnson, Managing Director Australia China English, Mandarin, Russian Wu Shuya, Head Of China Research China Mandarin, English