CHINESE real estate investors and immigrants are forecast to pump another $60 billion into the real estate market over the next six years.
There is plenty of talk about Australia’s housing shortage or over supply. But what if the time comes when nobody’s left to buy?
We don’t have to look too far on the Internet for opinions, seminar sprookers* and doomsayers offering enlightenment and crystal ball advice on the Australian property market and opportunities. Without doubt, even industry experts are perplexed by the mixed messages and agendas of the contributors.
The truth of the matter is, understanding or predicting the Australian real-estate market is about making ‘babies’, and it is joined at the hip of immigration policies of the government, the mining sector, and the economic prosperity of the country-- not the opinions of realtors and seminar sprookers.
CHINESE real estate investors are forecast to pump another $60 billion into the property market so is there an Australia real estate shortage ? There is plenty of talk about Australia’s housing shortage and over supply. But what if the time comes when nobody’s is left to buy? We can't make more babies can we ?
Chinese real estate investors - 60 Billion forecast
On a recent business trip to Hong Kong, I caught up with an old friend and philanthropist-mentor from my days in New York City politics. A former Managing Director of Citibank, with US$8 billion in his portfolio, friend with the Buffett’s, a board member of my charity and the type of person you look up to for high-level opinions and knowledge. I will refer to my friend as Steve.
Getting the topic of economic turmoil and the troubles of Europe and the USA out of the way, Steve in his loud American accent declared that ‘there is nothing intelligent about [Australia’s] economy or politics.’ Slightly offended, but more curious to the contextual meaning of this statement, he continued explaining.
"You are making only 1.7 babies and as you know civilisation will soon be extinct if you’re not making 2.8+ babies per year.
You will not need to build new homes, schools, and shopping centres."
You have three distinct economies in Australia, he said. First economy is Mining. You simply scoop it out of the ground ship it to China and buy some merchandise back along with the rest of the world. You have so many resources in the ground that this will continue forever as long as the world consumes. China will still place its orders, and Australia will continue to profit from digging it out of the ground.
Australia's Second economy is Food. Australia agriculture is feeding the world.As everyone has seen in the press, China has been busy buying up farmland and over 50% of certain fresh produce in Singapore is from Australia. This is of no surprise to myself -- I was in Nanjing, China, recently and enjoyed an Australian steak, and tonight I am ordering home delivery in Beijing ‘Aussie Lamb Chops’.
Australia's Third economy – if you ever have the pleasure of meeting Steve, you will appreciate some theatricals that coincide with the conversation –
Steve picks up his beer and demonstrates Australia’s third economy. ‘No, it isn’t beer,’ he said.
He pours a tiny drop into his glass and states, ‘Immigration. This, my friend Scott, is the most un-intelligent economic policy Australia has, that no other country in the world can produce.’ (Pour in a lot or pour in a little – immigrants verses the beer demonstration.)
You are making only 1.7 babies and as you know a civilisation will soon be extinct if you’re not making 2.8+ babies per year. You will not need to build new homes, schools, and shopping centres, you will be in an economic slide to disaster this century.
Your country has the space, infrastructure, climate, stable government, and great economy, [and it has] no guns and a quality life unique in the world.’ Steve furthered: ‘These positive attributes can be said about a few countries; however, where your country wins is your undeniable popularity. Walk down a street in any country in the world and ask a simple question: ‘Today, we are handing out passports. Which country would you like to live, work and raise your family?
The response is more likely: ‘Australia.’ ‘This is the single most important ‘un-intelligent’ factor that secures your third economy.’ Indeed, apply this knowledge into simple supply and demand controls and you have an economic weapon against any unforeseen localised or global economic crisis. Oversupply of cars or housing? Hand out some $1 million - to $2 million-dollar visas and watch them arrive by the plane load ready to buy your houses, cars and furniture, eat in your restaurants, and send their children to your schools. More consumers means productivity fixed in a flash.
That being said, Australia’s economic policy is joined at the hip with immigration – open the immigration doors too widely, and you will have a boom-crisis on your hands that will overinflate every single market sector on simple supply and demand.
Too much demand is probably your greatest economic concern. It needs to be a controlled, intelligent, sustainable growth policy, married to immigration.
Australia is a nation built on immigration. Nearly 50% of Australians are either born overseas or have a parent or grand parent born abroad. It has become a leading country because many ethnic groups have enriched it culturally, socially and economically.