Sydney house price in USD

Attached.
link: http://www.cashflowcapital.com.au/update/foreign-buyers-just-got-a-massive-advantage/

 

Certainly explains why Sydney house prices are no match for cashed up foreign investors with USD or other similarly-valued currencies.

 

Syd boom has been going hard for the last 3 years and Au dollar has only recently tanked.

Clearly attractive currency play, but Market now peaking

MTR

 

~30% drop of AU$ against USD (and Chinese YMB) has effectively squeezed "bubble" from most Aussie assets. This makes everything in Australia looks cheap. It may take some time for its effect on export and tourism etc.to appear.
The "bubble" in current Syd/Melb housing market is less significant from global prospective IMO. With ARPA suppressing investors, any change to "negative gearing" is less likely.
By the way, Chinese just learned from Aussies to squeeze "bubble" from their giant "balloon" by devaluing their currency (~2% today). This opens another dimension for the world.
http://www.sbs.com.au/news/article/2015/08/11/chinas-record-yuan-devaluation-dents

 

Yes I agree, Sydney house price looks cheap on the foreign investor eyes.
http://www.smh.com.au/comment/all-bubbles-burst-first-china-later-australia-20150826-gj8dpe.html

It will be more interesting at the end of this year since China just cut interest rates. Other central banks to follow loosening their monetary policy.

http://www.bbc.com/news/uk-34052618

So who is next?

When RBA cuts the Interest Rate again this year, AUD$ will be devalued thus making property here more lucrative again. Perhaps the investors going to Brisbane instead of Sydney and Melbourne.

 

Look at this range, just getting cheaper for some foreigners, its clear the AUD$ will trend down from 70, predictions are 65. If this happens Syd/Melb will be cheap as chips.

http://www.ozforex.com.au/forex-tools/my-fx-dashboard/AUD/USD/

 

It's good for them but not for us unfortunately.

 

I think charting YoY performance compared to USD is more informative on a constant currency basis.

 

I think we will have to wait and see what happens with the current political movement against foreign ownership of established properties.
New laws have been passed and the ATO is now policing transactions.

If (big if) they actually manage to divert foreign capital into new properties/developments rather than established dwellings then it wouldn't matter what house prices are in $USD terms. All foreign capital would be increasing supply and limiting capital gains on established properties.

What has happened to other countries in a similar scenario?

 

The FIRB laws on foreign purchases have been around for >10 years, it is just that enforcement is starting to happen with the purchase of existing buildings (though the reigns have been loosened as to what qualifies as a foreign purchase eg existing house may be purchased by someone on a student visa).

 

FIRB is useless. This is just a symbolic action from the government to provide a little comfort for some unhappy locals . By the way, do you really think it is difficult for the rich foreigners (and their kids, relatives) to get a permanent visa here (to legalise purchase)? It is just a formality for them.
It seems that the unhappy locals do have a very simple mind (naive?) ......
Government has to produce some useless policies for comforting locals because this is what they want ; in return, the locals might support the "efficient" government

 

FIRB may be useless but the ATO is not.

We will just have to wait and see what the response to the policy is.

 

@propernewb:
Do you really think our government (including ATO, 4 banks etc) wants to block foreign investors (or overseas buyers)? This is equivalent to give them a pay cut!. Do you sense this possibility?

 

@acorn123 how are our banks profitting from foreign investors when they often make purchases with cash or with loans from their home country?

Government profits from housing via stamp duty. It doesn't care who is buying them so long as houses keep getting flipped.
Enforcing foreign investor laws opens up a new source of revenue - confiscation of all profits for those investors who failed to seek approval; fines against the investor; and fines against 3rd parties. The Government will do very well out of this.

I don't know why you are asking me if this is a possibility when it is set to become reality by 1st December 2015.
Do you really think the Government would just ignore the issue when its own senator headed up an investigation into housing (re: Kelly O'Dwyer) whilst the already xenophobic electorate is out marching against foreign ownership? Not if they want to get re-elected.

 

@propernewb:
You really believe most foreign buyers purchased properties with cash? as reported by media?
You really think most foreign buyers purchased properties illegally? As I know, most of them did this through local banks here.
You really think by cracking down this small group of illegal buyers can make the country rich (new source of revenue)? or cool down the housing market in Syd/Melb? or deter overseas buyers to buy more?

IMO the law enforcement is to regulate the housing market to some extent; Not to stop or ban foreigners to buy properties legally.
I understand some people want to ban overseas buyers altogether .....
Unfortunately, neither liberal or labor government will do so .....; You need an ultra-right party/government (or in the name of patriotism) to do this -- however this will be condemned by the world -- and less likely to happen - Yanks or Brits will force us to review an old lesson titled "capitalism" .....
With AU$ and share values of companies going down, more overseas buyers will come. They are not aiming for residential properties (which are small shrimps) ; they come for buying Qantas, Telstra, FMG, etc.

 

Yes