Below is an extract of an extremely long and interesting article which addresses many aspects of the Australian economy. The key issue that mining, agriculture, and especially manufacturing are a declining share of the GDP while services and house building is growing. The author contends that immigration (~170,000), education visas (~400,000+), and temporary entrance visas (Senate report, there are 1.4 million visa holders with working rights in Australia) are propping up the demand for housing and thus the GDP while the service industry is the biggest growth industry with Australian GDP growing more from selling coffee to each other than any other cause.
The article highlights Sydney house price to income ratios of 13+ whereas the normal ratio of affordability is ~ 3 and unaffordability 5+.
The article also contends that the profits of mining relative to costs are low and falling and some of the biggest miners and hydrocarbon producers are not making any real money. Recently the demand for workers in these industries has risen and so have wages while costs of mining projects continue to blow their budgets.
Productivity has been stagnant for more than 20 years while past excessive wage growth has slowed to zero. Australians have an entitlement belief that they are entitled to have the wage growth rates of the past.
Meanwhile, budget deficits and current account deficits are growing setting up a desperate situation where the government will be virtually powerless to act if there is a recession which bursts the property bubble and causes massive unemployment.
What will trigger the collapse of the Australian economy Ponzi scheme? If the Chinese economy stalls Australia will be in a world of hurt.
https://medium.com/@matt_11659/matt-bar ... 77adb3fb2f
There's much more in the article.... despite the gargantuan amount of money that China has been pumping into the system since 2014, Australia’s entire mining industry- which is completely dependent on China- has struggled to make any money at all.
Across the entire industry revenue has dropped significantly while costs have continued to rise.
China credit impulse leads its manufacturing index (which in turn fuels commodities). Source: PIMCO
According to the Australian Bureau of Statistics, in 2015–16 the entire Australian mining industry which includes coal, oil & gas, iron ore, the mining of metallic & non-metallic minerals and exploration and support services made a grand total of $179 billion in revenue with $171 billion of costs, generating an operating profit before tax of $7 billion which representing a wafer thin 3.9% margin on an operating basis. In the year before it made a 8.4% margin.
Collectively, the entire Australian mining industry (ex-services) would be loss making in 2016–17 if revenue continued to drop and costs stayed the same. Yes, the entire Australian mining industry.
Collectively, the entire Australian mining industry (ex-services) would be loss making in 2016–17 if revenue continued to drop and costs stayed the same. Source: Australian Bureau of Statistics
Our “economic miracle” of 104 quarters of GDP growth without a recession today doesn’t come from digging rocks out of the ground, shipping the by-products of dead fossils and selling stuff we grow any more. Mining, which used to be 19% of GDP, is now 6.8% and falling. Mining has fallen to the sixth largest industry in the country. Even combined with agriculture the total is now only 10% of GDP.
Operating profit before tax by Australian Industry- the entire small and medium mining industry collectively has been loss making from 2014–16 on an operating basis. Source: Australian Bureau of Statistics
Mineral production in regional Western Australia, where 99% of Australia’s iron ore is mined, contributed only 6.5 percent to Australia’s GDP growth in 2016.
To make matters worse, in 2017 there has been a sharp downturn in Chinese credit impulse (rate of change), which is combined with a negative, and falling global credit impulse. According to PIMCO’s Gene Fried “the question now is not if China slows, but rather how fast”. This will cause even more problems for Australia’s flagging resources sector.
China’s contribution to the global credit impulse (market GDP weighted). Source: PIMCO
The “economic miracle” of GDP growth is also certainly not from manufacturing, which has collapsed in the last decade from 10.8% to 6.6% of Gross Value Add, and has grown by… negative 275,000 jobs since the 1990s.
Industry share of Gross Value Add 2005–6 versus 2015–6. Source: Australian Bureau of Statistics
This is even before the exit of Australia’s last two remaining car manufacturers, Toyota and Holden, who both shut up shop in 2017. Ford closed last year.
Australian Manufacturing Employment and Hours Worked. Source: AI Group
In the 1970s, Australia was ranked 10th in the world for motor vehicle manufacturing. No other industry has replaced it. Today, the entire output of manufacturing as a share of GDP in Australia is half of the levels where they called it “hollowed out” in the U.S. and U.K.
In Australia in 2017, manufacturing as a share of GDP is on par with a financial haven like Luxembourg. Australia doesn’t make anything anymore.
Manufacturing value add (% of GDP) for Australia. Source: World Bank & OECD
With an economy that is 68% services, as I believe John Hewson put it, the entire country is basically sitting around serving each other cups of coffee or, as the Chief Scientist of Australia would prefer, smashed avocado.
David Llewellyn-Smith recently wrote that this is unsurprising as “the Australian economy is now structurally uncompetitive as capital inflows persistently keep its currency too high, usually chasing land prices that ensure input costs are amazingly inflated as well.
Wider tradables sectors have been hit hard as well and Australian exports are now a lousy 20% of GDP despite the largest mining boom in history.
The other major economic casualty has been multifactor productivity (the measure of economic performance that compares the amount of goods and services produced to the amount of combined inputs used to produce those goods and services). It has been virtually zero for fifteen years as capital has been consistently and massively mis-allocated into unproductive assets. To grow at all today, the nation now runs chronic twin deficits with the current account (value of imports to exports) at -2.7% and a budget deficit of -2.4% of GDP.”
The Reserve Bank of Australia has cut interest rates by 325 basis points since the end of 2011, in order to stimulate the economy, but I can’t for the life of me see how that will affect the fundamental problem of gyrating commodity prices where we are a price taker, not a price maker, into an oversupplied market in China.
This leads me to my next question- where has this growth come from?
Successive Australian governments have achieved economic growth by blowing a property bubble on a scale like no other.
A bubble that has lasted for 55 years and seen prices increase 6556% since 1961, making this the longest running property bubble in the world (on average, “upswings” last 13 years).
In 2016, 67% of Australia’s GDP growth came from the cities of Sydney and Melbourne where both State and Federal governments have done everything they can to fuel a runaway housing market. The small area from the Sydney CBD to Macquarie Park is in the middle of an apartment building frenzy, alone contributing 24% of the country’s entire GDP growth for 2016, according to SGS Economics & Planning.
According to the Rider Levett Bucknall Crane Index, in Q4 2017 between Sydney, Melbourne and Brisbane, there are now 586 cranes in operation, with a total of 685 across all capital cities, 80% of which are focused on building apartments. There are 350 cranes in Sydney alone.
Crane Activity — Australia by Key Cities & Sector. Source: RLB
By comparison, there are currently 28 cranes in New York, 24 in San Francisco and 40 in Los Angeles. There are more cranes in Sydney than Los Angeles (40), Washington DC (29), New York (28), Chicago (26), San Francisco (24), Portland (22), Denver (21), Boston (14) and Honolulu (13) combined. Rider Levett Bucknall counts less than 175 cranes working on residential buildings across the 14 major North American markets that it tracked in 3Q17, which is half of the number of cranes in Sydney alone.
According to UBS, around one third of these cranes in Australian cities are in postcodes with ‘restricted lending’, because the inhabitants have bad credit ratings.
This can only be described as completely “insane”.
That was the exact word used by Jonathan Tepper, one of the world’s top experts in housing bubbles, to describe “one of the biggest housing bubbles in history”. “Australia”, he added, “is the only country we know of where middle-class houses are auctioned like paintings”.
Our Federal government has worked really hard to get us to this point.
Many other parts of the world can thank the Global Financial Crisis for popping their real estate bubbles. From 2000 to 2008, driven in part by the First Home Buyer Grant, Australian house prices had already doubled. Rather than let the GFC take the heat out of the market, the Australian Government doubled the bonus. Treasury notes recorded at the time say that it wasn’t launched to make housing more affordable, but to prevent the collapse of the housing market.
Treasury Executive Minutes. Source: Treasury, The First Home Owner’s Boost
Already at the time of the GFC, Australian households were at 160% debt to net disposable income, 30% more indebted than American households at their peak, but then things really went crazy.
The government decided to further fuel the fire by “streamlining” the administrative requirements for the Foreign Investment Review Board so that temporary residents could purchase real estate in Australia without having to report or gain approval.
It may be a stretch, but one could possibly argue that this move was cunningly calculated, as what could possibly be wrong in selling overpriced Australian houses to the Chinese?
I am not sure who is getting the last laugh here, because as we subsequently found out, many of those Chinese borrowed the money to buy these houses from Australian banks, using fake statements of foreign income. Indeed, according to the AFR, this was not sophisticated documentation — Australian banks were being tricked with photoshopped bank statements that can be bought online for as little as $20.
UBS estimates that $500 billion worth of “not completely factually accurate” mortgages now sit on major bank balance sheets. How much of that will go sour is anyone’s guess.
Llewellyn-Smith writes, “Five prime ministers in [seven] years have come and gone as standards of living fall in part owing to massive immigration inappropriate to economic circumstances and other property-friendly policies. The most recent national election boiled down to a virtual referendum on real estate taxation subsidies. The victor, the conservative Coalition party, betrayed every market principle it possesses by mounting an extreme fear campaign against the Labor party’s proposal to remove negative gearing. This tax policy allows more than one million Australians to engage in a negative carry into property in the hope of capital gains. In a nation of just 24 million, 1.3 million Australians lose an average of $9,000 per annum on this strategy thanks to the tax break.”
The astronomical rise in house prices certainly isn’t supported by employment data. Wage growth is at a record low of just 1.9% year on year in 2Q17, the lowest figure since 1988. The average Australian weekly income has gone up $27 to $1,009 since 2008, that’s about $3 a year.
Private sector wage price index (annual percentage). Source: SMH, Australian Bureau of Statistics
Household income growth has collapsed since 2008 from over 11% to just 3% in 2015, 2016 and 2017. This is one sixth the rate that houses went up in Sydney in the last year.
Employment growth is at an anaemic 1% year on year in 4Q16, and the unemployment rate has been trending up over the last decade to 5.6%.
Unemployment rate and Employment growth. Source: ABS, RBA, UBS
Foreign buying driving up housing prices has been a major factor in Australian housing affordability, or rather unaffordability.
Urban planners say that a median house price to household income ratio of 3.0 or under is “affordable”, 3.1 to 4.0 is “moderately unaffordable”, 4.1 to 5.0 is “seriously unaffordable” and 5.1 or over “severely unaffordable”.
Demographia International Housing Affordability Survey. Source: Demographia
At the end of July 2017, according to Domain Group, the median house price in Sydney was $1,178,417 and the Australian Bureau of Statistics has the latest average pre-tax wage at $80,277.60 and average household income of $91,000 for this city. This makes the median house price to household income ratio for Sydney 13x, or over 2.6 times the threshold of “severely unaffordable”. Melbourne is 9.6x.
Sydney House values by Suburb. Source: Core Logic
This is before tax, and before any basic expenses. The average person takes home $61,034.60 per annum, and so to buy the average house they would have to save for 19.3 years- but only if they decided to forgo the basics such as, eating. This is neglecting any interest costs if one were to borrow the money, which at current rates would approximately double the total purchase cost and blow out the time to repay to around 40 years.
Ex-deputy Prime Minister Barnaby Joyce recently said to ABC Radio, “Houses will always be incredibly expensive if you can see the Opera House and the Sydney Harbour Bridge, just accept that. What people have got to realise is that houses are much cheaper in Tamworth, houses are much cheaper in Armidale, houses are much cheaper in Toowoomba”. Fairfax, the owner of Domain, or more accurately, Domain, the owner of Fairfax, also agrees that “There is no housing bubble, unless you are in Sydney or Melbourne”.
Now probably unbeknownst to Barnaby, who might be more familiar with the New Zealand housing market, in the Demographia International Housing Affordability survey for 2017 Tamworth ranked as the 78th most unaffordable housing marketing in the world. No, you’re not mistaken, this is Tamworth, New South Wales, a regional centre of 42,000 best known as the “Country Music Capital of Australia” and for the ‘Big Golden Guitar’.
According the Australian Bureau of Statistics, the average income in Tamworth is $42,900, the average household income $61,204 but the average house price is $375,000, giving a price to household income ratio of 6.1x, making housing in Tamworth less affordable than Tokyo, Singapore, Dublin or Chicago.
If you used the current Homesales.com.au data, which has the average house price at $394,212, or 6.6x, Tamworth would be in the top 40 most unaffordable housing markets in the world. Yes, Tamworth. Yes, in the world. Unfortunately for Barnaby, Armidale and Toowoomba don’t fare much better.
Tamworth, which at current prices would be in the top 40 most unaffordable housing markets tracked by Demographia in the world. Really? Source: GP Synergy
Out of a total of 406 housing markets tracked globally by Demographia, eight (or 40%) of the twenty least affordable housing markets in the world were in Australia, including in addition to Sydney and Melbourne such exotic places as Wingcaribbee, Tweed Heads, the Sunshine Coast, Port Macquarie, the Gold Coast, and Wollongong. Looking at all regional Australian housing markets, they found 33 of 54 markets “severely unaffordable”.
The 20 most unaffordable housing markets in the world. Source: Demographia, 13th Annual Demographic International Housing Affordability Survey:2017
If you borrowed the whole amount to buy a house in Sydney, with a Commonwealth Bank Standard Variable Rate Home Loan currently showing a 5.36% comparison rate (as of 7th October 2017), your repayments would be $6,486 a month, every month, for 30 years. The monthly post tax income for the average wage in Sydney ($80,277.60) is only $5,081.80 a month.
Commonwealth Bank Standard Variable Rate Home Loan for the average house. Source: CBA as of 7th October 2017
In fact, on this average Sydney salary of $80,277.60, the Commonwealth Bank’s “How much can I borrow?” calculator will only lend you $463,000, and this amount has been dropping in the last year I have been looking at it. So good luck to the average person buying anything anywhere near Sydney.
Federal MP Michael Sukkar, Assistant Minister to the Treasurer, says surprisingly that getting a “highly paid job” is the “first step” to owning a home. Perhaps Mr Sukkar is talking about his job, which pays a base salary of $199,040 a year. On this salary, the Commonwealth Bank would allow you to just borrow enough- $1,282,000 to be precise- to buy the average home, but only provided that you have no expenses on a regular basis, such as food. So the Assistant Minister to the Treasurer can’t really afford to buy the average house, unless he tells a porky on his loan application form.
The average Australian is much more likely to be employed as a tradesperson, school teacher, postman or policeman. According to the NSW Police Force’s recruitment website, the average starting salary for a Probationary Constable is $65,000 which rises to $73,651 over five years. On these salaries the Commonwealth Bank will lend you between $375,200 and $419,200 (again provided you don’t eat), which won’t let you buy a house really anywhere.
Unsurprisingly, the CEOs of the Big Four banks in Australia think that these prices are “justified by the fundamentals”. More likely because the Big Four, who issue over 80% of residential mortgages in the country, are more exposed as a percentage of loans than any other banks in the world, over double that of the U.S. and triple that of the U.K., and remarkably quadruple that of Hong Kong, which is the least affordable place in the world for real estate. Today, over 60% of the Australian banks’ loan books are residential mortgages. Houston, we have a problem.
Residential Mortgages as a percentage of total loans. Source: IMF (2015)
It’s actually worse in regional areas where Bendigo Bank and the Bank of Queensland are holding huge portfolios of mortgages between 700 to 900% of their market capitalisation, because there’s no other meaningful businesses to lend to.
Australian banks’ mortgage exposure as a percentage of market capitalisation. Source: Roger Montgomery, Company data
I’m not sure how the fundamentals can possibly be justified when the average person in Sydney can’t actually afford to buy the average house in Sydney, no matter how many decades they try to push the loan out.
Mortgage Stress Trends to Oct 2017. Source: Digital Finance Analytics
Indeed Digital Finance Analytics estimated in a October 2017 report that 910,000 households are now estimated to be in mortgage stress where net income does not covering ongoing costs. This has skyrocketed up 50% in less than a year and now represents 29.2% of all households with mortgages in Australia (or 9% of all households). Things are about to get real.
Probability of default in 30, 90 days across Australian demographics in October 2017. Source: Digital Finance Analytics
It’s well known that high levels of household debt are negative for economic growth, in fact economists have found a strong link between high levels of household debt and economic crises.
This is not good debt, this is bad debt. It’s not debt being used by businesses to fund capital purchases and increase productivity. This is not debt that is being used to produce, it is debt being used to consume. If debt is being used to produce, there is a means to repay the loan. If a business borrows money to buy some equipment that increases the productivity of their workers, then the increased productivity leads to increased profits, which can be used to service the debt, and the borrower is better off. The lender is also better off, because they also get interest on their loan. This is a smart use of debt. Consumer debt generates very little income for the consumer themselves. If consumers borrow to buy a new TV or go on a holiday, that doesn’t create any cash flow. To repay the debt, the consumer generally has to consume less in the future. Further, it is well known that consumption is correlated to demographics, young people buy things to grow their families and old people consolidate, downsize and consume less over time. As the aging demographic wave unfolds across the next decade there will be significantly less consumers and significantly more savers. This is worsened as the new generations will carry the debt burden of student loans, further reducing consumption.
Parody of Sydney real estate, or is it?
So why are governments so keen to inflate housing prices?
The government loves Australians buying up houses, particularly new apartments, because in the short term it stimulates growth — in fact it’s the only thing really stimulating GDP growth.
Australia has around $2 trillion in unconsolidated household debt relative to $1.6 trillion in GDP, making this country in recent quarters the most indebted on this ratio in the world. According to Treasurer Scott Morrison 80% of all household debt is residential mortgage debt. This is up from 47% in 1990.
Australia Household Debt to GDP. Source: Bank for International Settlements, Macro Business
Australia’s household debt servicing ratio (DSR) ties with Norway as the second worst in the world. Despite record low interest rates, Australians are forking out more of their income to pay off interest than when we had record mortgage rates back in 1989–90 which are over double what they are now.
Everyone’s too busy watching Netflix and cash strapped paying off their mortgage to have much in the way of any discretionary spending. No wonder retail is collapsing in Australia.
Governments fan the flame of this rising unsustainable debt fuelled growth as both a source of tax revenue and as false proof to voters of their policies resulting in economic success. Rather than modernising the economy, they have us on a debt fuelled housing binge, a binge we can’t afford.
We are well past overtime, we are into injury time. We’re about to have our Minsky moment: “a sudden major collapse of asset values which is part of the credit cycle.”
Such moments occur because long periods of prosperity and rising valuations of investments lead to increasing speculation using borrowed money. The spiraling debt incurred in financing speculative investments leads to cash flow problems for investors. The cash generated by their assets is no longer sufficient to pay off the debt they took on to acquire them. Losses on such speculative assets prompt lenders to call in their loans. This is likely to lead to a collapse of asset values. Meanwhile, the over-indebted investors are forced to sell even their less-speculative positions to make good on their loans. However, at this point no counterparty can be found to bid at the high asking prices previously quoted. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash.
The Minsky Cycle. Source: Economic Sociology and Political Economy
The Governor of the People’s Bank of China recently warned that extreme credit creation, asset speculation and property bubbles could pose a “systemic financial risk” in China. Zhou Xiaochuan said “If there is too much pro-cyclical stimulus in an economy, fluctuations will be hugely amplified. Too much exuberance when things are going well causes tensions to build up. That could lead to a sharp correction, and eventually lead to a so-called Minsky Moment. That’s what we must really guard against”. A Minsky moment in China would be an extreme event for the parasite on the vein of Chinese credit stimulus- the Australian economy.
Today 42% of all mortgages in Australia are interest only, because since the average person can’t afford to actually pay for the average house- they only pay off the interest. They’re hoping that value of their house will continue to rise and the only way they can profit is if they find some other mug to buy it at a higher price. In the case of Westpac, 50% of their entire residential mortgage book is interest only loans.
Percentage of interest only loans by bank. Source: JCP Investment Partners, AFR
And a staggering 64% of all investor loans are interest only.
Share of new loan approvals for Australian banks. Source: APRA, RBA, UBS
This is rapidly approaching ponzi financing.
This is the final stage of an asset bubble before it pops.
Today residential property as an asset class is four times larger than the sharemarket. It’s illiquid, and the $1.5 trillion of leverage is roughly equivalent in size to the entire market capitalisation of the ASX 200. Any time there is illiquidity and leverage, there is a recipe for disaster- when prices move south, equity is rapidly wiped out precipitating panic selling into a freefall market with no bids to hit.
The risks of illiquidity and leverage in the residential property market flow through the entire financial system because they are directly linked; today in Australia the Big Four banks plus Macquarie are roughly 30% of the ASX200 index weighting. Every month, 9.5% of the entire Australian wage bill goes into superannuation, where 14% directly goes into property and 23% into Australian equities- of which 30% of the main equity benchmark is the banks.
ASX200 by market capitalisation, Big 4 banks top and Macquarie on the left (arrows). Source: IRESS
You don’t read objective reporting on property in the Australian media, which Llewelyn-Smith from Macro Business calls “a duopoly between a conservative Murdoch press and liberal Fairfax press. But both are loss-making old media empires whose only major growth profit centres are the nation’s two largest real estate portals, realestate.com.au and Domain. Neither report real estate with any objective other than the further inflation of prices. In the event that the Australian bubble were to pop then Australians will certainly be the last to know and the propaganda is so thick that they may never find out until they actually try to sell.”
Take, for example, this recent headline from the Fairfax owned Sydney Morning Herald on March 1st 2017, “Meet Daniel Walsh, the 26-year-old train driver with $3 million worth of property”. It appeared in the property section, which for Fairfax today sits on the homepage of their masthead publications, such as the Sydney Morning Herald, immediately below the top headlines for the day and above State News, Global Politics, Business, Entertainment, Technology and the Arts. The article holds up 26 year old Daniel, who services five million dollars worth of property with a train driver’s salary and $2,000 a week of positive cash flow.
This is what the Australian press more commonly holds up as a role model to young people. Not a young engineer who has developed a revolutionary new product or breakthrough, but an over leveraged train driver with a property portfolio on mostly borrowed money where a 1% move in interest rates will wipe out the entirety of this cash flow.
Yet this young train driver isn’t an isolated case, there are literally hoards of these young folk parlaying one property debt onto another in the mistaken belief that property prices only ever go up. Jennifer Duke, an “audience-driven reporter, with a background in real estate and finance” from Domain, also promotes Robert, a 20 year old, who had managed to accumulate three properties in two years using an initial $60,000 gift from his mum. Jeremy, a 24 year old accountant, has 8 properties with a loan to value ratio of 70%, Edward, a 24 year old customer service representative, has 6 properties despite a debt level of 69% and a salary under $50,000, and Taku, the Uber driver, has 8 properties, with plans for 10 covered by a net equity position of only $1 million by November 2017.
How a train driver can service five million dollars of property on $2,000 a week of positive cash flow comes through the magic of cross-collateralised residential mortgages, where Australian banks allow the unrealised capital gain of one property to secure financing to purchase another property. This unrealised capital gain substitutes for what normally would be a cash deposit. This house of cards is described by LF Economics as a “classic mortgage ponzi finance model”. When the housing market moves south, this unrealised capital gain will rapidly become a loss, and the whole portfolio will become undone. The similarities to underestimation of the probability of default correlation in Collateralised Debt Obligations (CDOs), which led to the Global Financial Crisis, are striking.
Fairfax’s pre-IPO real estate website Domain runs these stories every week across the capital city main mastheads enticing young people into property flipping as a get rich quick scheme. All of them are young, with low incomes, leveraging one property purchase on to another.
At Fairfax — whose latest half year 2017 financial results had Domain Group EBITDA at $57.3 million and the entire Australian Metro Media which includes Australia’s premier mastheads Australian Financial Review, Sydney Morning Herald, the Age, Digital Ventures, Life and Events EBITDA at $27.7 million — property is clearly the most important section of all.
In between holding up this 26 year old train driving property tycoon as something to aspire to, Jennifer has penned other noteworthy articles, such as “No surprise the young support lock-out laws” which parroted incredulous propaganda claiming that young people supported laws designed to shut down places where young people go — Sydney’s major entertainment districts.
As if the Australian economy needed further headwinds, the developer-enamoured evangelical right have crucified NSW’s night time economy. Reactionary puritans and opportunists alike seized on some unfortunate incidents involving violence to simply close the economy at night. NSW State Government, City of Sydney, Casinos, NSW Police, public health nannies, property-crazy media and, of course, property developers had the collective interest to manufacture and blow up a fake health & safety issue to create lockout laws — and then instituted broad night time economic terraforming policies designed to herd patrons to large casinos so they could become permanent monopoly owners of the night time economy in Sydney and Brisbane, while conveniently damaging the balance sheets of small businesses located in competing entertainment areas, so the property could be demolished and turned into apartment blocks.
Property watching at Fairfax has become a fetish. Almost on a daily basis Lucy Macken, Domain’s Prestige Property Reporter, publishes a gossip column of who bought what house, complete with the full address and photos of the exterior and interior and any financial information she can glean about them. I know of one person whose house was robbed — completely cleaned out — shortly after Macken published their full address. Perhaps that was a coincidence, but I am utterly amazed that Fairfax senior management allows this column to exist given the risks it poses to the people whose houses and private details are splashed across its pages.
Fairfax, to be fair, is not without its fair share of great journalists, albeit a species rapidly becoming extinct, who are very well aware of what is really going on. Elizabeth Farrelly writes, “Just when you thought the government couldn’t get any madder or badder in its overarching Mission Destroy Sydney — when it seemed to have flogged every floggable asset, breached every democratic principle, whittled every beloved park, disempowered every significant municipality and betrayed every promise of decency, implicit or explicit — it now wants to remove council planning powers. The excuse, naturally, is ‘probity’. Somehow we’re meant to believe that locally elected people are inherently more corrupt than those elected at state level, and that this puts local decision-making into the greedy mitts of Big Developers”.
However, despite the picture Domain would like to paint, young people with jobs aren’t responsible for driving house prices up, in fact their ownership is at an all time low.
In 2015–16 there were 40,149 residential real estate applications from foreigners valued at over $72 billion in the latest data by FIRB. This is up 244% by count and 320% by value from just three years before.
To put this 40,149 in comparison, in the latest 12 months to the end of April 2017, according to the Australian Bureau of Statistics, a total of 57,446 new residential dwellings were approved in Greater Sydney, and 56,576 in Greater Melbourne.
Even more shocking, in the month of January 2017, the number of first home buyers in the whole of New South Wales was 1,029 — the lowest level since mortgage rates peaked in the 1990s. Half of those first home buyers rely upon their parents for equity.
The 114,022 new residential dwellings in Sydney and Melbourne in 2015–16 should also be put in comparison to a net annual gain of 182,165 overseas immigrants to Australia of which around 75% go to New South Wales or Victoria.
This brings me onto Australia’s third largest export which is $22 billion in “education-related travel services”. Ask the average person in the street, and they would have no idea what that is and, at least in some part, it is an $18.8 billion dollar immigration industry dressed up as “education”. You now know what all these tinpot “english”, “IT” and “business colleges” that have popped up downtown are about. They’re not about providing quality education, they are about gaming the immigration system.
In 2014, 163,542 international students commenced English language programmes in Australia, almost doubling in the last 10 years. This is through the booming ELICOS (English Language Intensive Courses for Overseas Students) sector, the first step for further education and permanent residency.
This whole process doesn’t seem too hard when you take a look at what is on offer. While the federal government recently removed around 200 occupations from the Skilled Occupations List, including such gems as Amusement Centre Manager (149111), Betting Agency Manager (142113), Goat Farmer (121315), Dog or Horse Racing Official (452318), Pottery or Ceramic Artist (211412) and Parole Officer (411714) — you can still immigrate to Australia as a Naturopath (252213), Baker (351111), Cook (351411), Librarian (224611) or Dietician (251111).
Believe it or not, up until recently we were also importing Migration Agents (224913). You can’t make this up. I simply do not understand why we are importing people to work in relatively unskilled jobs such as kitchen hands in pubs or cooks in suburban curry houses.
At its peak in October 2016, before the summer holidays, there were 486,780 student visa holders in the country, or 1 in 50 people in the country held a student visa. The grant rate in 4Q16 for such student visa applications was 92.3%. The number one country for student visa applications by far was, you guessed it, China.