Razer on price hikes, Rachel cuts and the Herald Sun

As a reader who prefers to encounter sentences made from actual words, thoughts made from actual thinking, and publications made of actually endurable writing instead of Satan’s nut-sweat, I generally avoid the Herald Sun. But, there are times when this, and other News Corp titles, emit the hellish nut stink of a filth so pure I cannot resist a sniff. It’s not a defensible instinct to draw your nostrils to the wet, tan spot on the month-old cauliflower your flatmate holds with the warning, “you’d better not put your nose near this stinker”. But, it’s an instinct nonetheless.

And, so it was that yesterday I encountered the “writing” of one Susie O’Brien. I know nothing of Susie O’Brien save for the fact that she is the last woman alive to ask a hairdresser for a modified “Rachel”. I am not myself a very fashionable lady and I am certainly not as photogenic as the blonde and winsome Susie. But, I know what’s right and I know what’s good, and asking for a layered, high-maintenance simulation of the Friends second season ain’t it.

Second only to crimes against hair, of course, are crimes against fact. And O’Brien’s refusal to engage with easily accessed fact has produced a brassica of such extreme decay, I find myself unable to let this day pass without publicly scrunching my nose at its moralising rot.

Perhaps O’Brien doesn’t know how silly her hair has made her when she makes the claim that the “Chinese” are inflating our housing market. But, she makes it nonetheless. Chinese investment in housing, writes Rachel, is the “reality that is making housing unaffordable”.

The thing is, though, it’s really not.

I know this because my hair, which is much more like Phoebe’s, was having an argument with its mother. It was mother’s view that my hair had failed to acquire a residence due to financial irresponsibility. It was the, then-unproven, view of my hair that the chasm between the average Australian house price and the average Australian wage had increased over time. As things turned out, Phoebe was right and this was a fact confirmed by the very on-point hair of Christine Lagarde, or at least of the organisation of which her marvelous steely ‘do is managing director. The IMF reports that Australia’s housing price-to-wage ratio is now the world’s third worst. And so, despite the attempts by the Coalition’s Kelly O’Dwyer to prove a connection via the Inquiry Into Foreign Investment In Residential Real Estate between Chinese ownership and housing affordability, it seemed silly to conclude that Australia was being impacted by investment at a rate unseen in the rest of the Western world. Where, in many cases, Chinese persons are free, if not freer, to buy.

Rachel O’Brien Green is a journalist and could have always made a call or visited the RBA website or asked Monica for help in understanding the emerging crisis of housing affordability. Instead, she swallowed the reeking fiction served up so regularly by her publishers and elected not to look at the reasons for this local inflationary bias. None of which, to the best of my knowledge stubbornly acquired over several days to prove a point, have anything to do with The Chinese. Whose selfish hegemonic audacity, says O’Brien, is reflected in the fact of them putting up signs in shops in Chinese!!! (Note to News: hànzì is not a hot new haircut.)

“The facts speak for themselves,” says Rachel before pausing to offer no facts of consequence. The “facts” of inflationary momentum have even been recently discussed by Federal politicians with the Coalition mentioning, correctly, the impact of state planning controls and the Greens mentioning, correctly, the impact of negative gearing. Tax and asset test concessions have served over time to concentrate property in the hands of a few. Australians, that is.

“Auctions,” says Rachel, “are packed with foreign buyers with cheque books”. Actually, what they are packed with is Australians who have tax benefits of such significance, no first home buyers’ grant can compete.  And these bidders, like all bidders including those who may dare to read Chinese signage in public, don’t squeeze others out of the market because they’re arseholes. They do it just because they can. Policy allows it.

The “people” responsible for inflationary bias are not, as Rachel Green-Hayek suggests, acting against the law to diminish affordable housing. They are working absolutely within it.

It’s been a while since anyone in the ALP has dared talk openly about the consequences of these tax concessions just as it’s been a while since well-to-do Australians stopped thinking of property as something to live in rather than something that lives in an investment portfolio. But, this doesn’t mean that the “facts” about inflation in the sector have changed nor does it mean that a journalist of modest skill can’t locate them. And the “facts” are not that limited affordability is the work of The Chinese, even if Rachel does find it difficult that her “beloved” upscale suburbs are now polluted with the Chinese characters and architecture she sees as testament to “overseas wealth and power”. I mean, can’t These People learn to decorate their gardens with tasteful yucca plants and perhaps get a nice layered crop?

If there is anything polluting our “beloved” suburbs, aside from stupid fucking cafes that serve paleo omelettes on tables upcycled from “retro” (i.e. de-funded) government school desks, it is idiocy. Idiocy of a sort that says Facts Are Facts and not, after all, “racist scaremongering”.

Frankly, I plan never to read Rachel O’Hair again and I don’t give a shit if she’s a racist or not. Perhaps she even travels regularly to Bali where she is “inspired” by the “simple wisdom” of ”local artisans” and is very careful to stay in luxury villas whose construction did not create an inflationary bias for residents. But, I do give a shit that this cauliflower stench is given free license to stand in for the facts of the market.

The thing about capital and the conditions that permit its very uneven distribution is that it does not have a race. It does not have a particular taste in architecture. It does not have morality. This is not to say that people are immoral, although I would argue that to make a statement about the poor taste and greed of a particular ethnic group is immoral. It is, rather, to say that crying for “morality” when what you need to cry out for is a suite of policies to increase housing affordability is bollocks.

Look. Don’t trust me on this. Trust an economic forecaster or an academic whose scholarship is based in urban or housing research. The “facts” can “speak for themselves” if one chooses to allow them oxygen. And to do this, we must remove the cruciferous stench of the rotten cauliflower. You know, the one with the haircut that takes a tiny bit of evil and infects the entire household with it.

Inflationary bias doesn’t just happen because people are Chinese. Or because they are greedy or because they have no taste. It happens because there are no fucking controls on the fucking market — save for those, like negative gearing, which advantage persons already rich in property. And, to a lesser degree, because there are no fucking controls on basic fucking journalism.

I mean. Fuck. I hate numbers and markets bore the blind shit out of me. Even more than season two of Friends. But you just can’t make shit up, lob a few volleys about mock French provincial design and cry about “foreigners” taking control. At least, not without me making fun of your haircut.

This post originally appeared at Helen Razer’s website badhostess.com

8 responses to “Razer on price hikes, Rachel cuts and the Herald Sun

  1. You may have a superior hair cut, but you seem to be on about par with Susie when it comes to facts. OK, so Australia has a high house price to wage ratio. Why does that mean negative gearing is more to blame for the housing ‘bubble’ than foreign ownership? There are plenty of reasons why foreign investors may prefer to invest in Australia than in other developed countries. This is an empirical question and we don’t have good enough data on foreign ownership to make a judgement.

    Not that it really matters anyway. Negative gearing is a market distortion so it should be fixed. Its importance relative to foreign investment in driving house prices is irrelevant. Foreign investment, on the other hand, is not a market distortion so there’s nothing to fix. Capping foreign investment would just be protectionism/xenophobia.

  2. Yep, city house prices suck, big time. I reckon the last time house prices were *fair* was about 1993. Since then houses seem to have become a path to wealth rather than shelter for people. Its all about policy for sure, and not just foreign buyers.

    Unlike a lot of people, I’m not convinced that negative gearing alone is the problem, although I think negative gearing should be abolished.

    Maybe the Chinese misinformation stems from the Vancouver experience when thousands of Hong Kong Chinese left China in 1997 and Vancouver prices supposedly went ballistic. I don’t know if this is even true, but it was certainly part of folk law in Canada.

    If I was a journalist I’d look that up, but I’m not, so I can just sprout any old shite I want to I guess.

  3. The truly amazing thing about this whole house pricing thing – by population density, we are the third last nation on the planet. Only Namibia and Mongolia have lower population density than Australia. But now we have the third least affordable housing stock. Hmmm.

    The anecdotal evidence about foreign purchasers is unconvincing. The “Chinese” buyers one sees at open homes are likely to be Australian citizens, in most cases. Additional controls on “foreigners” (really, a sop to the significant undercurrent of latent racism amongst Australians), is likely to achieve little or nothing.

    Australia’s tax and welfare system essentially forces everyone with any means to purchase a home. The residential home is exempt from most forms of taxation and assessment for welfare purposes. Try living on the old age pension whilst still paying rent in Sydney…

    But then, once you’re in, build up some equity (a simple matter in a rising market) and then negative gearing makes the second and third properties much easier to acquire and much more tax effective than most other investments. It is THIS that drives up prices.

  4. I applaud your right to have a go at a reckless idiot espousing the company line, but…

    Respectfully, investment in housing by non-nationals is actually a problem in Australia, such that it is a significant, but by no means the greatest factor, in why Australia’s housing is so unaffordable. That with our insistence on not getting good jobs with good pay, and security, and a willingness to blindly throw our lives under the corporate banking bus.

    However there are quite reasonable analysts who are close to the industry who have facts about the rate of chinese investment in housing, and those people with the facts point out that is also canadian, US and UK investors.

    And Bernard can argue till he’s blue in the face that taking these people out of the market will see less housing stock built, but in the main they are not building new housing, they are buying off the plan from big construction companies, the likes of Meriton et al.

    And it doesn’t take a genius to see that if they were not able to invest in housing in Australia then those very same houses would be available for Australians, possible even first home buyers. Some countries have banned investment from non-locals, including US and Canada. Why we need housing investment from non-nationals has never been aired, and Bernard tends towards assuming that any money is good money. I don’t take the same view.

    As well, non-nationals get around the problem of having to invest only in new housing by buying existing houses, which they have to knock down and re-build within 2 years, so they are very deeply in the market of existing houses. Again, Bernard seems to assume that is a rare case, but my contacts who are senior real estate industry types insist that non-nationals money is a substantial cut of all the money that is currently inflating the bejesus out of our housing stock.

    But undoubtedly the biggest factor is the blind and stupid aussie investor who is being led that way by what is certainly the biggest factor in the inflation of housing costs, those being negative gearing and the capital gains tax concessions.

    So while Rachel should rightly be called out as a Sun-Herald troll, there is some truth in the argument. But it’s not just chinese money.

    1. I don’t think we’re terribly at odds. My chief objection to the “writing ” in the Hun is that it posits foreign investment (in this case specifically Chinese) as the major reason for inflation. As you say, this is a minor factor. And the chief reason, which I discussed with a range of academics for a previous piece in Crikey, is tax concession.
      Money is money whether it derives from a Chinese bank account or an Australian one and the problem with it is not that it’s grubby or culturally insensitive to Susie but that it is concentrated in fewer pools. The monumental disadvantage to first or non-investor home buyers is made by these concession policies. People who own more than one house find housing much cheaper to buy.
      And as for the purported outcome of negative gearing, of advantage only to Australians (but clearly not all Australians), it produces very little rental stock. I have it on the authority of advocates that 90% of all NG purchases are of rental stock that already exists.
      So foreign and Chinese residential real estate investment is a tiny trifling part of a serious and complex crisis. And that “writing ” was so ignorant and heedless of facts, it deserves to be analysed.

      1. Except where money isn’t just money. In the case of Chinese investors they are looking for investments outside the Chinese housing market, which arguably is a bubble of greater extent (but it’s not a homogenous lump) than Sydney & Melbourne. It’s called land banking for a reason, they have loads of cash and are looking to buy security. Certainly some of the explosion in medium and high density developments do have Chinese developers/money behind them. And if the apartments are sold to Chinese investors and not occupied (or entire houses shuttered with plywood) that hardly growth the supply side.

        Just one of many demand co-factors, others being population growth (duh, everyone rich wants a Big Australia for obvious reasons), planning constrains (some sensible others not), bad State Govt infrastructure and land use planning that makes outer suburbs of major cities much less desirable markets to buy in, Aussie investors looking to get a leg up the ladder of less back-breaking-work-till-I-retire having seen others with 5-10 investment properties profit from land-price inflation and encouraged by get-rich-quick-in-property seminar proliferation.

        And frankly, fuck the Hun and all who sail on her, any day of the week. :-)

      2. And negative gearing is a (?the) major land-inflation driver (obviously) according to any org that’s studied housing affordability in quantitative terms.

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