I must admit it does not feel the best watching Labour being accused of engaging in dog whistle politics. Is it true?
The social media response is mixed with many pouring scorn on the Auckland Housing analysis methodology used without, it appears, even understanding what the methodology is. Others think that the issue concerning the flow of overseas money is a significant issue that needs to be discussed and addressed. Of course if the Government was measuring important data such as non residential purchases of houses and inflow of capital and what it is being used for this sort of guesstimate would not be required.
Rob Salmond has written a calm explanation on what the analysis entailed and in my view the analysis clearly backs up a strong local impression that there is a problem. He makes it clear that the modelling used did not automatically assume that a foreign surname depicts a foreign purchaser. For instance the surname “Lee” triggered a 40% possibility that the purchaser was ethnically Chinese. The analysis is more nuanced than Keith Ng suggests.
Some non Labour commentators have been careful in their response. Daniel Mclaughlin says this:
On the other hand, I do find the logic of what Labour are trying to say fairly convincing. In his post Keith converts the percentages in Labour’s analysis into raw numbers and seems to think that demolishes Twyford’s argument, but I think he’s wrong. I haven’t done a big fancy regression analysis to figure out the likelihood that the sales in Labour’s dataset can be accounted for by Auckland’s resident ethnically Chinese population, but I think the chance is very small. Maybe Labour’s right? Maybe a lot of the buyers in their data are foreign based Chinese investors?
Unfortunately we can’t tell based on what we’ve got. But we do need to figure out a way to talk about the ongoing impact of China on New Zealand without (a) the entire conversation being written off as racist or (b) offending Chinese New Zealanders. Feels like Labour’s just set us back aways there.
I could not agree more with his second to last sentence although I do not necessarily agree with his last sentence.
Russel Brown said:
Focusing on non-resident Chinese investors isn’t necessarily racist either. There actually aren’t any other countries with trillions of dollars of capital looking for places to go, and the Chinese credit and investment environment is very weird, as evidenced by the recent drama on the Chinese stock markets. It is entirely possible that Chinese capital (and credit) is distorting our badly-regulated residential property market.
But this just isn’t good enough data to go out and say so with, especially when you’ve dragged residents into it.
And Bernard Hickey’s tweet summed things up well.
If only we had some proper data on residency and ownership, this Auckland housing debate wouldn't be so painful
— Bernard Hickey (@bernardchickey) July 10, 2015
The basic problem is there is $21 trillion US in Chinese Banks looking for a return, any return. Some overseas residential property, such as Auckland’s, is attractive because it is in a stable jurisdiction and is a bolthole in case of disruption at home. And with suggestions that current restrictions on the export of capital could be relaxed the potential for overseas purchasing of local real estate will only get worse.
Different Western nations have felt the effect. For instance in the United States last year Chinese topped Canadians to rank as the biggest foreign purchasers of U.S. homes by sales and dollar volume. In London Chinese buyers accounted for 11 per cent of all property transactions worth above £1m in 2014, up from 4 per cent in 2012. In Canada inflation real estate inflation through Chinese investment resulted in the hashtag #donthave1million taking off amongst young Canadians who were increasingly being priced out of the possibility of home ownership. And in Australia there has been talk about a “Wall of Chinese Capital” hitting the property markets of Sydney and Melbourne.
A recent Sydney Morning article contained this comment from an ethnic Chinese Property developer James Tee:
“We have been tracking this for two years,” says Tee. Those outflows from China are compounded by the flight of capital out of Canada which is now “bursting” to find a home in Australia.“There is a mountain of liquidity. China is bursting with flight capital,” says James Tee.Due to the bubble in Canadian house prices and ensuing concerns over social dislocation, Canada’s government shut down its investor visa program last year. Some 40,000 Chinese visa applicants with a minimum loan to governments of $C800,000 were handed back their capital.
“That’s roughly $32 billion,” says Tee. “The Canadian government said: ‘We don’t want your money anymore’ and that capital is now hitting the Sydney market.”
“There is a mountain of liquidity. China is bursting with flight capital. They can’t go to the US, they can’t get it into Singapore anymore, or Hong Kong.”
Australia has more restrictions than New Zealand in that there is some measurement of capital inflows its use and residential investment is directed to the construction of new houses. But there are predictions of a possible $60 billion investment in Australian houses by Chinese interests over the next six years.
There is a complaint about why Labour made this about Chinese. The problem lies with the Chinese Banking System and the threat it poses to our economic stability and to the aspirations of our young and poor. Attacks on the accuracy of the methodology ignore what is happening on the ground in Auckland although I agree that the presentation of the data should have concentrated on the money and not on the people.
The foreign money is certainly the issue. Perhaps Labour should have concentrated on this to the exclusion of everything else.