The sellout of the fifth continent

Sydney, Melbourne, Brisbane – Australia’s major cities are among the most sought-after places to live in the world. Not only for locals. Immigrants, foreign investors and business people are also increasingly investing their money in Australian real estate.

Some because of the lifestyle, others because of the low mortgage rates. As a result, house prices in Australia’s metropolises have not risen, they have exploded. Anyone who wants to buy a home in Sydney has to fork out an average of one million Australian dollars, the equivalent of 680,000 euros.

One in six new houses or apartments there is sold to foreigners. Chinese entrepreneurs and millionaires in particular invest their money in Australian real estate. A practice that is subject to strict rules, but which are circumvented time and again. As a result, prices are rising and attractive living space is in short supply.

For millions of Australians, the dream of owning their own four walls is becoming increasingly unaffordable. Particularly hard hit are the socially disadvantaged, who cannot afford the astronomically high rents. The waiting lists for social housing are long and hardly any new ones are being built, because developers are paying top prices for land in the big cities. A trend that is increasingly slamming its own front door in Australians’ faces.

The article in the wording:
A picture-perfect Saturday morning in Cremorne in Sydney’s north. A crowd has formed in front of number five, Adelaide Street. Because number five, a three-bedroom designer apartment with a parking space and roof terrace is being sold, auctioned on the spot by an auctioneer – as is customary in Australia.

Every week, hundreds of houses and apartments change hands in Sydney. It’s a billion-dollar business in which the state government makes a hefty profit. It gets a good four percent of the sale price every time the hammer falls.

Living in Sydney is expensive, more expensive than in London and almost as expensive as in New York or Paris. If you want to own your own four walls, you usually have to go into debt up to your ears or assemble your furniture cheaply from pallets. However, there are good offers for this from pallets for sale in sydney. The average house price in Sydney has just cracked the one million dollar mark – the equivalent of about 680,000 euros. No wonder more and more people in Sydney are giving up the dream of owning their own home and resigning themselves to renting for life.

Paul Tovin: “I know a lot of people who have been working in good jobs for a long time and still can’t afford to buy a house in Sydney. Without my parents’ help, it would have been unthinkable for us for the next few years, too.”

Half a million euros for a two-bedroom house in need of renovation on a noisy main road. Typical Sydney. Small fry for Tim Pellier. He looks after the Moby Dicks in Sydney’s property pool. Designer glasses, an Armani suit and a yellow sports car convertible: you can tell Tim works in a boom industry. For 14 years now, the real estate agent has been selling houses in Double Bay, one of Sydney’s wealthiest neighborhoods, but bricks and mortar have never been as valuable there as they are today.

Says Tim Pellier, “The real estate market is growing and growing. Prices are stable or rising. The Australian dollar is also favorable to overseas buyers. Sydney house and land prices remain high.”

Wealthy customers from China
Low mortgage rates, not enough housing and a reputation as a cosmopolitan city: it’s all driving up house and land prices in Sydney. Plus a stingy government that hardly provides any building land to save the high expense of a transport link. One cost, however, is an import. Foreign real estate investors, especially from Asia, who want to take their own slice of Sydney. At any price.

Monika Chu is in her element, surrounded by luxury. For her agency, she exclusively guides wealthy clients from China through Sydney’s most expensive homes. Multi-millionaires like Amy Yang. The 30-year-old industrialist’s daughter from Shanghai is house hunting, her budget unlimited.

Amy Yang: “An acquaintance from Hong Kong fell in love with Australia and wants to move here with his family. Just like I did. The clean air, schools and lifestyle are great. It’s beautiful here.”

Beautiful comes at a price. The eight-bedroom villa with harbor views costs nine million euros, including a swimming pool. Monika Chu doesn’t even show houses under three million to her Chinese clients:

“Business is excellent. Australia is becoming more and more popular with buyers in China. I was going to sell $100 million worth of houses this year, and now I’m already at $120 million.”

Sydney’s real estate agents are in a gold rush. Wild west for millionaires from the Far East, from Indonesia, Singapore, Hong Kong or China. Robert Simeon is one of the few brokers who doesn’t at all like what he observes at auctions almost every weekend: Suitcases full of cash, auctions where only Mandarin is spoken and bids are made with the help of straw men. Often no older than 19, 20 years old.

Robert Simeon: “Study abroad students are allowed to buy a house for their time studying in Australia, but when they graduate, they have to sell it again. But not one of those houses comes back on the market. That’s illegal and an insult to local buyers. Anyway, our foreign investment review board is a joke.”

Those who want to invest in Australia from abroad first need approval. The rules for buying property are clear: foreigners are only allowed to buy newly built apartments or houses, not existing ones. The consequences of this cannot be overlooked, let alone ignored, in major cities all over Australia.

Residential towers with 50,000 apartments
The construction industry is booming. Residential towers for a total of 50,000 brand new apartments are planned in and around Melbourne, 25,000 are to be built in Brisbane, and 100,000 in Sydney. Most of the apartments have already been sold before ground is broken. Patrick Bright was interested in a swanky three-bedroom apartment in Hurstville, in Sydney’s west, in the planned ultra-modern “Highpoint” complex. Only to learn that all the apartments had already been reserved – for a six-figure “fee” – for Chinese investors. Patrick was outbid.

Patrick Bright: “Developers prefer foreign buyers because they pay higher prices. Why else are new houses and apartments being marketed overseas when they could be sold here for the same money?”

Buying is one thing, living in it is another. The Australian Tenants Association wondered why many new apartments in Melbourne and Sydney would not use water. The answer was as simple as it was sobering: because they were empty. “This is money laundering,” says Martin South of the Tenants’ Association. The owners abroad were only using the properties to park their assets in Australia. And the local buyers paid on it.

Martin South: “Prices are going up and up. Those who want to buy their first home can’t even get a foot in the door. The competition is too fierce because prospective Australian buyers have to bid against rich, foreign investors. That’s why it’s so difficult for first-time buyers to get into the real estate market.”

Laws with loopholes
Brokers covering up illegal sales overseas or nebulous property transactions through international family funds: the laws designed to protect Australian real estate from being sold offshore have more loopholes than a termite mound. In the last nine years, not a single case has been prosecuted in court. That’s supposed to change from 2016 on. Anyone who lies or cheats will then face fines and prison sentences of up to three years. Nevertheless, real estate agent Tim Pellier in Sydney’s posh suburb of Double Bay can hardly save himself from loud and dishonest offers from abroad:

“Our small brokerage alone has sold $1 billion worth of homes in the last two years. It’s fantastic, the sales are enormous.”

The crown jewel in Tim’s real estate portfolio is a 12-bedroom luxury villa, complete with a small private beach, private pier and boat shed. Despite a princely, suggested retail price, Tim sold the mini-palace in just four weeks:

“It’s that house over there with the gray roof down by the water. That went to a Chinese businessman for $27 million…. Now it’s being renovated for seven million. The main thing is that it has a view of the harbor bridge and the opera house. That’s what buyers from abroad value.”

The harbor and Harbour Bridge on the left, the city skyline on the right, and the Opera House directly across the street: even some of the cheapest accommodations in Sydney have the most expensive views. The “Sirius” high-rise is an unimaginative concrete block in the midst of lovingly restored, historic sandstone buildings. Behind the ugly facade are 79 public housing apartments, and the postcard panorama costs tenants just 200 euros a month. But now they have to move out. Crystal Tanner was given notice to quit six months ago. Since then, the single mother has been sitting on packed suitcases with her daughters Meg and Zoe. The public housing units in “Sirius” are being vacated and converted into luxury apartments.

Crystal Tanner: “I don’t know what to do anymore. How can I take care of my children without a roof over their heads? I never thought of myself as poor, but now I’m in serious trouble for the first time.”

Crystal feels betrayed and sold to the highest bidder. After all, the less affordable housing there is to be had, the more the rents go up. In the last six months, she has applied for a place to stay a full 130 times, each time to no avail. The wait for a public housing apartment in the Sydney metropolitan area is a good year and a half. For two months, the Salvation Army has promised Crystal and the children emergency accommodation in a motel. After that, however, she has nowhere to go.

“I don’t want to tell anyone how I’m doing because being homeless is almost considered a disgrace. I can’t even bring myself to say the word – but I am homeless.”

Public housing, neglected community centers, even public parking lots: Developers offer cash-strapped communities millions and millions for every last bit of Sydney, often making billions. Crystal Tanner has had enough of the big city, and is considering moving to the countryside to live with acquaintances. Where she can still afford a home – with a little help. But others slip through the social net without anyone even noticing.

In the soup kitchen of the Salvation Army
A cold and wet Tuesday evening in Belmore Park, a green space behind Sydney Central Station. While people rush to their trains from the City’s offices and stores, no one is in a hurry outside the Salvation Army soup kitchen.

More than 200 homeless people wait patiently for a meal, for most it is the first of the day. There are grilled sausages on toast with ketchup, along with tea or coffee and a few friendly words. Once a park where many spent their lunch break, most Sydneysiders now give Belmore a wide berth. Social worker Michael Perusco believes because of the bums who squat in the park under tarps and grubby blankets:

“It’s alarming how many are becoming homeless today. We help three times more Australians than we did two years ago. But once you’re homeless, you stay homeless for longer and longer periods of time because we just can’t find enough shelter for these people.”

There’s Mark, who hasn’t had a permanent roof over his head for 15 years, or Dean, who lost first his mother and then his home at 22 and has been wandering aimlessly through the inner city ever since. Family, financial or health problems: there are many reasons for their plight. But Mark, Dean and the rest of Sydney’s homeless have one thing in common: they have to sleep on the streets because they can’t afford a home:

“The rents in Sydney are a joke. On the Internet, I saw a one-bedroom apartment for $345 a week – more than 230 euros !” – “A social worker told me, “You’ll never find an apartment in Sydney, why don’t you try Newcastle?” I said, “Man, that’s where I just came from.”

“Australia is a rich country,” says a volunteer at the soup kitchen, and yet the Salvation Army could do no more for Mark than get him a warm blanket. Across the country, more than 100,000 Australians sleep night after night in cars, public toilets or green spaces. Dean unrolls his sleeping bag outside the glass door of a closed bank branch:

“Just down around here, you see. See where the two park benches are near the tap-on, tap-off machine ? Just in there. Very, very cold.”

Studies show that each long-term homeless person like Dean costs charities about 25,000 euros a year. Money that has become harder and harder to find since the conservative, Australian government slashed social services and municipalities also cut corners. “Without the necessary funds,” warns street worker Michael Perusco, the previously largely hidden problem of “homelessness” in Australia would soon be impossible to ignore:

“Investing more in the social sector is good for the cohesion of our society and makes economic sense. We just need more cheap social housing so people in trouble can keep a roof over their heads and continue to be part of our community.”

Back in Double Bay, light years away from public housing or rent subsidies. Last weekend’s price and sales records are waiting to be broken. No one here wants to hear about “the market overheating,” nor that one in six new houses or apartments in Sydney is now being sold to foreigners – and the trend is rising. Real estate guru Louis Christopher calls this a “home-made vicious circle. If politicians continue to stand idly by while more and more Australians have their doors slammed in their faces, they shouldn’t be surprised if their voters eventually get on their backs.

Louis Christopher: “Every year, thousands and thousands of properties change hands. Concessions for foreign buyers are a problem, but not the most pressing. Our houses, apartments and rents must become more affordable, because otherwise there will soon only be haves and have-nots in Australia. And that would lead to enormous social problems.”