Home prices are rising around the world, but it’s not the fault of Chinese
Foreigners – mainland Chinese in particular – are being blamed for distorting property markets, but there are bigger forces at play
One thing that fascinates me about the last global financial crisis is how its aftermath saw housing bubbles expanding across the world, on multiple continents. Shanghai and Sweden, Sydney and Melbourne, Hong Kong, London, San Francisco, Amsterdam, Toronto and Vancouver – this cannot be a coincidence.
The causes are multiple and complicated, so it’s pointless to blame it all on foreigners. And yet, we do. Even rust-belt districts like Windsor, Ontario, have seen prices soar by up to 20 per cent in the past year, and you don’t see many mainland Chinese moving there.
In many places, there has been a housing policy panic among their governments. And Chinese buyers have become easy targets. It’s often unspoken, but everyone knows who those “foreigners” are. It’s the new “yellow peril”.
Early in the last century, many Westerners believed dirt-poor East Asians, mostly Chinese, threatened to overwhelm their countries with diseased immigrants and their Mongoloid offspring. They were happy to exploit their cheap labour, though.
Today, in a milder version, some think Chinese investors and immigrants are making their cities and houses unaffordable. But in market after market, that is almost never the case. And of course, most locals are more than happy to pocket foreign money when it suits them.
In Canada, the debt load of households almost doubled from 87 per cent of disposable income in 1990 to 167 per cent today – thanks mostly to rising mortgage debts. Foreigners didn’t make them do it. In Australia, locals take up most of the house sales, with foreign investors accounting for only 14 per cent.
Homeownership in Australia and Canada – whether with full equity or a mortgage – are both roughly 70 per cent. In Hong Kong, it’s about one in two households. Those who own property – the majority of households – are perfectly happy, and their political leaders know it. Would those governments be foolish enough to crash the market by, say, 20 per cent – and face the wrath of the propertied class?
No, you overseas people and we in Hong Kong are addicted to the highs of property speculation – or investment if you prefer a less offensive word. Some market causes are domestic, but others are powerful global macroeconomic forces out of our control. But everyone loves to ride the good times. So stop being hypocritical by blaming foreigners such as mainland Chinese.