What's your prediction on the Australian Dollar?

[JohnK]

But real estate prices will remain crazy as a ratio to Australian wages.

Isn't that because we allow overseas money laundering by non-Australian residents?

 

[Alanslegal]

Isn't that because we allow overseas money laundering by non-Australian residents?

Same could be said for non-Thai people buying up in Thailand.

I did look in Bangkok recently and wow, the prices for new apartments right in the City is pretty up there.

 

[JohnK]

Same could be said for non-Thai people buying up in Thailand.

I did look in Bangkok recently and wow, the prices for new apartments right in the City is pretty up there.

That's not money laundering though is it?

Anyway if you look away from Bangkok there is an over supply of new condos and prices are plummeting. There are lots of bargains. Wish I had some ready cash.

 

[Cruiser Elite]

The inflow of foreign capital into the residential housing market IMHO is one of the biggest challenges we have in front of us. Currently the participation rate by Australian first home buyers in housing sales is lowest on record - that is just not acceptable.

YES we all want our houses to continue to appreciate in value - it's the biggest investment most Australians will make (Super aside) - but when our kids can't get a foot in the door that is just WRONG.

The Chinese money continues to flood in - and don't forget 20% dep in A$ over last 12mths buys them 20% more house for same money. AND - Australian real estate is FREEHOLD - you get to own it FOREVER. No such thing as FREEHOLD in China - 50 year leases - that is all you can buy once you have jumped ALL the hurdles to get to a position to do so.

NO I am not singling out the Chinese - just an example. Again our liberal Australian society means there is NO LEVEL PLAYING FIELD - but as much as Mr Stephens wants a $ in the .80c range it appears on surface the free market is not going to abate real estate prices and legislative action is gong to be reqd. We are in for some interesting times.

 

[amaroo]

Exchange rates never worried the Chinese. At 52p and falling the poms (and a few oligarch) will start opening their wallets.

 

[Alanslegal]

That's not money laundering though is it?

Anyway if you look away from Bangkok there is an over supply of new condos and prices are plummeting. There are lots of bargains. Wish I had some ready cash.

How do you know its not laundered into Thailand? If I want a visa, I pay a lawyer in Thailand to do some creative paperwork and bingo, I can be a resident.

More importantly though, and back to your point, is how do you know the money coming into Australia is laundered money? I would think these are just scare-mongering sensational ideas with no factual basis. The ones with money just pay the right people who know the right laws and processes to get money through, nothing illegal with that, just like nothing illegal with legal tax minimisation.

 

[JohnK]

How do you know its not laundered into Thailand? If I want a visa, I pay a lawyer in Thailand to do some creative paperwork and bingo, I can be a resident.

More importantly though, and back to your point, is how do you know the money coming into Australia is laundered money? I would think these are just scare-mongering sensational ideas with no factual basis. The ones with money just pay the right people who know the right laws and processes to get money through, nothing illegal with that, just like nothing illegal with legal tax minimisation.

This is one of the biggest problems in Australia and I guess the rest of the world. The law is on the side of the criminal.

I have seen kids driving the latest Ferarris. They have never worked. Their parents have never worked. Where did they get the money. I know where they got it. I'll let you figure out the rest.

FWIW A couple of weeks ago we witnessed 2 red Ferraris driving down Nottinghill Road, Lidcombe past Carnarvon golf course. There were 28 of us waiting to tee off. Everyone thought exactly the same thing.

How come everyone knows except the law?

 

[RAM]

How do you know its not laundered into Thailand? If I want a visa, I pay a lawyer in Thailand to do some creative paperwork and bingo, I can be a resident.

More importantly though, and back to your point, is how do you know the money coming into Australia is laundered money? I would think these are just scare-mongering sensational ideas with no factual basis. The ones with money just pay the right people who know the right laws and processes to get money through, nothing illegal with that, just like nothing illegal with legal tax minimisation.

Some is honest money - most is not. Chinese officials and their families move as much of the new found wealth out of China, often via HK.

The secret to Singapore's success was a deal with the top Chinese party officials in the early 50s where Singapore guaranteed never to repatriate any money back to China if asked by the Govt of the day (read best back room boys).

So if there was a purge and officals fell out of favour or worse then their ill-gotten-gains were untouchable by the new boys in power. The benefit for Singapore - they paid no interest on this money and if the officials were executed etc then they pocketed it. Only the guy who opened the account could access it not his family etc.

Over the decades this had grown to tens of billions by late 90s early 2000s of which approx 1/3rd was 'executed' money.

As the ability to get money out of China has increased 100 fold these days you see officials down to village level sending the money offshore and as the Aust Govt makes it so easy much comes to Aust with no Govt siphoning vs Singapore's approach.

One very senior guy went public about what the Chinese officials were doing after he'd heard once too often a certain Singaporean official talking about how the US should follow Singapore's example. The Chinese Govt contacted the CEO of the US bank he worked for and was given a few hours to sack him, discredit him or lose the ability to do business with China. He got sacked and was unemployable globally.

On a similar line, early 2000s Don Weatherburn (Director - NSW Bureau of Crime Statistics) said roughly out of every $10 spent in NSW - $1 is to do with illegal drugs.

 

[dajop]

I guess not all of the inflows are illegal money laundering, or indeed moving money gained illegally. As well as the "dodgy" money, some of it is simply money looking for reasonable long term returns, other is money gained legitimately looking for a trustworthy home. In some countries people simply do not trust the government so you either stack it up in paper or get it out of the country (not to say that a big proportion isn't "dodgy", most of it probably is.)

 

[JohnK]

On a similar line, early 2000s Don Weatherburn (Director - NSW Bureau of Crime Statistics) said roughly out of every $10 spent in NSW - $1 is to do with illegal drugs.

Only $1/$10? Very surprised.

Are people really that naive thinking the money made by Leagues Clubs, RSLs and casinos in NSW is legal money?

 

[drsmithy]

YES we all want our houses to continue to appreciate in value - it's the biggest investment most Australians will make (Super aside) - but when our kids can't get a foot in the door that is just WRONG.

These are two directly conflicting desires.

The Chinese money continues to flood in - and don't forget 20% dep in A$ over last 12mths buys them 20% more house for same money. AND - Australian real estate is FREEHOLD - you get to own it FOREVER. No such thing as FREEHOLD in China - 50 year leases - that is all you can buy once you have jumped ALL the hurdles to get to a position to do so.

NO I am not singling out the Chinese - just an example. Again our liberal Australian society means there is NO LEVEL PLAYING FIELD - but as much as Mr Stephens wants a $ in the .80c range it appears on surface the free market is not going to abate real estate prices and legislative action is gong to be reqd. We are in for some interesting times.

Foreign purchasers play a part, it's true, but Australian house prices have been out of control for 15 years, and far too high for more like 25 - and most foreign purchasers are buying at the upper ends of the market (i.e. above median).

Affordable housing is 3x median income or less. Median income in Australia is around $50k.

 

[NFF]

Is gold a better investment or hedge than real estate ?

 

[moa999]

In the last 12mths gold down, property up

Gold typically works well in times of low inflation and global instability (eg. GFC).

It sucks during boom time as gold doesn't earn a yield (dividend, interest, rent)

 

[MEL_Traveller]

strange feeling... anyone else remember a couple years back when you'd read a duty free brochure on an airplane and the pictures looked good but you'd do the conversion from USD and think 'oh, that's expensive'. Well I got that feeling again today for the first time in a long time. I'd become used to converting 1-to-1, or knocking off 5-10%. Now it's not looking so good again

 

[cove]

The Aussie dollar has drifted down to around 0.81 against the U.S. and around 0.52 to the pound. There will be some rather large price increases on imported products over the next 3 to 6 months as importers run out of their currency hedging. A further 10% drop in our currency would really slow down international travelling.

 

[JohnK]

A further 10% drop in our currency would really slow down international travelling.

I will still go overseas as often as I do now. All the slow down will do is mean I spend less in Australia. Yes I know that it sad but I am not going to let currency manipulators ruin my travel plans.

 

[amaroo]

The Aussie dollar has drifted down to around 0.81 against the U.S. and around 0.52 to the pound. There will be some rather large price increases on imported products over the next 3 to 6 months as importers run out of their currency hedging. A further 10% drop in our currency would really slow down international travelling.

With a corresponding increase of inbound tourists - always winners and losers.

 

[drsmithy]

There will be some rather large price increases on imported products over the next 3 to 6 months as importers run out of their currency hedging.

Remembering that basically everything in the country is imported...

 

[cove]

When my mother called me un-Australian for being an importer we started manufacturing in 1986 and it has grown over the last 28 years. It has been a good journey and I enjoy this part of our business.
No not everything is imported but automation and lower energy consuming machinery are an investment in the future.

 

[defurax]

Well, if more transactions would be settled directly in local currencies (i.e CNY, MYR, IDR, etc) the currency risk would be different. The current trade system based almost entirely on USD conversion is a bit silly.
I know some progress has been made to increase the number of transactions settled directly in CNY, but the whole system is a bit old fashioned...like so many thing in the financial world e.g LIBOR...give me a freakin break!!! Who could devise such a dumb metric based on "honour".