Not racist to target Chinese housing investors
OPINION: Labour has been roundly criticised this week for pinpointing non-resident Chinese investors as inflating the housing market, particularly in Auckland.
The racism word has been thrown around in an effort to shut down debate in time-honoured fashion.
Labour's basis for its commentary is a leaked three-month summary of sales by Auckland real estate agency Barfoot and Thompson. Apparently 40 per cent of the buyers had Chinese surnames.
This is not a great data to hang your hat on and, using it in the way Labour has, panders to the bigots and nitwits in our midst.
However, that does not mean the data is misleading or that Labour is wrong to highlight it.
We need to be careful about the racism accusation. To point to rich people from a particular country investing in New Zealand to the detriment of the local population is not racist.
Racism – it always helps to check the dictionary – is suggesting that people are inferior because of their race. Saying that rich Chinese buyers are inflating the NZ housing market does not suggest Chinese are inferior in some way.
Not that long ago we were talking about Japanese housewives inflating the NZ share market.
It might well be unfair to highlight Chinese buyers as if they are the only non-resident investors in NZ property but it is not racist.
Only a few days ago the hyper-sensitive Guardian newspaper in Britain ran a story about Chinese investors deserting the rocky Chinese stock market in droves to buy property in Britain, Australia and Canada.
The article wasn't condemned as racist as far as I saw.
We should not be startled by the observation that non-resident Chinese buyers are big players in the Auckland and to some extent the Canterbury property markets.
This trend has been evident for years, particularly in countries like Britain and New Zealand where it is easy for foreigners to buy property.
Investors from places like China and Russia rightly see New Zealand as a bolthole and secure place to stash not-always-honestly-obtained money.
We can thank our robust and transparent institutions for creating an attractive environment for rich people from countries where such protections are not in evidence.
The current stoush over foreigners buying our property has highlighted the massive hole in our statistics on who owns what in New Zealand. That is being fixed but the lack of good data makes any debate dangerous and potentially unfair.
In theory we should know exactly how many properties in New Zealand are owned by non-residents. We could then talk with some authority on what impact foreign buyers are having on the housing market.
Without those figures we are reliant on anecdotes and industry figures talking about trends.
However, even with the dearth of good information, it's a secure bet that if the Government took measures to stop or discourage non-residents buying New Zealand property, as I think it should, the real estate market would take a hit.
Not everyone would be thankful. Homes might become more affordable but we tend to forget that one person's over-heated market is another person's godsend.
Sellers don't care who they sell to if the price is right and buyers who have bought at sky high prices don't want to see their properties suddenly devalued because of a law change.
Another thing also often forgotten in this debate is a much more potent influence on the housing market. This, of course, is immigration.
Over the last few years the net inflow of people coming to live here permanently has been around 50,000. So each year NZ imports the population of a city like Invercargill.
Many of these immigrants bring money into the country to buy a property and other assets, which amounts to a massive boost for the NZ economy each year.
Of course they are going to inflate the property market and make it harder for locals. who have earned their pile in conditions quite different to those experienced by the immigrants.
In theory, that shouldn't matter too much because immigration is supposed to bring skills and capital which will increase the overall pie, with everyone getting a bigger share.
But many of these immigrants will end up driving taxis or working outside the industry which they trumpeted as potentially benefiting from their skills. Many will only use New Zealand as a bolthole and continue to work overseas, returning when they want to retire or use our health system.
A Massey University study released this year showed one in five Chinese approved for New Zealand residence no longer lived in New Zealand.
Are we being suckered? Perhaps.
But we should also look at ourselves. We want all the benefits of being an open economy which takes skills and money from the rest of world without accepting that approach will have costs.
One of those costs is an over-inflated and unfair property market.