This week's Dateline looked at the flood of wealth Chinese migrants are pouring into Vancouver real estate, and suggests Australia will benefit from curbing foreign investment.
SBS's Dateline this week showed how wealthy Chinese investors are pushing Vancouver property prices beyond the reach of local wage earners.
Vancouver is an uncommonly beautiful city, situated between the mountains and the sea. With a stable economy, clean environment, and access to world-class education, much like Australia, it's no surprise Vancouver attracts immigrants from all over the world.
Over 100,000 Chinese millionaires have migrated to Vancouver in the last 20 years under Canada's investment visa programme. Of the city's population of two million, 17% speak Chinese at home. By comparison, 3.5% of Brisbane's two million residents speak Chinese at home (profile.id data) and in Sydney, 8% speak Chinese at home.
The investment visa programme was intended to promote economic growth with new businesses and jobs in Canada. However, Dateline revealed that migrants payed on average only $1,400 in income tax per annum, and the businesses started by migrants employed on average only one person. The policy was quietly ended after 35,000 applications were received in 2010, virtually all from China.
A total of $450 billion in personal wealth left China last year amid fears the economy is weakening, and in the wake of the anti-corruption crackdown. Vancouver's new residents are bringing a torrent of wealth with them, and investing the majority of it in real estate.
Not surprisingly, this influx of investment is sending prices rocketing in Vancouver. The average price of a single-family home in Vancouver rose 40% in 2015. Strong prices rises have driven unprecedented levels of construction, just as we have seen in Sydney, Melbourne and Brisbane.
It's virtually impossible for Vancouver wage earners, even those on good incomes, to compete with the wealth flowing into real estate from China. The city is now the second most unaffordable city in the world, according to Dateline.
Dateline spoke to Ian Young, an Australian-born journalist for the South China Morning Post. He said, "Your'e not going to be able to afford a $3 million house on an average household income of $85,000, not if you're funding your purchase with domestic income."
Young also said the debate about Chinese investment was clouded by fears of appearing xenophobic or racist.
"This isn't an issue about race," Young said. "It's an issue about wealth. It doesn't matter whether the buyers are immigrants from China or Korea. What matters is if they are earning domestically - that's what fuels unaffordability."
Though property owners in Vancouver have seen the value of their homes rise strongly in recent years, many take little delight in their gains. Land taxes have risen, communities have decayed as foreign investors leave family homes empty, and families have been split apart as younger generations are forced to leave the city.
Professor David Ley, who studies immigation and housing bubbles around the world, told Dateline that Australia is facing similar problems to Vancouver, but is attempting to find solutions. For example, Victoria has recently doubled the land tax for foreign investors, and New South Wales is considering similar moves. Canada hasn't taken such a proactive attitude, and strong levels of foreign investment are likely to continue in the near term.
Ley says migration is a regular feature of human history. The key is to work out how to deploy the new wealth, and how to help new residents fit in.