Abbott's foreign buyer sabre-rattling is nonsensical: Terry Ryder

The universal distrust of politicians has been confirmed, yet again, by the Roy Morgan survey ranking the professions on ethics and honesty.

Only 13% give a positive rating to federal politicians, who are near the bottom of the poll with the people who sell real estate, advertising and cars.

Election outcomes increasingly reflect the degree to which the public is fed up with politicians. Few incumbents survive elections these days, with Victoria’s Denis Napthine dumped and Queensland’s Campbell Newman converting a record majority into a stunning defeat. The recent New South Wales poll was a rare exception.

Politicians provide examples daily of why people detest them: broken promises, relentless spin, refusal to give a plain answer to a straight question, the strident overblown language, the brattish behaviour in the Canberra kindergarten known as parliament.

To put it in pub terminology, they’re the people who p--- on us and tell us it’s raining.

Tony Abbott managed to encapsulate everything that’s despised about politicians with his recent pronouncement on foreign investors. The Prime Minister, if we can believe him, proposes to lock up people for buying houses. He says this will make homes cheaper and the Great Australian Dream more attainable.

Now, I know Abbott isn’t the sharpest tool in the political shed but even this dead-man-walking Prime Minister must know that persecuting foreigner investors won’t make housing more affordable.

Foreigners are allowed to buy Australian real estate provided they buy new. The issue is the degree to which some overseas buyers sidestep the rules to buy existing dwellings. But the research shows that overseas buyers of secondhand homes are a tiny share of the total market and stopping them won’t affect pricing levels.

But Abbott managed to keep a straight face while claiming this is why he’s threatening to jail foreign buyers for three years. He says they’re “unnecessarily driving up prices”.

If he really believes that, he’s an even bigger idiot than I think he is.

Firstly, Australian prices are not rising to any significant degree, outside of Sydney. According to Domain’s House Price Report, median prices in the past 12 months went backwards in two capital cities, were unchanged in another, and grew less than 5% in three others. In the unit market, prices dropped significantly in three cities, were unchanged in another and grew less than 4% in two others.

So we don’t have a pricing issue, apart from Sydney.

But if you genuinely wanted to stop real estate prices rising, you would target the sections of the market that have the greatest influence. According to the recent NAB survey, the largest market sector by far is next-time buyers (home buyers other than first home buyers), who comprise 42% of sales of existing dwellings.

Next most important are first time buyers, who are 26% of sales, and then Australian investors, who are 22% of the market. Foreign investors are 7% of sales.

We must have slipped into a parallel universe if 7% of buyers can have more influence over prices than the other 93%?

The reality is that the federal government is running a Yes Minister scenario. The ordained method of dealing with a thorny issue is to run an inquiry, hold lots of press conferences, threaten strong action, find an unpopular minority as a scapegoat and, in the end, do nothing.

They started last year with a long and expensive federal inquiry into affordability. This talkfest produced nothing of value to the public, but something of immense value to beleaguered politicians – the perfect scapegoat. Foreign investors are a godsend because they’re few in number and they don’t vote anyway.

A chest-thumping press conference with a touch of sabre-rattling makes the PM look tough – but what he’s suggesting is nonsensical.

Imagine a scenario in which a Shanghai businessman buys a mansion in Sydney. Is it proposed that Australian will extradite him and put him on trial here for the crime of real estate purchase? And then lock him up for three years?

That’ll go down well in China, the most important buyer of our resources and also the No.1 source of foreign investment in Australian real estate. Even a twit like Tony Abbott isn’t going down that path.

You get the feeling it’s all designed as a smokescreen ahead of the Budget in which the numbers will be embarrassing.

TERRY RYDER is the founder of hotspotting.com.au. You can email him or follow him on Twitter.