Residential buildings in the Jiading district of Shanghai, China. Credit:Bloomberg But it was in the question and answer session that the real anger showed. A Chinese man aged maybe 30 politely asked for the microphone. He directed his question to Jeff Lin, the chief strategist for Country Garden Holdings, one of the biggest property developers in China. We younger Chinese can't afford to buy homes in the cities, he pointed out. How would the property developer feel if frustrated young Chinese people rose up in a new revolution and seized his home? In China, home of the communist revolution against the landed classes, talk of an uprising isn't a light matter. "You think our kids are frustrated with property prices," says Hasan Tevfik, research analyst at Credit Suisse in Sydney. "Spare a moment for the poor Chinese because it's even more expensive for them.

"Aussies might be shocked to understand that a Sydney apartment is cheap when compared to an equivalent apartment in Shanghai or Shenzhen." And this is one of the reasons that real estate in Sydney and Melbourne has become so costly. The top-tier cities in Australia are cheap compared to the top-tier equivalents in China. For instance, the median two-bed apartment in Shanghai sells for about $900,000, which is 25 per cent more than the median apartment price in Sydney. And Chinese property is much further out of reach relative to people's incomes. It takes the equivalent of 12 years' average income to buy the median Sydney house and 9.5 years' income in Melbourne. In China's top-tier cities, it take 30 years' average income to buy the median dwelling. So as Chinese investors chase bargains in Australia, China's real estate bubble floats in to help further inflate Australia's high prices. The US funds manager Bill Sterling of Trilogy Global Advisers says Australia is a Chinese "secondary bubble".

"If you study the history of international finance there are often primary bubbles that create secondary bubbles somewhere else," he told the Financial Review in Sydney recently, and the influence of Chinese money "may be more intense here than in most other countries in the world." Young Chinese, shut out of their home market, are now snapping up foreign real estate using mobile phone apps. The Wall Street Journal cited a 29-year-old marketer from far western China who recently bought a studio apartment in Thailand, sight unseen, using the app Uoolu for $125,000. Chinese especially like the English-speaking "gateway" cities of Hong Kong and Singapore, Los Angeles and New York, Sydney and Melbourne, Vancouver and Auckland. The attraction isn't just price. It's breathable air, good schools and universities, and "that little thing called rule of law" as Tevfik puts it. Chinese who want investment security know China is a risk. Land can be appropriated at a moment's notice, owners can be subject to corruption investigations based on political agendas, and many Chinese are anxious that the modern surge in wealth could be fragile. They want to get their money out of China, despite escalating attempts by Beijing to block money flows abroad. "Even," says Sterling, "what is small trickle of money from China from their perspective is a torrent from your perspective." How big a torrent?

Australia's Foreign Investment Review Board gave foreigners approval to buy homes and apartments valued at $72.4 billion in 2015-16, according to its annual report. That's an increase of 20 per cent on the $60 billion of the preceding year. The number of applications approved was up by 9 per cent to 40,100. The FIRB doesn't break this down by country of origin. But Credit Suisse's researchers broke it down for NSW and Victoria residential real estate using state tax data they got using freedom-of-information laws. "We find foreigners are currently buying the equivalent of 25 per cent of new supply in NSW and 16 per cent in Victoria," they wrote in a March report.



"Almost 80 per cent of foreign demand is from China. And Chinese buyers continue to settle on their purchases despite the numerous impediments."



But since all of these purchases were made, the federal government has announced new measures to crack down on foreign buyers. Treasurer Scott Morrison put a new levy of $5000 a year on homes that are held but not occupied for six months or more. And he limited foreign buyers to 50 per cent of the apartments in any new, off-the-plan developments.



Will that deter Chinese buyers? A Sydney real estate agent, speaking on an anonymous basis, scoffed that his Chinese clients spending millions on houses will not even notice an impost as "trivial" as the $5000 levy. He saw no change in Chinese appetites in the weeks since the budget. Credit Suisse's Tevfik agrees that the budget measures will be ineffectual. "They're not a major impediment." He pointed out that the Canadian city of Vancouver had last year imposed a "major impediment", a 15 per cent tax on foreign real estate buyers. "That slowed foreign demand for a short while, maybe six to nine months, then it's come back." With last weekend's rebound in auction clearance rates in Sydney and Melbourne to 80 per cent and above, it seems Morrison has done very little to make any impression on the boom, whether with local or overseas buyers.

In effect, the Australian Treasurer has delegated the task of cooling the Sydney-Melbourne boom to China, and to future interest rate movements at the Reserve Bank. Like a Chinese lion dance, he proved to be noisy but without bite. The frustration of the excluded generation, in China and in Australia, continues to build. Peter Hartcher is international editor.