The worsening situation in China could send more Hong Kongers here… that could have a big impact on our property markets.
So it seems are coming to their inevitable conclusion in Hong Kong. The Chinese Communist Party is flexing its muscle, and protestors are being arrested on new anti-sedition laws.
It’s a shame.
If things deteriorate rapidly (and this is 2020, so the worst case scenario is probably your base case) it could mean we find a rush of Hong Kongers heading for the safe and welcoming arms of Australia.
The government is already considering its options:
Australia is “actively considering” offering safe haven to Hong Kong residents to come to the country after controversial national security laws imposed by China came into effect, Prime Minister Scott Morrison says.
On Wednesday, hundreds of people were arrested after demonstrators took to the streets to protest the new laws, which were introduced by China to suppress dissenters.
British Prime Minister Boris Johnson said he would offer eligible people in Hong Kong a path to citizenship, allowing them to settle in the United Kingdom.
The UK handed control of Hong Kong to China in 1997, and the latest round of protests surrounded the anniversary of that event.
Before the handover took place, citizens in Hong Kong were able to apply for British National Overseas (BNO) passports.
Hong Kong is home to hundreds of thousands of BNO passport holders, with millions of other residents believed to be eligible.
Mr Johnson said on Wednesday that the UK would ensure a path to citizenship was open for those passport holders.
Remember, we recently took 12,000 refugees from Syria, so I think something in that order of magnitude is easily conceivable. Hong Kong, like Australia, was once part of the British Empire, so our bond is much deeper and enduring.
12,000 would have to be a minimum if things really hit the fan.
But this has interesting implications.
Because, on average, people from Hong Kong are very wealthy.
On a per capita basis, they’re the 12th richest country on Earth, just one spot behind the US, and several places higher up the ladder than Australia.
Hong Kong is also home to a million millionaires. When you remember that the entire population is only 7 million, it shows you just how wealthy they are.
There’s no way you could say that one-in-seven Australians are millionaires. Not even close.
So we’re talking about a very different form of immigration.
Typically, refugees are fleeing countries that have already been torn apart by decades of war and hardship. They often come with nothing.
That wouldn’t be the case with an exodus out of Hong Kong.
It’s quite likely that each person from Hong Kong who lands here will have much more wealth than the average Australian.
That is, they will push the average wealth in Australia up.
Our property and asset markets, which are leveraged up on our average wealth, would go up in turn.
And remember, we know that Australia is already a popular destination for Hong Kong wealth.
Credit Suisse looked at the impact of Hong Kong capital flows on the Sydney property market last year.
What they found was that the capital flows out of Hong Kong lined up very well the behaviour of prices that they couldn’t predict with their models.
That is, their model for Sydney house prices – which included interest rates, employment etc. generally did a good job of predicting prices. When there was a ‘surprise’, it often seemed that Hong Kong money was behind it.
And if Hong Kong money is rushing for the exits right now, you can be very sure that a good chunk of it is heading for Australian real estate.
So, it looks to me like it’s China’s loss, and Australia’s gain.
Fair enough.
JG.
Michelle Webb says
Yes we welcome the millionaire Hong Kongers, every single one of the million. We need their brains to rep-prop our economy.