Foreign buyer ban working

Expectations that foreign buyers would start using companies to get around rules stopping them buying New Zealand houses have been proved incorrect, new data shows.

Statistics New Zealand has reported a steep decline in homes being purchased by foreigners.

Just 0.5 per cent of home transfers in the June 2019 quarter were to people who were not residents or citizens, down from 2.8 per cent a year earlier. House transfers by corporates also decreased from 10,566 to 9987 over the same time period.

A ‘‘transfer’’ refers to any change in ownership, including sales.

Chinese real estate website Juwai.com chief executive Georg Chmiel said the ban was expected to cause a ‘‘flood of foreign buyers’’ setting up corporations to avoid it, but this had not happened.

‘‘For many Chinese buyers, New Zealand is very appealing. The buyer who wants to replicate the big-city experience they can get at home in Beijing, Shenzhen or Shanghai won’t come here,’’ Chmiel said.

‘‘The majority of Chinese buyers in New Zealand are purchasing for their own use while studying or otherwise living in the country. In 2019, fewer are buying for pure investment purposes.’’

The Overseas Investment Amendment Bill came into force last October, stopping foreigners not intending to live in New Zealand from buying existing homes, except for apartments off-the-plan.

While Australian and Singaporean investors were exempt, the amendments to the bill applied to Chinese investors.

The exemptions mean sales to foreign buyers are unlikely to ever be zero. Foreign buyer support is seen as necessary to get some off-the-plans apartment developments built.

Chmiel said that overall, the foreign buying restrictions were working.

Information on the ownership of corporate entities is not currently available, but according to Stats NZ a third of applications to the OIO for consent to buy homes were by people from Britain.

The country with the secondhighest number of applications was China (30 per cent), followed by the United States (10 per cent) and South Africa (9 per cent). Companies that are at least 25 per cent foreign-owned are treated as ‘‘overseas persons’’.

Barfoot & Thompson managing director Peter Thompson said the Auckland real estate company had not experienced an increase in foreign buyers purchasing exempt off-the-plans apartments. Instead, they had turned away altogether.

‘‘It is having an impact on jobs that are badly needed around the country,’’ he said.

Thompson said buyers from China were also affected by their government’s crackdown on how much citizens could invest outside the country. He had not seen an increase in purchases from residents of Singapore and Australia.