Buyer ban affects few house sales
As little as 3 per cent of all property purchases in New Zealand could be affected by the proposed ban on foreign buyers.
The Government plans to stop foreign speculators by classifying all existing houses as ‘‘sensitive’’ under the Overseas Investment Act. That would mean anyone who was not a citizen or resident of New Zealand would need approval to purchase an existing home.
Foreigners would still be able to buy land and develop housing on it to sell. Australians would have a special carve-out to be able to buy homes – as Kiwis do in Australia.
But it’s unclear how many people the proposed ban will affect.
Realestate.co.nz spokeswoman Vanessa Taylor said about 15 per cent or 16 per cent of the 1 million viewers who visited her site each month were overseas. About 7 per cent were in Australia.
She said the top three sources of international visitors to her website were Australia, Britain and the United States. Canada accounted for another 0.3 per cent and Hong Kong for 0.2 per cent.
Taylor said a lot of focus was on Chinese buyers in New Zealand but that was not where most foreign buyers were coming from.
Bank of New Zealand chief economist Tony Alexander said it was hard to say how many buyers would be kept out of the market.
‘‘We don’t know what proportion of sales have been going to foreigners and we don’t know to what extent buyers will find ways around the rules … In all probability all that will happen is that the change will reinforce the flattening in the cycle which is already under way.’’
Alexander said if the ban ended up pushing foreigners to buy properties to build, that would divert resources away from other projects, such as the plan to build 100,000 affordable houses over 10 years through KiwiBuild.
‘‘We should expect to see new large projects being marketed to buyers in China, as has happened in recent years in Australia.’’
Real Estate Institute chief executive Bindi Norwell said the impact of a similar policy in Australia had been minimal.
‘‘Additionally, many of the large banks here have already made restrictions to offshore buyers without a local income, yet we’ve still seen the national median house price increase … So, from our perspective, we would just like some clarification on what the ban is trying to achieve.’’
Gareth Kiernan, chief forecaster at Infometrics, said the most recent Land Information New Zealand data indicated 3.1 per cent of buyers nationally were foreigners, rising to 4.9 per cent in Auckland and 11.3 per cent in the Queenstown-Lakes District.
‘‘However, this data only captures people buying properties they are not going to live in and is based on people’s tax residency … So the genuine proportion of foreign buyers is probably higher than these figures.’’
He said the restriction would probably have a limited effect because a slowdown was already happening. ‘‘Investors’ expectations of capital gains have disappeared, particularly in Auckland.’’