Soaring house prices not down to influx of expats

Expats coming home from Covid-ravaged countries are not directly to blame for the booming housing market, experts say.

Rather, they’re caught up in the real causes – which include news and anecdotal reports of Kiwis coming home en masse.

“Every man and his dog in New Zealand believes the expats are either coming back or want to come back,” says independent economist Tony Alexander.

“People are aware of the numbers – there are a million Kiwi residents overseas. We’re swapping these stories but what’s happening now is just a different version of what happened about 10 years ago, when people would swap stories to see who could have the most outrageous urban legend about Chinese buying properties.

“We’ve got an undeclared competition about who can come up with the most outrageous anecdote about expat Kiwis buying while they’re still in isolation overseas.”

A recent survey indicated half of Kiwis living abroad are considering returning, but Statistics NZ data shows they’ve yet to arrive en masse.

So while some are spending up large – like the expats who bought a renovated villa in Grey Lynn for $3.55m, more than $1m above CV – Alexander reckons the real driver of rising prices is low interest rates.

That view’s backed by Brad Olsen, senior economist for Wellington-based consultancy Infometrics: “That interest rate effect just blows everything out of the water. [Low] interest rates have pushed people to consider what they’re doing with their money and realise they want to get in before things turn around or before prices spiral even crazier out of control.” REINZ chief executive Bindi Norwell says it’s no surprise some expats see New Zealand as a safe haven.

“Returning Kiwis, regardless of their situation, will need somewhere to stay, whether that is buying, renting or staying with friends and family, which is going to [put] pressure on the market.