Deception risk in foreign-buyer numbers: ASB
Restrictions on foreigners buying New Zealand property will depress prices, an economist says – and the effect might be greater than some have predicted.
The Overseas Investment Amendment Bill is working its way to becoming law.
But while official statistics and anecdotal evidence from the real estate industry indicate that only 3 per cent of sales are to overseas buyers, ASB senior economist Mark Smith said that number might be deceptively low.
He pointed out that, within the Statistics New Zealand figures, another 8 per cent of sales were attributable to resident visaholders who were not citizens, such as people who had newly migrated.
Another 10 per cent were corporate entities, for which ownership information is not available.
He said anything from 11 per cent to 21 per cent of purchases in the year to March 2018 involved a non-New Zealand citizen.
Auckland and Queenstown have the highest proportion of sales to overseas buyers and the smallest proportion of sales to New Zealand citizens.
Smith said it was probably only a coincidence that they were also the areas with the highest house prices in the country.
‘‘Those prices probably reflect more what’s happening globally than anything domestic.’’
But the restrictions should be expected to affect New Zealand prices when they were enacted.
While overseas buyers were not a huge part of the market, they were still a force, he said, and taking them out of the picture would make a difference.
That was particularly so in a weaker environment.
‘‘If the market is already under some pressure it will add more to the pressure. There probably will be a change to prices when the rules come in,’’ Smith said.
‘‘It’s difficult to separate that impact from other impacts because prices are already on their way down . . . But anything that has an impact on the demand side will have an effect.’’
Smith said it was an area in which there was a lack of good information but ‘‘even incomplete data is better than nothing’’.
‘‘Policymakers need to strike the right balance between promoting measures to facilitate dwelling construction and yet ensuring that New Zealand citizens do not get priced out.’’