Foreign owners are continuing to sell their New Zealand residential properties at twice the rate they are buying them.
According to Statistics NZ, 192 NZ dwellings were purchased by foreign buyers in the first three months of 2021, up from 153 in the first quarter of last year.
That made up just 0.4% of all dwelling sales in the first quarter of this year.
That is well down from more than 1000 per quarter being bought by foreign buyers, who are classified as being neither NZ citizens nor NZ residency visa holders, prior to the introduction of restrictions on foreign buyers in 2018.
However there are no restrictions on foreign owners selling their existing NZ properties and there were 423 sales of NZ dwellings by foreign owners in the first quarter, up from 324 (+31%) compared to the same quarter of 2020.
That means more than twice as many homes are being sold by foreign owners than are being purchased by foreign buyers, a reversal of the situation three years ago before the restrictions were introduced.
In the 12 months to the end of March this year 714 homes were purchased by foreign buyers, compared to 669 in the 12 months to the end of March 2020 and 3834 in the 12 months to March 2018.
Over the same periods, foreign owners sold 1473 NZ dwellings in the 12 months to March this year compared to 1290 in the 12 months to March 2020 and 1899 in the 12 months to March 2018.
However those numbers are probably only a fraction of the transactions by overseas buyers, because Statistics NZ only classifies transactions by buyer type where the property is bought or sold in the foreign person's own name.
Statistics NZ does not classify transactions undertaken through a company structure or a trust where at least one trustee is a NZ citizen, even if the trust's beneficiary is an overseas person.
So the number of transactions undertaken by overseas persons through a company or trust structure is unknown. The Financial Action Task Force, the global money laundering and terrorist financing watchdog, last week highlighted the openness of trusts to abuse and suggested the NZ Government considers establishing a register of all domestic trusts.
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80 Comments
good news day
double bug post
triple bug post
Foreign $$ headed for the door, leaving kiwis holding the bag..
Yep its a "thanks for all the fish" moment.
My view is foreign buyers (and I was someone who spent a lot of time being out-bid by them) were influential not by their volume but by their market-making and price setting.
I witnessed many times participants in auctions not just being out-bid by small increments but lots won by 10k increments. Worse yet when they started to bid against each other the whole average of the market was incremented without too much concern for comps' or valuations.
Foreign buyers: a real estate agents best friends.
the issue here is the investors visa still exists - you are bidding for a home to live in - foreign interests are bidding for a new life (which one is worth more?) - and essentially they have a target they need to hit in dollar value for that visa.... so where are you are happy to spend 750,000 to live a sensible life in a single house - they want to get this over and done with and make sure that have spent 3million to hit that target - if that means 3 houses at a million each, well thats quicker and less hassle than 4 at $750,000. So your not playing in the same market with the same rewards... in fact they are total opposite to each other - they want to spend as much as possible, you want to spend as little as possible.
I dont think this gets talked about nearly enough.
Agreed, good point.
Several years ago I witnessed a family being outbid by an individual who could not speak English. He simply mouthed "more" and pointed upwards. The auctioneer suggested the numbers, the individual didn't care. The family were devastated and the father outwardly angry. The property was unremarkable and became grossly overpriced.
I agree, they added a great deal of momentum to the market and often didn't seem to be concerned with the fundamentals (rental yield etc.). I suspect it was a case of get the money out of the homeland at any cost.
Probably a very common tale tbh. Capital flight is real, & so is turning grubby fiat into hard assets. Probably a heck of a lot of 'laundering' has gone on.
Sometimes lack of English and information helps investment. If you know too much, you never buy.
If he bought a house several years ago, Overprice or not, I think that individual who couldn't speak English has made a good profit.
Although I strongly suspect, he merely pretended he didn't understand English, putting off an opponent in an auction.
That family should have bid more and mortgaged more.
JustAnOpinion
Some points for a little balance:
- Agreed that FB will be taking their capital gain away - recent purchases should have been subject to brightline test so hopefully not all.
- Interesting many were posting at the time that they were the most significant driver in the market but since the FBB was introduced houses prices continued to rise and in fact increasingly so even when FB were net sellers.
- What makes you think you were being outbid by a FB - simply because they were Asian? Could they have been a New Zealand resident or citizen? Other than asking to see proof of their residency status you really can't tell.
Getting residency first, then buying is the same effect - a bunch of foreign cash bidding up prices.
It's very entertaining - what a parabolic!
As pointed out in the article...the stats do not take into account the hidden FB purchases via trusts and business structures.
There are better buys now, eg Aussie.
Too bad IRD isn't standing at the door clipping the ticket with a properly-functioning bright-line test regime.
They managed to tax the $1.30 ball point pen I bought on ali express though? Shows where there priorities lie.
What on earth would possess anyone to purchase a ball point pen on any online shopping site?
Most probably because it's a knock-off of a similar ballpoint pen that retails for 50-80NZD. You can buy pretty good quality Parker, Mont Blancs, copies etc.
What on earth would would possess anyone to spend $50 to $80 on a flipping ball point pen?
Novelty or status.
It's all about voluntary compliance, apparently people love to pay tax.
https://www.nzherald.co.nz/business/ird-half-way-through-1500-job-cull/…
Under Nationals "...Inland Revenue Commissioner, said since the business case had been set out in 2015..."
Exactly they are not mugs
Pretty meaningless unless we can factor in companies, trusts, and "residents" who achieve residency via the investor visa program.
If they're selling at the peak of a dumb bubble, good on them for making a profitable play.
Foreign buyers are smart as they know when to move out - peak to enjoy the CG.
But, but, but AC has been saying that prices will double again within a couple of years - that's why everyone is still jumping into property boots and all. So what do you mean 'peak'??
Rallying up the troops to go out and take out bigger mortgages, until we start running out of eligible borrowers at the prices commanded.
Not to worry, the banks have deep pockets. Let's engage the 4 big Australian owned banks to start buying our houses and then flip them off amongst themselves. All they need to do is lend money into existence to the purchasing bank, who will then on sell to the third bank for a bigger amount borrowed. GDP growth etc etc.
This is when the venture capital comes in and starts buying up the excess/discounted properties.
1. Why are foreigners still buying NZ property?
2. Are the ones selling paying tax on the gains?
1. Australian and Singaporean nationals are exempt from the ban due to clauses in our FTAs with their countries.
Also, developers are allowed to sell a part of their new-build stock to foreign investors with OIO exemptions.
2. Yeah right - good luck chasing up those foreign investors weeks after the sale proceeds have been transferred to an overseas account.
Wouldn't it be easier to tax every seller on their capital gains at the point of sale and get them to file returns for a refund, passing both the compliance costs and the headache on to the seller?
The Australian government has a system in which they force conveyancers to put a percentage of the sale above $750k aside unless you prove you are an Australian citizen/permanent resident.
Lawyers have to ask for the relevant information as part of the sale and purchase process.
I sold recently and they asked me to prove I wasn't liable under the bright line test, easy enough to do using the date of purchase.
That info goes to IRD, but not sure what happens with it as it wasn't relevant to me.
Labour usually have more loopholes than a swiss cheese in anything they implement. 80% of people going through MIQ don't pay a cent. But who cares when you can just print, borrow, and oggle your ample slush-find.
2. Are the ones selling paying tax on the gains?
I had a friend who sold recently, they were within the existing bright line. I asked if they were paying the tax. they laughed.
I'm not too sure how IRD will monitor this but I would guess les than half of the tax due is being collected for the current CGT on house.
one must remember that certain cultures do not see paying tax as a requirement if it can be easily avoided.
IRD is one of very few government departments that I would like to see massively beefed up. They need much more mandate and resource to monitor and enforce this better. I have also heard plenty of anecdotes of tax avoidance, by both locals and foreign nationals
God, People making comments here by assumption not facts. All oversea purchaser who sold their property in NZ would require to pay a withholding tax (33% of the profit or 10% of the sales price whichever is lower). There's simply no tax loophole here and it is up to the oversea seller who could claim these tax back later by an application and proof of why you don't pay tax
offshore person only required to pay withholding tax if sale is subject to any of the 3 bright line periods.
People making comments here by assumption not facts. All oversea purchaser who sold their property in NZ would require to pay a withholding tax (33% of the profit or 10% of the sales price whichever is lower). There's simply no tax loophole here and it is up to the oversea seller who could claim these tax back later by an application and proof of why you don't pay tax
People making comments here by assumption not facts. All oversea purchaser who sold their property in NZ would require to pay a withholding tax (33% of the profit or 10% of the sales price whichever is lower). There's simply no tax loophole here and it is up to the oversea seller who could claim these tax back later by an application and proof of why you don't pay tax
Go on, take the money and run.
- Steve Miller
So more NZ residents purchased property from foreign property speculators allowing them to then onsell for massive profit(s) and/or 'sit' on the accumulating capital gain?
Foreign buyers selling up and Westpac selling up.....it must mean that Kiwi's buying in now stand to make massive capital gains. It all depends on how you read the tea leaves I guess.
That's what Robertson and Ardern want isn't it?
Double the sales vs purchases by foreigners over the last 12 months but house prices rising like never before. Can we now stop blaming the foreigners?
Foreign money has an impact but yes the real reason is the amount of money banks are lending out. Always surprises me how much we go after govt, reserve bank, investors, foreigners.. this harmful price inflation is 95% up to the banks and their lending decisions.
I will jump the gun and answer that on behalf of others : NO.
Can you not?
I never did .. those who do mostly do it for emotional reasons ; no amount of empirical evidence will change their minds.
We are not blaming the foreigners, we are blaming the governments which allow this happen. Foreign investors definitely brought a huge impact to our property market. They pushed the price up and create the momentum. The price back then maybe not as crazy as now, but because that momentum, locals are now on board and buying out of FOMO. I've heard lots of stories that foreign students came to study, they bought houses or apartments during their first year in Uni and sell them after they graduate and left the country. Guess what? The money they made out of it literally paid their tuition fees and cost of living for the period of their stay.
What makes you think that people in NZ are blaming the governments? I'd love to think that way but that's not what polls shows us.
‘Governments’ being the operative word. The last National government has been saddled with the blame for the ‘crisis’, then the fixers with all the answers were elected to make things better - but despite total failure they have a free pass due to ‘COVID management’ and Kiwis love of high house prices.
But as others have mentioned the data doesn't cover trusts etc.
For those who solely blame foreigners, that's just dumb. However there's no doubt in my mind that foreign investors have been a very significant factor over the last 10 years.
Probably not as much of a factor as domestic investors though.
The problem was not the 4,000 houses per annum bought by non citizens and non residents. The problem was the effect of a net 500k people coming to live in NZ in the space of ten years,
.. but almost none arrived over the last year - yet the prices shot up by 20% or more - should that not tell us something ?
I think Kainga Ora buying a few thousand houses might have had some impact too?
Not true, prices have stopped rising like they were a few months ago. Agree foreigners are not the only ones to blame but still affect the market since they can purchase new builds.
They've been out of most of the market for almost 3 years
As pointed out in the article, the stats do not take into account the hidden FB purchases via trusts and business structures.
No need to be foreign....we give away residency. That's my read.
FHB would be very well advised not buy at the moment, stand by and watch the speculators tear each other apart. Don't be a fool and fund their escape with their profits.
"watch the speculators tear each other apart"
Like vultures over a rotting carcass ?
Like blood thirsty vampires?
or like green, limbless zombies ?
Is the the image you're going for Chris?
More Darth Vader (evil of the empire) vs Gollum (my precious).
Why can't you see the good in this? Some greedy guys are about to get some hard time for the profit of people that badly need a home. A little support would be good.
How are foreign buyers buying any.. I thought we had a foreign buyer ban. Are these all the Singapore and aus people we couldn't stop buying. Pull the other one. These are people who applied for an exemption and were told 'go ahead,, screw a kiwi', and yet again another policy became merely election words. How many prosecutions have we had over the bright line test with almost zero compliance... yet more words. Oh how I long for a politician worth more than a kick up the backside.
From the Stats website that was the basis of this article (https://www.stats.govt.nz/news/more-overseas-people-selling-than-buying…):
"Why is the number of home transfers to overseas people not zero?
The number of home transfers to overseas people may never be zero due to Overseas Investment Amendment Act 2018 exemptions (for example, some new homes, and Australian and Singaporean buyers).
Some contracts signed before 22 October 2018 may take many months before they are completed and counted in these statistics. Apartments bought off the plans may not be transferred to an overseas buyer until construction is complete years after the contract was signed."
Sorry, but there is not a government statistic worth the ether it is published in. Remember foreign buyers at 3% when estate agents were telling me it was closer to 80. Inflation less than 2 %. You can make anything true if you apply enough spin. A great man once said, we won every battle in the war but were forced to surrender when betrayed by our allies. He also said it doesnt matter who you vote for, you always get the government. Whose side are they really on...?
my neighbouring property is a rental bought buy an overseas landlord - (I'll leave you to guess which country he/she resides - the obvious one). The property was bought 3yrs ago for $1.3M and now he plans to ask $1.8M. That's a serious capital gain and a lot of money soon to be leaving NZ shores. I just hope the IRD are onto him and that he at least pays the brightline tax, but I have my doubts.
Some poor kiwi can be his debt slave and work for the next 20+ years to pay the $500K gain he's made (via debt...)
That ‘poor Kiwi’ has been coached by his fellow Kiwis into believing he is a big winner, rather than the debt slave that he is.
Report?
Garbage data, as revealed in the last 2 paragraphs of the article.
The stats in this article don't really surprise me. A couple of months ago the DFA (Oz) site did an item in which an Oz real estate agent with Asian connections said that Chinese buyers were expecting Oz to do better than NZ during a COVID recovery and were looking at selling out of NZ.
Fantastic
This is what we want for Kiwi,s
It is great to have strong Leadership to make this happen.
No more lies like the JK days
You serious? You do realise and remember the Chinese buyup of NZ started when Helen Clark actively encourged Chinese 'investment' in NZ real estate when she was in power. Remember the plane loads of Chinese 'investors' landing, getting onto tour buses and buying multiple homes as they were being driven around? JK is only guilty of not stopping it. Jacinda is guilty too as she hasnt stopped it either. Lots of weasel words, but still too many loopholes. Buying houses in Auckland, even during Covid, I can assure you the 'foreign buyers' are still buying, all they need is one NZ agent or trust that has a link to citizenship or residency. Govt stats (all parties) have always downplayed the amount of foreign money pushing up house prices.
Lol
- Front of the queue
- Hard and early
- That guy was a rapist
- Spoke too definitively
- No CGT on my watch
- Gold standard contact tracing
- Border workers are regularly tested
- Border workers are definitely being tested
- Infected border workers are to blame for not being tested
- That KFC worker was told to isolate at home by the MoH......(No)
- No new taxes this term
- Shovel Ready projects
- Vaccination strategy is to move this slow on purpose
- We have a plan
- There is no agreement on Ihumatao land...
and my favourite
- We'll build 10,000 houses a year for 10 years
New lending rule announcement by RBNZ today. Cant wait...
700 homes bought by foreigners, out of what...80,000 odd sales in 2020/21 fiscal year.....hardly relevant.....yawn
double post
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