The number of New Zealand homes being bought or sold by foreign owners appears to have flattened off in the September quarter, according to the latest figures from Statistics NZ.
They showed that foreign owners (people who are not NZ citizens and don't have a NZ residence visa) purchased 132 residential dwellings in the September quarter of this year, barely changed form 135 in the June quarter.
That was down from a quarterly peak of 1116 properties bought by overseas owners in the June quarter of 2018.
Sales of New Zealand dwellings to overseas buyers dropped away substantially after restrictions on overseas ownership of residential properties came into effect in October 2018.
However there are exceptions, such as people from Australia and Singapore, and for some multi-unit residential developments.
Since the restrictions came into effect, overseas owners are now more than twice as likely to be selling a New Zealand residential property than they are to be buying one.
In the September quarter 354 residential dwellings were sold by overseas owners, also barely changed from the 366 that were sold in the June quarter.
In the 12 months to September this year 633 NZ dwellings were purchased by overseas owners, compared to the peak of 3951 in the year to September 2018.
Auckland remains the most popular location for overseas buyers, with 282 purchases in the year to September, followed by Canterbury with 108.
That compares with 2460 Auckland purchases by overseas buyers in the year to September 2018 and 351 in Canterbury.
However the Statistics NZ figures do not give a complete picture of activity by overseas owners, because they do not include purchases or sales made through a company structure, or a trust where at least one trustee was a NZ resident or citizen, even if the beneficiaries or settlor of the trust were non-NZ residents or citizens.
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42 Comments
What happen to the theory that foreign buyers are responsible for rising house prices?
News like these are blasphemous to the flat earthers.
That theory was only ever credible to people who have no idea what they're talking about; Grant Robertson, for example. In fact, Robertson went on to claim that it was an influx of Kiwi ex-pats propping the market up in the absence of foreign buyers, all returning home with pockets full of cash and their tails between their legs, fleeing the COVID madness overseas for the relative safety of Godzone.
Turns out it was actually a very low number, but unfortunately for that handful of people, it looks like they might have been jumping out of the frying pan and into the fire.
Chebbo
That theory was also very credible to many on this site who vehemently blamed Chinese nationals - resident In China - for pumping our housing market and in some instances implicitly that they were the single most important factor. The market has continued to rise despite the intro of the FBB and CCP restrictions on money movement.
So maybe there was a bit of scapegoating?
Having said that, the causes of house price inflation has many causes chiefly low interest rates, landlords by default, supply issues, high levels of immigration . . . and no doubt foreign buyers were also a contributor.
The reality now - for a variety of reasons - the days of rapid house price inflation will be simply reminiscing over a beer at the BBQ.
Not sure why anyone would expect to see a 1:1 relationship between foreign buyers and house prices. As you say there are a multitude of factors that drive house prices. But if you are claiming foreign buyers have/had no impact on the market then you are really claiming demand for an extra ~4,000 houses p.a. (~6-7% of the market) is irrelevant when determining prices.
Currently it is very low interest rates driving up prices. It is a fluid situation. Conditions change.
The theory was very credible to anyone who went to a residential property auction in Auckland c.2012-2020. Depending on the suburb, an overwhelming number of buyers were Chinese - and not 'Kiwi Chinese', but Chinese in the sense of transacting everything through an interpreter. Given that actual ownership is extremely easy to hide through trusts or having a 'friend' buy in your name, the figures have never been meaningful. It just strains credulity for anyone who saw what was happening on the ground.
Spot on Sammy B. We were trying to by a house in 2013/14, didn't even get to raise our hands at multiple auctions until we lucked into one at election time.
And on Thursday we sold this place, it went onto TM Wed arvo, done deal midday Thurs. Less than 18hrs all up.
Multiple Chinese developers came through who all obviously had PR but there was nary a word of English spoken by any of the 6 parties in that 18hr period.
And going on the sum paid you gotta wonder where the money comes from.
No average Kiwi in their right mind would have paid that amount.
Same in Christchurch. Have attempted to buy several properties recently and all of them went to non-NZ Chinese people. All were sold way over market value in a multi-Asian auction bidding war. That then sets the new "comparable price" for the area, and next week everything sells for that price. Thats how we have achieved a 50-100% increase in prices in Christchurch in a single year. So nothing has changed - as the article states "they do not include purchases or sales made through a company structure, or a trust where at least one trustee was a NZ resident or citizen, even if the beneficiaries or settlor of the trust were non-NZ residents or citizens." As soon as one family member achieves residency, they are out there buying houses for the rest of the overseas family and friends.
I don't think people suggested it was the sole reason?
JSA
Certainly there were numerous posts focussed solely on FB especially in the Auckland market.
Old news.
Its the Kiwi fetish of hoarding houses and rinsing the fellow citizens of every dollar (rent) combined with cheap money.. that’s what got us into this pickle. Nothing to do with foreign investment, they behave in a more civilised and egalitarian manner for the most part.
Back in the day they absolutely were, pushing house prices through the roof, mainly in Auckland, not caring how much they spent so long as they had real estate to hide their ill gotten gains in. I know it, you know. Now we have ludicrous house prices that we are pretty well stuck to because of it.
Chinese govt put the brakes on capital flight and now that money is heading back there, plus the capital gains made in the meantime.
Yeah but who sets the price? Not the person purchasing. The greed is at the other side of the table I’m afraid
It's always the underbidder that sets the price. If there wasn't one more person(demand) than the property being sold (supply), then the purchase price would be lower.
This is where very few extra buyers, especially those that can afford to pay more, can cause large increases at the margins.
Price increases have more to do with the regulations around advertised market prices. So much of New Zealands listed real estate is not given a disclosed market value and much of the local sales data is withheld by agents for lengthy periods in order to distort and mislead buyers perceptions eg in Australia a property is advertised with a disclosure document which indicates what the real estate agent believes it's worth in the market, and that value is regulated eg it can not be falsely over or understated by more than 10% otherwise agents can be punished and have been. That doesn't mean a house won't sell at a crazy price over and above the top range in a busy market, though it is likely to fall into that range in a quite or balanced market. It generally makes a huge dent in FOMO by minimising the obfuscation that creates the huge upward distortions.
One old 50's original and unrenovated 2 bedroom unit in an average area went to a brought forward auction the other day (Christchurch) on an offer of $500k (which was a still a ridiculous price to pay but arguably that was the market price). It sold at the auction for $700k which is completely insane.
Spot on. Conditions change and new factors then push up prices. Currently it is the emergency low interest rates and few houses in the market being sold
Surely if the CCP has made moving money out of China harder there would be reduced reason for selling. Unless they are selling in NZ and moving to another non-China country.
Foreign buyers have obviously been making a difference, especially to those of us living in Auckland. And cheap finance.
They were. But things change and NZs prices have gotten out of control. Even overseas buyers know when prices are crazy.
And if they bail out as it appears they are, they will have the exact same influence, only in reverse
Now foreign buyers are exiting, prices are declining. It's a factor.
Sadly the profit goes with them.
Analysis is often retrospective and not introspective. The market 'shakes off' bad news and falls a month later 'on fears of'. The market is never the economy, the market is what the market does.
At the moment NZ, particularly Auckland will be off their shopping list, there are better investments elsewhere eg Brisbane for 300k less, and better rental yield.
There is always somewhere cheaper than somewhere else. As for FBB Australia has FBB too and for longer than here....
FBBs yes, but we all know the purchase and certificate of title are done by an NZ resident, but the cell phone instructions and payment is coming from someone else in Ch___
However the anti laundering laws have helped here, but the foreign buys are still being made in disguise.
I believe that that was happening, but also that it's dropped off a lot since a peak a few years ago. I think foreign buyers will continue to be net sellers, both in the figures and in reality. Time to take profits for them.
I have a new hypothesis for how news affects the NZ residential property market:
[News comes out] - > [Property prices increase]
One can fill any news item they like
"However the Statistics NZ figures do not give a complete picture of activity by overseas owners, because they do not include purchases or sales made through a company structure, or a trust where at least one trustee was a NZ resident or citizen, even if the beneficiaries or settlor of the trust were non-NZ residents or citizens."
...which in effect makes the metric worthless
Agree totally , the opaque nature of foreign trusts etc does not lend credibility to any comments on offshore purchases as there is a dearth of facts to provide accurate assumptions .
Hang on a minute. The ban also applies to trusts and companies. The majority of the beneficiaries/shareholders must be NZ Citizens/Residents. Foreign trusts cannot buy NZ property.
They don't have to be a foreign trust, they can buy through a domestic trust as long as a NZ resident or citizen is in the trust.
Exactly. The person with NZ residency buys the house in their name, the Trust agreement that makes them a Trustee is executed in China. How would NZ even know what agreements lie behind the purchase?
All the signs of a pump and dump. That they are selling should be a major flag for local leveraged speculators.
Averageman
There may be some truth in that but sales by foreign owners have exceeded purchases since the FBB came into place (and certainly markedly over the last few years) yet the market has continued to rise over that period.
Yes, it is widely accepted that there is likely to be little upside to prices and some correction but increasing interest rates, government action directed at investors, minimal immigration, increasing supply, and affordability issues are all probably far more significant flags.
I wouldn't be too concerned about speculators . . . despite what one may think of them, they are not stupid.
Very sensible overseas house sellers. Long may it continue. I only hope that it is NZ property investors buying them and not FHBs.
Yes, the yuan will be heading back to the father land over the next 12 months. They have their own issues. And they will have done very nicely thank you very much. New Zealand: Tick. This will assist our market to rebalance, which could well be minus 20% or more, over that time frame. In all honesty, that would be good for NZ. Yes, some of us will be stuck with higher mortgage payments but we can guts it out, just like before. My guess is that the Sun will probably rise tomorrow morning, regardless.
Until Govt. stick to the theory of 'sustained moderation', these minor changes will have no impact on house affordability.
And news like this will be only categorized as false propaganda.
Getting out at the top of the market after some of the biggest capital gains in the world. Overseas buyers seem to be big in the UK at the moment and their prices in parts look cheap compared to NZ.
Growing political risk having capital in NZ. Government by decree, medical apartheid, three waters…..
Without the trusts decode noone knows what is really going on. It was created by the great and groomed to allow wealthy buddies to hide ill gotten gains while at the same time pilfering New Zealand assets and in some cases of shoring the profits. The structure is still alive and well with NZ journalism cowered into submission, if not infact being paid to step aside.
Communists like the NZ Labour Party don't respect private property rights.
It's only a matter of time. Too risky to buy property in NZ on a freedom/ownership level..
As for prices - it's totally a landlords market. Cramming more and more tenants into the same house.. This is the Way..
Immigration and tourism taps need turned on to prop this ponzi up!! Though communist don't like small business..
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