The anecdotal suggestions that large numbers of overseas-based buyers are snapping up New Zealand homes have been substantially refuted by evidence collected in the BNZ-REINZ monthly residential market survey.
It seems that as few as 4% of the house sales nationally may be to overseas-based buyers not intending to live here. In fact just 9% of sales reported in the survey were to people currently offshore.
The latest survey as a whole paints a picture of continued strength and upward momentum in the housing market. This is consistent with the latest sales figures reported by REINZ.
For the first time this month the survey asked detailed questions of real estate agents on where buyers of houses were from and whether they intended to live in New Zealand.
BNZ chief economist Tony Alexander says that principally in Auckland, anecdotes have been flying thick and fast regarding Chinese buyers "snapping up" properties. "The evidence does not support these anecdotes," he says.
"In Auckland an estimated 11 % of sales are to people offshore. Only 19% of those buyers are from China. Forty two percent of those buyers say they plan shifting to New Zealand.
"Therefore we can state that at most 1.2% of dwelling sales in Auckland are to buyers from China not planning to shift to New Zealand and all up just 2.1% of dwell ling sales in Auckland are to people living in China."
To put those percentages against actual Auckland sales figures in February, this would suggest that possibly only around 29 of the houses sold would have been to Chinese nationals not intending to live here.
Alexander says that amongst other nationalities, 2.1% of Auckland sales were to people living in the UK and 1.7% to people living in Australia.
On a national basis, Alexander says that the monthly survey of 10,000 agents revealed that only 9% of all sales were to people from offshore.
"When we allow for at least 40% of these buyers indicating to agents that they intend shifting to New Zealand, we are left with a result that only between 4% and 5.6% of all NZ dwelling sales are to people not intending to live here."
Alexander poses the question of whether it can be concluded that the "divergence of surveyed reality from the hypothesised situation" tells us something about Kiwi attitudes specifically toward buyers from China.
"After all, the furore over Chinese buying of the Crafar farms revealed biased attitudes toward Chinese purchases of farmland that do not exist toward purchasers from other countries," he says.
In Auckland, the survey showed that the biggest number of offshore buyers (19%) did come from China, but Britain was only just behind, with 18%.
In the previous survey, conducted in February, the BNZ had asked agents for their opinion as to where buyers came from, while in the latest survey for March the agents were asked to provide actual figures.
The results from the previous survey had shown that agents thought 45% of offshore buyers in Auckland had come from China, which obviously was markedly different to the actual results.
"Reality has proved substantially different from the dinner table suppositions," Alexander says.
On a nationwide basis the largest source of offshore buyers is the UK with 18%, followed by China (15%) and Australia (14%).
In general terms the latest survey showed continued strength in the housing market. A strong net 54% of agents reported that prices were rising.
A net 27% of agents reported more people going through Open Homes. "This measure moves around a bit but it remains strong overall, suggesting many people looking at properties," Alexander says.
Increasing numbers of people are looking for houses as an investment, the survey shows. A record net 37% of agents reported that more investors were looking to buy houses.
The survey also showed fewer people backing out on house sales after agreeing to buy. A record net 43% of agents reported more written sales going through to being unconditional.
A net 26% of agents thought auction clearance rates were rising.
The interest from first home buyers seems to have dropped a little however, with the figure down to a net 39% of agents reporting seeing more first home buyers in the market.
"This is a key driving force behind the real estate upturn because agents report that 24% of their sales are to people purchasing a property for the first time," Alexander says.
The survey shows this is still a sellers market, with a net 20% of the agents reporting that buyers were more motivated to strike a deal than sellers.
66 Comments
Given that some foreign nationals are buying investment property to qualify for residency. So they are intending to stay in New Zealand (or at least have a bolt hole here if things go bad wherever they are). We should be looking at the total foreign national figures, which seem significant. These people are essentially buying residency + property so will obviously pay more than some who just wants to buy property. This is clearly a distortion in the market.
Banning non residents from buying property would seem to be a no brainer, if the government really wants to stop the house balloon inflating to dangerous levels. They cannot just say it is all about supply when clearly supply and demand are both factors.
If we think of the new residents in Auckland (be they Asian or non-Asian) as first home buyers but with more cash resources than locals, this would easily explain the problem.
We may have net zero migration but while those leaving come from all over NZ the incoming ones mostly seem to gravitate to Auckland. In particular that situation is Asian based because most of their local connections are there.
So there is still a problem.
The subtle art of mis-direction
The clues are in Hargreaves statement "anecdotal evidence .. seems as few as 4% of the house sales nationally may be to overseas-based buyers not intending to live here"
Note the use of the words "anecdotal" and "Nationally" and "may be"
The heat is in Auckland. Rub the same numbers for Auckland only
When the data is stretched out over the entire country it diminishes the results as portayed.
You haven't made your case yet.
I'm with Neven, and even Scarfie - for a change.
11% is a lot. And also what is the churn.
If 11% goes out of local hands. And are long term holds. Over time that adds up and up. Doesn't take too many years to be over 50% of ownership.
There is also the Auckland skew, which is significant there. And as for 'intentions' of shifting here, lets not assume it always happens.
That is not how it works. If the stats hold over time those 11% going to sell their properties 89% of the time to local buyers. Of course if they never sell their properties then you have a problem...but I don't think we have any stats to indicate how long they hold their property for,
Fair comment. But we don't actually know. Once it was zero all round. Not now. 11% (apparently) is the rate at changover. Holds might be quite different rates. We don't know still who holds what. I suspect if you did a house to house ownership survey around the Valley Road area of Mt Eden the outcome would be amazing.
Anyway congratulations to those who did the survey. We are a long way ahead on information than we were before. But we have a long way to go.
11%. Even if it's at changeover only is still markedly high. And will be having a huge effect.
LINZ has all the ownership information (i.e. the Land Information Registrar) in a database - and REINZ operators subscribe to a LINZ service that provides access to that database. The public can also access the same information by property address from any council (provided you go to the council in person to access the database) - and I do not believe there is any charge by council's for doing that.
The REINZ information accessed also provides details of the properties sales history - what the prices paid were each time it changed hands. So don't try to fool an RE about the price you paid .. they already know. :-).
Not so sure about that bob .. the massive influx of asian migration that results in those concentrations began with the ethnic cleansing in Fiji followed by the 1997 return of Hong Kong to Chinese control .. any offspring born-and-bred in new zealand are not yet of an age to produce those numbers .. yet
So in Auckland you would have the following scenario in a typical street with one hundred houses over time if the current stats hold true. 11 of them would be owned by foreign buyers and 2-3 of them would be owned by a foreign chinese buyer and 1 of them would be owned by a foreign chinese buyer who never intends to live here.
Now apply this to every street in Auckland. That is a HUGE problem.
Yes, this is an extremely serious problem. If only 1 house in 100 belongs to a Chinese, very soon the whole street will be bought over by Chinese !!!
And they seem to only immigrate to Auckland and refuses to go anywhere else in New Zealand...
We do know that every Chinese that immigrate here has at least four or five other immigrant attached to them coming in later as relationship or dependents....Parents / Grandparents /Cousins etc etc. (Winston Peters said so) ..Everyone will want to buy a house on the same street as the original immigrant, very soon all of them will congregate on that same street and all the houses will be owned by Chinese...Apply this to the whole of Auckland, and you can see where this goes.
In 100years, all of Auckland will be owned by Chinese whether resident or non resident.
That is not what I said I am not sure where you came up with that. I suggest you stop being a troll and focus on discussing what I actually said like a rational person.
Chinese are the largest foreign buyer (19%) that is why I singled them out. Also they have the lowest rate of intention to move to NZ (37%) as per the report.
Why single out the Chinese ? Just because they are the largest buyer only in Auckland and only by 1% margin???
Why not people from the UK who areTHE LARGEST BUYER NATIONWIDE and only 1% margin behind the Chinese???
What have "intention to move" anything to do with buying a house ?? If he don't move, he will have to sell it ...or rent it. Either way, the housing stock available is still the same..
Yes, because they are the largest. Nationwide we do not having a housing problem. Auckland has the housing problem - hence I only care about the situation in Auckland. They are all a problem but it is valid to focus on the largest group.
Yes, the UK is only 1% behind China, but they are 20% more likely to come to NZ and reside here. That is still a problem but no where near as much as the overseas chinese buyers.
Intention to live is everything. We have a housing crisis in Auckland and we need houses for people to BUY and live in. They do not have to sell it just because it is vacant. They can speculate and hold it for a couple of years or more or they can use it as a holiday home. The housing stock is not the same, it is reduced by this number.
How do you capture the case of a person who owns multiple houses (supposedly 15 to 18 in number) is NZ resident but spends most of his time in his Asian homeland?
Obviously the cash to buy has come from somewhere and probably none of it passed through the NZ tax system and much of the income probably will not do so either.
Yes, it is unfair that people can own houses here and yet go and spend most of his time away from it. Everybody who owns a house in New Zealand should be forced to stay in it at least for half a year at least.
Furthermore we should investigate where thses people get so much money to buy houses. It is quite obvious that some or most of these moniescould come from illegal sources, otherwise how can they buy up all these houses in the first place??
We should investigate each and every purchase and any illegal funding should lead to confiscation by the goverment....
So change the taxation system to charge tax on the basis of a net 6% (or some such) of capital value, unless the owner occupies it for a minimum 6 months each and every year.
Don't collect tax on the actual rent.
If you make more than 6% you can have that bit tax free.
If you earn less than 6%, tough!
Thanks for publishing this piece David , its been what I thought all along ( see my remarks yesterday) .
The problem is one of immigration, and simple economics in the form of supply side problems.
It begs the question , if we have an immigration policy to bring in 60,000 new migrants a year , and we dont have enough accomodation to house those already here , why are we still packing them in , and making the problem worse ?
House prices remain a function of supply and demand , and demand exceeds supply , hence the prices go up .
I find it amusing... the whole piece does come across as slanted and I can think of resons why a bank would not be the most independent party to conduct this research.. Bold conclusions all base on one months stats..hmm and it surprised me how long b4 people starting to think about 11%... Varations mentioned to the other survey suggest to me we need a longer time series than one month.
Don’t panic guys the wheels are falling off. Been to 4 Auctions over last 10 days 90 plus properties and well over half of them passed in. The opportunities are coming from the internationals that have paid too much over the last 6-12months.
No one is reporting from the front lines they are all to busy in the cafes.
The Japanese gave back their profits by paying too much for US assets in the 80's and now it seems the Chinese are going to have their turn. Fine for them given they have a big pile of money to burn, but not for first time Kiwi's who have finite resources and thus cannot hope to compete, assuming it is real money the seller expects to be paid.
As I have said umteen times here, go ahead and buy a place in AKL as long as you are prepared to spend the rest of your life there, as you may have to. OR, wait until this irrational exuburance passes, because, it always does. Once the hangover arrives your money buy a lot more.
Here are Russel Norman's views:
A survey showing around one in ten properties throughout New Zealand are
purchased offshore highlights the fact that this practice is making the
housing market harder for New Zealanders to get into, Green Party Co-leader
Dr Russel Norman said today.
The March BNZ-REINZ Residential Market Survey shows around 9% of house sales
in New Zealand went to offshore buyers, while in Auckland this figure was
11%.
“This survey is likely to understate the true level of overseas purchases
of New Zealand houses,” said Dr Norman.
*“*Our weak overseas investment laws mean New Zealand is a good place to
pick up a bargain for an overseas property speculator.
“The fact that around one in every ten homes is being bought offshore is of
no concern to the BNZ or the Real Estate Institute of New Zealand.
“Overseas investors buying up houses in New Zealand is great news for the
banks and real estate agents making money from these deals, but terrible for
New Zealand house buyers in an already tight market.
“The BNZ and REINZ are also keen to play down the fact that more than 5% of
houses purchased recently will not even be lived in by their owners,” said
Dr Norman.
“The fact that New Zealand’s already tight housing market is becoming a
magnet for overseas investors should be of great concern to any New Zealand
government.
“Sadly, given past statements on overseas investment, the Key Government
have no intention of dealing with this issue,” said Dr Norman.
“This is unfortunate as continued speculation in the New Zealand property
market by offshore buyers will help fuel another destructive housing bubble.
“The Key Government need to look to other jurisdictions, such as Hong Kong,
that realise the danger of offshore buyers making large inroads into an
already tight market.
“Hong Kong has imposed a 15 per cent emergency tax on foreign buyers of
residential property.
“Hong Kong was forced to take this action after investors from Mainland
China drove up prices creating a housing bubble, Dr Norman said.
You really have to wonder. This has been going on for a long time .. at least 5 years .. This knowledge has been in the possession of the Real Estate agents, and REINZ for that length of time .. Barfoot and Thompson have known for that length of time .. Bernard Hickey has known .. have any of them been contacted by Treasury or the RBNZ over those years?, or by any member of parliament? .. or by Winston Peters? .. everybody has known all along what has been going on .. it has been a hot topic here on interest.co.nz all that time .. yet it's still not a problem .. how much am I bid for Park Lane? .. Mayfair? .. Regent St?
Given that 8 out of 10 of the top selling realestate agents are Asian and given that those questioned are hardley neutral......?
Tony Alexander Says:
*/
The claim that foreign migrants drive our house prices is a red herring. To the extent that
migration flows influence the housing market it is us Kiwis moving around who are the
main cause, not the foreigners.
"
*/Based solely on the fertility and migration choices of New Zealanders (eachpresumably behaving fairly rationally), our population growth would have been growing only quite slowly since the mid 1970s. As it is, our population growth since 1990 has been second or third fastest in the OECD. What changed? Migration policy did in the early 1990s.
And 80% of our population growth in the last couple of decades has been the net inflow of non NZ citizens - thus almost purely a matter of discretionary policy choice. "
http://www.treasury.govt.nz/downloads/pdfs/mi-jarrett-comm.pdf
So if immigratnts don't buy houses, how does Tony Alexander account for the changing ethnic makeup of some of our suburbs?
I'm with you there. Didn't anyone even give a passing though to the fact that they were surverying the very people who have a vested interest in the status quo remaining. And as for the question being asked as "In your OPINION............................" ," Awwwww, nah"
That survery holds about as much water as your average sieve
A six-day showcase in Shanghai of more than $800 million worth of premier New Zealand property is generating "serious interest" from specially invited Chinese VIPs according to the organisers, Harcourts' franchise Cooper & Co.
The successful North Shore-based company's international marketing initiative is focused on presenting a collection of more than 50 residential, lifestyle, rural and commercial property and development projects from around New Zealand to Chinese millionaires and billionaires interested in investing and/or immigrating here.
This just goes to show how out of touch Harcourts franchise Cooper & co are with their New Zealand buyers. The best thing we can all do it keep well away from their circus and the bunch of clowns that perform for them.
They struggle to get the job done and are a bunch of individuals cutting each others lunch They are always $50 to $100k behind B&T who are more of a team structure so don’t waste your time and money dealing with them. They also have no interest in looking after there own back yard and people (Kiwis)
I would also not take to much notice of Bnz chief economist Tony Alexander.Firstly he is in the business of selling Money and secondly he gets most of his info from the clowns (Realesate agents)on property.He would be better off going to the local primary school they would have more idea than the clowns.
I'll also note that BNZ has been doing an extremely heavy push to gain Asian customers. They have a dedicated Asian banking team that they set up a few months back - you may remember the publicity surrounding it.
I'm usually a fan of Tony Alexander, but I think the conclusions of this survey, and potentially the methodology is not driven by a disinterested observor.
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