By Bernard Hickey
Prime Minister John Key has argued in Parliament that net buying of homes by foreigners may be as low as zero, citing research by BNZ Chief Economist Tony Alexander.
Key made the comments as Labour Leader David Cunliffe ramped up his questions about foreign buying of houses in Auckland, particularly those buying over the phone through auctions and those Chinese investors searching for New Zealand property on the internet.
Cunliffe's questions about foreign buying start around the 2 minute mark. He began by asking about the BNZ-REINZ survey of real estate agents conducted by Alexander, which Cunliffe said showed 2,750 homes nationally were sold in the year to February 2014 to non-resident offshore buyers, including 12% of all Auckland homes.
Key said in reply many of those offshore buyers may be New Zealanders or Australians.
"If you look at the numbers supplied by Tony Alexander, in terms of his monthly survey of real estate agents...I reckon he doesn't have much in the way of numbers...but if we go to them, he says 6.4% of dwellings sold by them in March this year were considered to be to people from offshore, but when you take into account those that were Australians or those that are legitimately moving to New Zealand, it comes down to 2% that are considered in that category," Key said.
"When you look at the sellers who were offshore, interestingly enough, he says the net sales and the net purchasers are about equal, so in other words the net number is zero. So we should quote the oracle of all this information, Tony Alexander, when he says the implication is there could be zero net transfers of New Zealand home ownership occurring to overseas investors," Key said.
Cunliffe then asked Key if he was concerned about recent statistics from real estate listings site Juwai showing New Zealand was one of the 10 most searched destinations by Chinese property investors.
Key said there may be many reasons why Chinese nationals were looking at New Zealand, including that it "was well governed under National."
Cunliffe then asked if Key agreed with the two thirds of people who said in a survey they favoured restrictions on "offshore speculators" buying property and whether he would support Labour's proposal for a Capital Gains Tax on rental property and second homes.
"Why is he standing by while young Kiwi first home buyers are outbid by foreign telephone bidders using cheap foreign money to buy up New Zealand houses, like for example, the more than a dozen overseas phone sales witnessed by Auckland real estate agent Adam Wang?," Cunliffe said.
Key responded that he would not support a capital gains tax on every small business and farmer in New Zealand and that there was already a capital gains tax on property speculators. He was referrring to the Inland Revenue Department's push to tax income from house sales by investors trading rather than holding houses.
Earlier Key had referred to how rising house prices from 1999 to 2008 under the then Labour Government had worsened home ownership rates.
"I know failure when I see it and it's a doubling of house prices and interest rates at 11%, and it's called a Labour Government," he said.
60 Comments
Spot on comment by DC further down the thread but unfortunately too subtle for the narcissistic and fact blind on here like FactBoy. Labour orchestrated the biggest property boom in NZ history in the naughties, they racked up crazy debt in boom times (when they should have been paying it down). And generally screwed up the economy, a big reason voters turned to National to clean it all up again. Now Labour are trying to get in power again with policies like money for breeders and blame the foreigners for everything, they should be ashamed of themselves.
You want to know who’s responsible for todays house prices take a good look at the Labour party.
Remind me, what's John Keys preferred PM rating? What's Cunliffe's?
Your post reads like a apology. Last time Labour were in power they failed to rebalance the economy, failed to control house prices, failed to keep interest rates low, failed to control govn debt, failed to control consumer debt, failed contain govn spending and now National has to clean up after them. I suspect you all hate JK and the current National party so much solely because they’re doing such a good job after Labour’s utter failure.
In my opinion Labour supporters are just vested interests who vote for a bloated public sector and/or increased benefit payouts, pure selfishness. Some like yourself have in my opinion become so entrenched in your own rhetoric that you’ll never accept facts.
I’ll leave you to your ranting; children always like to get the last word…
I think Ipredict is favouring Key a little at the moment. If you add up the seats each block gets in the past few polls, the single most likely result by a long way is Winston Peters gets to decide the next government.
Actually, it beingelection year and all, perhaps interest.co could solicit an article from someone at iPredict explaining how the prediction market works.
I don't understand your comment. New Zealand does have a positive trade balance, and has for the past 3 of 4 years. Big negative trade balances were a feature of the decade prior to 2009, but we have long since moved on from then.
The chances are that 2014 will show the best trade surplus in decades.
I don't mean to be picky, because you have the right metric - it's the current account that is the one to watch.
But on the $300m/week thing you are long out of date. That may have been true up to October 2011 when govt debt rose to $71 billion. But since then the gross debt levels have risen 'only' $5 billion, which over the interveneing 125 weeks is $40 million per week. And decreasing. Bond markets are concerned NZ may make too few new issues. When Govt bond supply is insufficient, yields get unnaturally small granting bond investors capital gains. Money is a funny thing.
btw, the current account data can be seen here. They too have sharply improved since 2009.
Confuseus he say,
"When a bank vested interest is plain for all to see and the Emporer has no clothes, all will be revealed, though only a tiny portion".
How can you tell when a man is lying through his teeth and reports what any blind man can see, even though he cannot see him smile and wave and fiddle the books.
Jeepers, does he think we are all stupid, or just bewitched, bothered and bewildered.
exactly. The problem isn't a left wing/right wing political debate. It's a generational debate. The way things are going, it will be impossible to even get into Palmy !!
There is plenty of talk from people over 40 when it comes to snapper. They say stuff like 'I want it to be around for my kids and grandkids'. But when it comes to letting them have a reasonably priced house, it's 'No way! That's my retirement fund!'
... we're Kiwis Mr Zz , not defeatists ... we can build up or down .... in or out ... we're only limited by our imaginations .... ummm , and gravity ...
We can live in stacked shipping containers , tubes , tunnels , trees , dug-outs , or even in trailer parks ...
Have we reached " Peak Imagination " ?
there's heaps of land! North of auckland there's heaps. I don't know how much a bridge would cost...
Plenty of farmland close to Howick too.
What about reducing the minimum subdividable section size? And getting the cost of subdividing down to the same as Australias. Is it true that you can subdivide in Oz for $10,000, but in NZ it costs about $70,000?
ZZ you just made my day, and perhaps for everyone who is looking at your comments.
Let me school you, only for free this time.
500 square meter = 0.0005 square kilo meter
Source: http://www.metric-conversions.org/area/square-meters-to-square-kilomete…
As I quote before, you should never underestimate the predicability of stupidity. You just nearly lost all your credibility, ZZ.
Been to Singapore? They can squeeze 4 millions+ into something not much bigger than Auckland and they can deal with all the waste issue.
Also, you don't need to go out to create more land, Melbourne minimum section size is 200sqm, with clever design you can do alot with 200sqm. While ago I rented a townhouse in Brisbane with 230sqm section, we still had a small lawn and BBQ area - way more functional than our previous house in Auckland with 480sqm!
I like your coment. I wish I had the energy to post it to Zz or the like. Well designed small scale living IS possible, and it IS nice to live in. Japan, London, Singapore are all good examples.
But getting that through to Zz, or other defenders of the Status Quo is impossible. They will come up with list after list of reasons why the current perverse system we have is the best it is ever going to be.
And then there is the actual time it will take to implement anything. We can't even properly organise safe bicycle commuting, let alone an entire revamp of the way we live and the communities we live in.
dude, you are not compare apple with apple <banging head against wall>
1. Swanson Street in Melbourne is smack in the middle of the CBD (try a high quality apartment in Queens st - Auckland)
2. Mt Eden isn't the same as Swanson street - should compare your purchase to something like Richmond in Melbourne
3. What is a norm in Singapore? 99.9% of people there live in apartments and Condos. A standalone home in singapore is like a palacial house in Herns Bay completed with swimming pool and tennis court. See how much change you will get if you get a home like that in Auckland!
What is your job again? You sound like a Real Estate agent!
He was in the middle of explaining that:
- 500m of infrastructure and roading is more expensive than 5km of infrastructure and roading therefore sprawl is better than more intensive urban forms.
- people living in apartments who don't own cars cause more vehicular traffic congestion than people living in sprawl suburbs who drive every time they leave the house.
- If you can chose to live in suburbia, apartments or anything in between then you have no choices. If suburbia is your only choice then you have freedom.
Then he just went quiet - must of got fedup with thickos not accepting his illogic.
wow, what a timewarp, back to the 80s when howick was surrounded by farmland.
You have long ago been able to drive from howick to manuaku without passing through any farmland. There's a bit of south flat bush that's not yet houses, but it's in progress.
https://maps.google.co.nz/maps?q=howick&hl=en&ll=-36.910853,174.902945&…
You have to go down east of Takanini or south to Drury to find the next block of good house building land.
As a person that rents - I'm not interested in buying a house with a section in Howick. Give me a liveable apartment with communal space, access to shops and good public transport. Kiwis that have lived overseas want this! The thing is we're too scared to invest in apartments because of the obvious low building standards/leaky home situation in this country. We can't win!
As a person that rents - I'm not interested in buying a house with a section in Howick. Give me a liveable apartment with communal space, access to shops and good public transport. Kiwis that have lived overseas want this! The thing is we're too scared to invest in apartments because of the obvious low building standards/leaky home situation in this country. We can't win!
ah ok. Yes, it is Whitford that I was thinking of.
I guess my point is that there is land with no houses on it. There are also a lot of big sections that could be divided and have another house on them.
If sprawl is totally udesirable, and the people decide density is better, then why not lower the cost of subdividing. Am I missing something? What is wrong with Australias cheap price for subdividing?
Now here is a man I would like to meet.
Though I believe he is miss-placed where he is, it is worth debating, whether like us we have to kow-tow to the "bigger idiot", just like the UK.
Apparently he does not toe the "Party Line" for all and sundry. And he seems to make ends meet.....with someone.
http://view.ed4.net/v/9ULF66/LJ6DZR/LAZ95B/JINULI/?ftcamp=crm/email/201…
A new low for our government is when the musings of real estate agents gets discussed in the house as if it is the gospel. Anyone who has had any contact with these beings know that they are lower than whale manure.
The public service has a role here - if the facts are not known then one of their departments needs to be pulled away from the coffee machine and told to get on with it. The next election could hinge on these details.
Kiwis so dumb lah!
Cunnie's on the rags 'cos he didn't get a photo op. with the royal baby George ...
... and judging by the way he's scriking over it , I know which of the two of them is the bigger brat !
After the Royals have gone , then we'll get back to those minor issues , like housing affordability , and the balance of payments ....
Who's a pretty boy then ! .... Goo goo gooey ! ... aw come on Cunny , I'm not talking to you ... get out of the pram !!!
Key clearly does not read this site where plenty of people have told us of their own landlord flying in from Hong Kong or wherever once or twice a year to check up on their rental portfolio and he clearly does not listen to Duncan Garner otherwise he would have heard Adam Wong the Remax auctioneer the other day about what he is seeing
What a complete idiot this man is proving to be, and yet there are still the sheeples who will hang on to every word he says
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Its not just Singaporean individuals. Big player hedge funds, and titanic sovereign wealth funds invested in US treasuries. If you take inflation into account the US treasury yields are close to zero or negative. Therefore massive quantities of so called hot money flowing around the world looking for a yield home. At least that's my understanding.
Well if you raise interest rates you make the dollar more attractive to foreign capital. That increases demand for NZD which goes up in value against other currencies, which in turn hurts our exports and damages the economy. NZ becomes less competitive in the global market place, and people lose their jobs. As the labour force participation rate drops so too does GDP and the problem spirals out of control. It seems to me that’s the direction we’re currently headed in.
I would have thought the best solution would be to put an iron clad ring fence around residential property, something with some serious penalties like forced confiscation and sale. Once the safeguards are in place, then lower interest rates close to zero. Our dollar would drop in value and our export sector would flourish, GDP will increase. New Zealanders would take up the property vacuum left by foreign owners as they realised the nominal interest (ie interest-inflation) on their savings was negative. Perhaps this could happen in conjunction with a complete revision of investment property taxation rules. How about a non-deductible land tax with exemption for owner-occupiers. Then home ownership levels would start to climb as the financial incentives to own a house became apparent. It’s important to do that without dropping house values. To many defaults and banks would become insolvent.
By this time our dollar is so low that foreigners will willingly invest in things that are actually productive for the rest of us. Perhaps they’d buy Racon, set up factories etc. I don’t know, just some ideas from a non-economist.
Apologies, a little off topic but I just had a vision of Steve Keen talking to John Key and the guys at the reserve bank. It goes a little like this.
Steve> Guys; Listen all y'all, Aggregate demand is income plus the change in debt!
Reserve Bank> Hmm but the countries private debt to GDP is 160% and rising. What if people get scared and deleverage? or worse, what if they borrow more, we're worried!
Steve> Well obviously you'r economy will be stuffed.
John Key> No problemo, we'll increase investment. We'll sell everything to foreigners. Dairy, Farms, Houses, Kidneys whatever. If we can put a price tag on it it's gone.
Steve> Hmm I'll have to model that in minsky. wont that... you know hurt young people and damage the economy in the long term?
JK> f#**# that, I wont be around to see it.
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