Where have all the Chinese buyers gone?
Their absence was particularly noticeable at this week's apartment auction by City Sales.
The apartment resale market is still dominated by investors and over the last year or so it has become increasingly dominated by ethnic Chinese investors, so much so that the big apartment auctions have tended to look like Shanghai on a Saturday night.
But at this week's City Sales auction there were only a couple of Chinese faces.
There were also noticeably fewer Chinese faces at this week's Ray White City Apartments auction.
There were Chinese people there and some were bidding, but in fewer numbers than I've become used to.
The same thing may be happening out in the suburbs.
During the week I spoke with an auctioneer who handles a large number of suburban homes.
He told me that he had auctioned 20 Auckland suburban properties in the last week or so and the Chinese buyers that had been thronging open homes and auctions until recently had become conspicuous by their absence.
"The Chinese have left the market," he told me.
So where does that leave the market?
At City Sales auction this week six properties were offered, four sold under the hammer and two were passed in.
One of those that was passed in was a 41 square metre, one bedroom leasehold unit with outgoings including ground rent of $368 a week, which would not leave much room for investors to make money from it, even if it was cheap.
At Ray White City Apartments' auction seven properties were offered and four sold under the hammer, with three being passed in for sale by negotiation.
One of those that was passed in had only been purchased in July, for $520,000, and a new, high quality furniture package had been installed. There were multiple bidders and the bids got to $570,000 but could not be coaxed any higher and it was passed in.
A couple of months ago I would have expected it to sell under the hammer.
Investors are still buying but they are being more picky.
They aren't prepared to throw bucket loads of money at a property in the expectation they will quickly get it back and more, from rapidly rising prices.
One of the complaints I've started hearing from agents is that they are increasingly having to deal with vendors who have unrealistically high price expectations.
At the moment demand is sufficient to soak up the supply of available properties, although those that aren't priced to meet the market or have other issues that set them apart, may struggle.
However the number of new listings coming to market is increasing strongly, particularly in Auckland, with the number of Auckland properties newly listed on Realestate.co.nz up by a third in September compared to the same month last year.
The challenge for the market as we head into summer will be how well it copes with that extra supply.
See below for the full results from this week's City Sales and Ray White City Apartments auctions.
Auctioned by City Sales on Wednesday 30 September:
- 6C/22 Beresford Square. Beresford building. A 77 square metre, one bedroom unit with north facing balcony. Vacant. Sold for $460,000. Rates were $1360 and the body corporate levy $2635. No sales history available. The agent was Gabrielle Hoffmann.
- 2E/2 Eden Cres. Argent Hall. A 32 square metre, furnished studio with a balcony. Rented at $320 a week.There was only one bid on the property, for $200,000 and it was passed in for sale by negotiation. According to QV.co.nz the unit had been purchased for $115,100 in 2001. The agent was Tony Kelly.
- 5b/18 Scotia Place. Nova en Scotia building. A 53 square metre, two bedroom furnished unit, overlooking Myers Park. Rented at $450 a week. According to the auctioneer the property needed a touch up with a paint brush. Sold for $426,000. Rates were $1397 and the body corporate levy $4399. According to QV.co.nz the unit had been purchased for $241,000 in 2007. The agent was Steve Roberts.
- 6P/100 Grey Ave. Amora Hotel building. A 35 square metre, furnished unit with a car park and storage locker. Leased to the property manager until 2021. Sold for $175,000. No sales history was available. The agent was Ivan Tvrdeich.
- 209/22 Fisher Point Drive. Beaumont Quarter complex. A 41 square metre, one bedroom furnished unit with a car park. Leasehold. Vacant. Rates were $1463, the body corporate levy $3821 and ground rent $13,865, giving total outgoings of $19,149 a year ($368.25 a week). There were no bids on the property and it was passed in. The agent was Tania Toparea.
- 9/3 Ngahura St, Eden Terrace. A 72 square metre, two bedroom/two bathroom, split level unit with a tandem car park, in a building that sits adjacent to railway tracks. Vacant. There was particularly competitive bidding on the property and it was sold for $471,500. Rates were $1265 and the body corporate levy $2787. According to QV.co.nz the unit had been purchased for $252,800 in 2011. The agent was Iona Rodrigues.
Auctioned by Ray White City Apartments on Thursday October 1:
- 5D Harbour St, St Mary's Bay. A 58 square metre, one bedroom, ground floor unit with courtyard. Vacant. Sold for $550,000. Rates were $1822 and the body corporate levy $2083. According to QV.co.nz the unit had been purchased for $340,000 in 2011. The agent was Krister Samuel.
- 10E/16 Gore St. Harbour City building. A 25 square metre studio. Vacant. The building's body corporate is involved in a $10 million High Court action against Auckland Council and other parties over alleged defects in the building's construction. Sold for $190,000. Rates were $2018 and the body corporate levy $1639 with an additional levy of the same amount. Vacant. The No sales history. The agents were Donald Gibbs and Liam Kyle.
- 1J/127 Grafton Rd. The Bridgeside building. A 48 square metre one bedroom unit with balcony and tandem car park. Vacant. Sold for $415,000. Rates were $1265 and the body corporate levy $4236. According to QV.co.nz the unit had been purchased for $186,000 in 2000. The agent was James Mairs.
- 1I/72 Wellesley St. Kingsbridge building. A 76 square metre, two bedroom furnished unit with a large balcony and a car park. Vacant. Passed in with a highest bid of $570,000. Rates were $1434 and the body corporate levy $5768. According to Qv.co.nz the apartment had been purchased fro $520,000 in July this year. The agents were Krister Samuel and Mitch Agnew.
- 318/6 Dockside Lane. The Docks building. A 65 square metre, two bedroom, furnished unit with a car park. Leasehold. The opening bid was $100,000 and when there were no higher bids the auctioneer made a vendor bid of $200,000 but when there were no further bids it was passed in. Rates were $1594 and the body corporate levy $7756 which included ground rent. The agent was Victor Liu.
- 109/53 Cook St. The Aura building. A two bedroom, two bathroom, furnished unit with a balcony. Sold for $295,000. The agent was Sue Holland.
- 201 Manukau Rd, Epsom. A 230 square metre, modern, mixed use, three level building on a corner site. Passed in with a highest bid of $1.26 million (plus GST). The agent was Dominic Worthington.
39 Comments
Maybe claims by mainstream media of commodity currency carnage yet to come has tempered foreign buyer aspirations?
To foreign-exchange traders, the currencies of commodity exporters are all in the same boat -- and it’s going down.
The long suffering exchange rates for Australia, Canada and Brazil have become increasingly correlated with each other during the past month, and banks including BNP Paribas SA, citing an indicator of momentum, and Barclays Plc, noting economic headwinds, say there are more losses to come.
“It’s bearish across the board -- we’re negative on all commodity currencies,” said Atul Lele, chief investment officer of Nassau, Bahamas-based Deltec International Group, describing the declines as a once-in-a-generation move. “The selloff will become more persistent” when the U.S. Federal Reserve raises interest rates, said Lele, who manages $2 billion. Read more
hmm, but also the exchange rate dropping from 85? to 64? cents must have caused a few heart atatcks. Plus the RB wants it even lower (so an even bigger loss on the cards). The trouble I have with wish this is the impact in the retail and business sector. ie you cant just add 25% to the purchase price and still expect a sale, unless you are a rentier and many are not. So opex / software and hardware bills will have got really ugly, really fast, and it cant be passed on.
The drop makes the return to a foreign (Chinese/US) investor, who paid mainly cash last year, look absolutely horrendous, despite the massive rise in prices over the past 12 months.
New investors paying with new US denominated (or pegged) currencies in theory should now be in a stronger position, but like most investors moving in herd mentalities, they are possibly basing their investment decisions solely on the past 12 months performance.
That will come - eventually - just not yet
see comment here
Loopholes and exemptions already
http://www.interest.co.nz/opinion/77907/indigestion-likely-be-order-day…
Am I surprised? No. The last thing a lot of overseas buyers want to do is register with the IRD and provide a bank account number. Unfortunately this all comes far too late to grab a lot of tax that has not been paid.It certainly looks like the "beginning of the end". But there will still be people who will say that property never drops in price in Auckland. News like this will flush out more people who want to lock in profits and more people who are stretched on their cashflow.
What is increasingly obvious also is the smaller number of property spruikers on this site. Either they have sold up or they were people just fabricating what they were holding. Some of them will be busy now trying to sell up as they need to get in before more and more realise the market is stabilising at best.
It would be great if we could get this level of detail on the Wednesday Barfoots actions. We have printouts from Baileys and Harcourts but nothing from the biggest Auckland agency (even if you can get it relatively easily if you asked).
My (very short of detail wrap).
88 listings
31 sold
21 passed in
17 no bids
10 sold prior
9 withdrawn/postponed/auction day
Auction rooms very busy.. but on the face of it that doesnt look too flash..
Fewer Chinese faces wouldn't have anything to do with this by any chance?
http://www.afr.com/real-estate/chinese-retreat-from-australian-property…
The argument was that anyone wanting to collect data to understand the causes for house price inflation was racist.
Is it racist that Immigration NZ currently collects data on which ethnicities are entering our country? No.
So, how is it racist to collect data on who is purchasing our houses, and for what purpose?
It is not. This country is here to benefit its citizens, whether they are European, or Chinese, or Maori, or any other race.
I am an immigrant to this country (now a citizen), and I want this country to remain the great country it is. If people who are not citizens are exploiting the rules and making it difficult for citizens to become home owners in their own country, the government is doing its job when it makes it more difficult for non-citizens.
Its duty is to us, not some nebulous market god, or the feelings of some overly sensitive non-citizens.
This is not racist, get over it.
FYI: my wife is both Chinese and an NZ citizen and feels the same.
Indeed as expected the drop-off corresponds with them starting to collect the data. Prepare over the coming months for National use it to claim there never was a problem.
But the aussie and NZ slowdown are happening at the same time. Probably more to do with events and rules outside NZ.
Chinese buyers don't like the tax man. I am shocked. Totally shocked.
If the money being paid was legitimate and by mainly local investors (of any ethnicity) then why would there be any aversion to supplying an IRD number?
Now we need an in depth investigation into all of the money spent on NZ property over the past three or four year boom. Was cash paid even by NZ residents laundered money? Has Auckland property just been a hot bed for ill gotten gains? Has NZ just been an enabler for international criminals?
All this talk about setting up insurance fraud investigations post earthquake (when only a handful of mainly opportunists falsified claims), yet no investigation into the billions of foreign dollars being paid for property?
That is the death-trap, the deadly hand-shake, the dance of the tarantulas, the deadly-embrace the NZ government will find itself caught in. More thrilling will be what they do about it - anybody's guess, but every probability nothing will be done, and hope it all goes away and gets forgotten
Because of the crack-down and increased scrutiny and enforcement by the China authorities on moving cash out of China, if the new NZ requirement for all non-resident buyers to provide their home Taxation Identification Number causes a mass drop-off in hot-sheet bidding then that is enough evidence that any property bought by any foreign national prior to 2015 for a price of $1 million or more was (probably) laundered hot-money, and exposes the government's pettifogging AML control systems as bureaucratic nonsense that doesnt and didnt work. At the very least every single one warrants examination
There is talk about additional Chinese money leaving their shores in the future and I just believe NZ needs to be better prepared for that with additional taxation or stamp duty for foreign investors. As much as anything it's a great opportunity to raise funds to develop the increasingly struggling Auckland infrastructure.
Think about this - NZ's Roading Network - our arterial life-blood
In August 2006 New Zealand had
Motorway network 170 kilometres
State Highway Network 10,725 kilometres
Local Authority roads 82,000 kilometres
Given the huge migration influx over the past 8 years, squeezing our infrastrucure
Does anyone have any update on these numbers
New Zealand has a state highway network of 10,895 km (5,974 km in the North Island and 4,921 km in the South Island, as of August 2006) of which 170 km are motorways. These link to 82,000 km of local authority roads, both paved and unpaved. The state highways carry 50% of all New Zealand road traffic, with the motorways alone carrying 9% of all traffic (even though they represent only 3% of the whole state highway network, and even less of the whole road network).
https://en.wikipedia.org/wiki/Transport_in_New_Zealand#Network
As I have pointed out before; foreign property owners should be required to pay 2% of the CV per year as a deemed tax (because you can bet pay they no other tax). This can readily be justified as their fair contribution to the infrastructure and running of the country in which they share the benefit of in owning property. If it is slightly to high this is a fair premium for the privilege of owning property here. If they pay any other tax on the property this can be offset. If we had to, it would also be perfectly fair to apply this to NZ citizen property investors.
They might be looking but are they buying? One or two sales does not mean they are all suddenly back in there buying as before. The IRD and Bank Account requirement has to be a big factor coming into play. There are countries around the world where people are not used to paying tax. What makes you think they are going to want to come into our country and start investing in property and just put their hands up and pay tax on their property sales.
"Where have all the Chinese buyers gone?
Please provide your IRD number and NZ bank accounts numbers please to settle the sale..., no we don't discount the GST if you pay cash, hello hello...you still there , hello??"
Yep...which now begs the question why? which then opens up a possible whole new can of worms...just how much tax has the IRD been missing out on ?....and is it worth pursuing in retrospect ... with penalties?
Was chatting to some long term Auckland 'speculators'.... buy, do up, added value, flick on 6 to 8 weeks later...
." So how is this new 2 yr sell/ tax thing going to effect u guys?"
"It Doesnt....we run a business, we pay our GST and taxes as any other business, nothing has changed"
Comment above
"So property market will rise again? Not as before..Auckland is trying to settle."
The market cycles every 7 to 9 yrs....and if one part of the country swings ahead before the other parts, the other areas tend to keep increasing till the equilibrium is reached again....
One can go back to at least the boom of early to mid 70s.. and that 7 to 9 yrs hits damn near spot on every time.
Go to the auctions. The asian buyers are still buying and leading the bidding. Maybe less but i have seen 2 auctions last weekend and this is what it was: 1 won by Cinese buyer, 1 did not sell but the biggest bid was from Chinese guy as well (driving brand new ML Merc!)
Lots of varying opinion on here but a close personal friend who is a top achieving Agent on the North Shore of Auckland told me the market has changed dramatically and the Asian buyers at auction have gone very very quiet - maybe its different by area of Auckland but the North Shore has certainly been affected and was an area of Auckland where the Asian immigration has been huge....entire suburbs with a changed demographic now.
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