By David Hargreaves
Top Chinese global property portal Juwai says the foreign buyers ban legislation passed in New Zealand on Wednesday is "neither wise nor useful" and if anybody has been driving up house prices in this country "it’s your rich dad and uncle, not rich Chinese".
Juwai' s Global PR and Communications Director Dave Platter predicts that after the passage of the new legislation Chinese buyer demand will "likely remain moderate into 2019".
"Is the ban wise or useful? We think it’s neither," he said.
"Foreign buyers are important, useful, and even vital in New Zealand but they are not a problem. I think that’s what the data clearly shows. Foreign buying is just 3% of the market and tends to be focused on new development, making clear again that foreign investment leads to the creation of new dwellings. That’s vital in a market with a housing shortage, like Auckland."
Platter said buyers from China are much more likely to buy off the plan than locals.
"Off-the-plan sales to Chinese buyers is a key first step for many developers who might otherwise never get the loans they need from the banks so they can start construction. By discouraging foreign buying, the government could turn off the flow of money that helps fund new construction in New Zealand."
It has been the "bad luck" of Chinese buyers to become visible in the market at the same time as interest rates hit rock bottom, Platter said.
"Does New Zealand face an affordability crisis? Yes — and not surprisingly given the rapid increase in population and most especially the historically low rates. When rates go down, prices go up. That’s the first thing any economics student learns about the housing market.
"Foreign buyers account for about one-tenth the number of transactions as local investors, according to official data.
"If anyone is driving up prices, it’s your rich dad and uncle, not rich Chinese."
Platter stressed the benefits of the New Zealand-China relationship. China accounts for 20% of Kiwi exports, delivers $800 million a year in international student spending, and provides $1 billion a year in tourist spending besides funding the construction of new housing, he said.
"Already the majority of mainland Chinese buyers are actually technically permanent residents or citizens of New Zealand. Chinese buyers who have shifted their base to locally in New Zealand account for two to three times more buying activity than offshore Chinese buyers. That’s from the StatsNZ data. They don't count as 'foreign' at all.”
Platter said 69% of Juwai's buyers in New Zealand say they are purchasing for their own use. A good school area is a top request for 23% of them, revealing many will be moving to the home with their children. New Zealand received the sixth greatest investor interest on Juwai.com, after the US, Australia, Thailand, Canada, and the UK.
"The ban served to pull forward a significant amount of Chinese investor interest. After two-quarters of declines, we saw fourth quarter 2017 buyer enquiries surge by 12.2% compared to the prior quarter. In the first quarter of this year, they surged again, by 15.6% compared to the fourth quarter. In the second quarter, that demand dropped off, and we saw a 31.4% decline in enquiries compared to Q1.
He said Chinese buyers spent more than NZ$1.1 billion on Kiwi residential property in 2017. The top New Zealand cities for Chinese buyers are Auckland, Christchurch, Wellington, Queenstown, and Hamilton.
65 Comments
'Juwai' s Global PR and Communications Director Dave Platter predicts that after the passage of the new legislation Chinese buyer demand will "likely remain moderate into 2019".
Not if you can't buy Dave..... Have you sold a pup? What is the penalty for that in the Mainland? I hope they go easy and we hear another statement from you. If not we know you've disappeared and will be sure to send out a recovery party...
typical Chinese attitude!!!
They have made an art out of wielding an Iron fist whilst pretending to be a victim.
And who care what they think anyway, go somewhere else to launder your stolen money, when their debt ponzi implodes it will make the Turkey situation look like chicken feed!!!
That much quoted 3% statistic is misleading and foolishly compares apples and oranges.
The methodology of the study that places foreign ownership at 3% includes non-residents (tax resident and not immigration “resident”). Any foreign national house buyer on a non-PR visa (student, investor, work etc.) who lived in NZ for at least 183 days before buying the house was excluded from the 3% count.
This bill makes only allows those on NZ Permanent Resident visas and citizens (not even the initial travel restricted resident visa) who are also tax residents of NZ to buy residential land without permission from the OIO.
The ban is not that effective simply because it is stupidity simple to have a go between or company make the purchase for you. Much of the investors in my area had real estate agents help with the setup & the properties are owned by companies with contact details overseas in China. (Of course the business is NZ registered so GST refunds can be claimed as well & can be considered entrepreneurial). Looking into it trusts are the next biggest fashionable manner of ownership. Also was recommended it would be a good way to hide asset value for post retirement benefits by several legal companies. Setup a NZ Trust with a local face and Voila. Hence it is not just selling homes overseas, it is selling the business services for setup of companies & trusts as well. Good business for some, but not the commonly paraded method of many local homeowners in NZ, and certainly not the unwashed general public. There is a significant financial barrier for many locals to those methods.
Nzdan how naive can you be ?
You really believe my former Chinese neighbour will be prevented buying properties for his relatives back in China ? No
However thank the Chinese for bringing much needed foreign investment
I wish the NZ govt would request a bullet train from one end of NZ to the other from the CCP
Northern Lights
Please read your post and mine and tell me whether you think your post could be construed as having 'Chinese Imperialist undertones? My comment is not even discussing race, it is discussing sovereignty of nation and the risks of divesting too much power and influence to those that may not have our best interests at heart. That is not racism.
But I am sure that there are a lot Chinese speculators who have gambled on NZ property who are now feeling very concerned that there may not be the ability to on-sell to others with a similar gambling addiction. That is not racism either! It's just a comment on markets and their participants..
Good luck kiddo.
Just like liquor laws don’t prevent a 21 year old from buying a bottle of vodka and giving it to a 16 year old. There will be ways of getting around it. If the legislation has no effect due to proxy buying then I’m sure if the government is really serious they’ll find a way of dealing with it.
Its the same with anything.
No matter how well you lock your house or your car, if a thief is determined to get in they will, but if you have security and lock your door, then then most people will be deterred.
This is effectively locking the door, most people will be deterred. Some wont.
Yes. Are you really that naive to think everyone will be buying for themselves as themselves. The exemptions can exempt everyone so long as they phrase it as a business. Setting up a NZ business is neither hard nor prohibited for overseas owners, (just get a NZ go between address which is relatively easy to find). Rent out rooms occasionally or Airbnb it and call it a hostel. Dunedin is full of similarly run property businesses.
I get what you’re saying. But like any law or piece of legislation, it doesn’t prevent the crime or action from happening.
This legislation will make it much harder for foreigners to purchase existing property. How many would rather put their money into a new house than try to tip toe around the law and risk getting caught?
Time will prove how big the influence of foreign buyers has been.An interesting point Tony Alexander made some time ago if it was 3 % then they were also 1.7% sellers as well so the impact is the difference of 1.3%. They certainly have been and will continue to be an anchor for buyers of the plan for new developments to secure funding to allow developments to proceed.
Happy to agree with you again Fritz and to have a combination of sensible comments that don't get deleted by Ed! China are still getting over the '100 years of humiliation' from 1840' when the British Navy took control of their ports... it's a long time ago for us lacklustre historians of the West, however it's still taught in Chinese schools so is very close to the imagination. The link is an interesting piece and hopefully thought provoking. Lest we forget..
Isn’t it funny how certain places of origin are “taboo” from holding a dim view against. *gasp* that’s racist. But if you swap Chinese out for American, Italian, German suddenly the statement doesn’t trigger anyone.....loses its “offensiveness”.
I think the assertion that something is offensive purely because it includes a certain group of individuals is in itself an offensive act.
Exactly. Holding a dim view of Trump and America is ok. But not China. Very odd. And as you say, actually offensive.
And as a matter of fact I do hold a rather dim view of American foreign policy. And if American based investors were buying up NZ property like Chinese based investors have been, I would be just as antagonistic to that.
It's got nothing to do with race.
Lapun - Of course you can.
I have a dim view of the English, Scottish, Welsh and Irish. In fact most Europeans, the Chinese, the Americans, and definitely the Aussies .. that's not to say I don't like them, I just think that the majority of them are as you say 'dim.'
As long as you think that you're smarter than most people, it's easy to have a dim view of pretty much anyone you like... More than happy for you to join my club of 'very gross', but generally true generalisations!. Welcome on board.
In more enlightened circles there is a growing backlash in the 'western' world against the stupidity of over the top political correctness. This tide of change will even overwhelm petty backward sites such as this one. Sadly NZ is very much behind modern European opinions and even Australia in this regard as shown by the ignorance shown here in relation to Molyneux & Southern. MSM is far too biased, thus they get little support from those like me that can support them financially.
True Fritz but you can be imperialistic when you are the CCP with a Ruler for Life in a country of nearly 1.4 Billion people
How else do you expect them to view tiny NZ with approximately 5 Million ? Benevolently ? Wishful thinking they wish to assimilate you by immigration & buying NZ
New Zealand received the sixth greatest investor interest on Juwai.com, after the US, Australia, Thailand, Canada, and the UK.
This is no surprise. People here often say that NZ is insignificant in the great scheme of things and that there are numerous non-English speaking countries that are much better. Yet here we see it in black and white how important NZ is. The primary motivation for these investors is not the making of money but rather buying a slice of Anglophone culture, a slice of freedom. A place where you can be what you want to be, think what you want to think, do what you want to do, in a very benevolent environment where property rights are sacrosanct. These are places where individuals can thrive and are thus highly sought after. If it is open to the global market to purchase then market forces will push the prices up.
Well done to Labour for its fortitude in pushing through with the OIA.
Its very clear that National was pulling wool over the people in claiming that the OIA would breach TPP.
Well,Labour just proved that it was a falsehood.
Sorry to the Blue Dragons of National may want to explore with Juwai some way of replenishing their coffers.
Of course the OIA is neither wise nor useful except to Juwai. Who the hell cares??
Labour has shown fortitude in pushing through with the OIA. It belies what National had declared that such legislation would put NZ in breach of TPP. Looks as if National had tried to pull wool over its people.Not that they cared for locals, as their Blue Dragons had interests elsewhere.
That figure of 3% foreign buyers would have been fudged by overseas buying through proxies who are citizens or PR's.
Its quite easy to flush these out .IRD,AMLA could inquire into their sources of funds.And if they claim to be proxies for overseas parties then they are stuffed by their own admissions. Charge them for aiding,abetting,conniving to circumvent the provisions of OIA.
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