Statistics NZ said yesterday 3.3% of home transfers in the March quarter were to people who didn’t hold New Zealand citizenship or resident visas, up from 2.9% in the December quarter.
That low percentage has been the basis of an argument that foreign investors have been of no concern.
But, just as the general rise in house prices around the country has been led by Auckland – and specific areas of Auckland – that’s also where the impact of foreign buyers has been greatest.
Fully foreign buyers (no NZ citizenship or resident visa) numbered 1212 in the March quarter, up from 1158 the previous quarter. Partially foreign buyers (at least one NZ citizen or holder of an NZ resident visa) increased the total by 33,000 in the latest period, 36,800 in the December quarter.
Assuming that the part-Kiwis have come here to live, the focus can be on just that smaller number of fully non-Kiwis.
What the statistics don’t show
In Auckland, 7.3% of purchases in the March quarter were by buyers with no NZ affiliation. The double-digit wards were Waitemata (the central city), where 18.7% of purchases were by full foreigners, Upper Harbour 14.3% & Kaipatiki 10.3%.
There’s no differentiation in the statistics between purchases of apartments & houses in the Waitemata ward, which is material to the value of the statistics. Auckland’s (and New Zealand’s) apartment market has been led by sales through overseas campaigns, particularly through Singapore, Malaysia & Hong Kong. Without those overseas campaigns, most of the city’s big apartment developments would not have got out of the ground.
A second factor which is important but not taken into account is the reason for buying, and the impact of the group of buyers who appear to have a motive other than residence. I have argued over the last 3 years that foreign buyers at auction who have no apparent concern that the price they are paying is well above market will lead a more general rise in prices in that suburb. That’s been happening in some of the most expensive areas of Auckland, such as Remuera, but this year that segment of buyers has been subdued – far fewer in number and far more cautious. The shift has been away from ‘Buy anything, fast’ to ‘Buy an investment, well’.
Exercise being bedded in
Statistics NZ property statistics manager Melissa McKenzie said total transfers fell 9.4%, from 36,279 in the December quarter to 32,880, but the number of transfers to overseas people rose 4.3%.
The proportion of overseas sellers also increased in the March quarter, from 1.3% in each of the first 4 quarters of the new count, to 1.5% in the March quarter.
When Statistics NZ launched its new count in the December 2016 quarter, 90% of the 40,000 transactions were between people whose affiliation to New Zealand wasn’t recorded. The statistics were made more accurate in the March 2017 quarter, when vendors whose affiliation wasn’t know declined to 12.7%. In the March 2018 quarter, the affiliation unknowns were down to 39 buyers.
You can see from that that the statistical exercise is just being bedded in, but also that it’s an exercise that might not mean much (directly) in many areas. The targeting of specific Auckland areas for above-market purchases can flow on to other parts of the city & country. Foreign sales over a number of years have also meant more construction of apartments, now available at a range of price levels.
Ms McKenzie said nearly 10% of all sales in the March quarter were to corporate entities, but information on the ownership of those entities – by New Zealanders or foreigners – wasn’t available. Most trusts buying homes were included in the statistics for individuals rather than corporates, because every trustee must provide information about their citizenship or visa status.
She added another questionmark: “Consultation about amendments to the Overseas Investment Act may have been a factor in recent increases in the proportion of transfers to non-New Zealand citizens & residents. The proposed changes could make it more challenging for overseas buyers to purchase residential land in New Zealand.”
In the March 2018 quarter, the territorial authority with the highest proportion of home transfers to people who weren’t New Zealand citizens or resident-visa holders was Queenstown-Lakes district, with 9.7%. For the year to March, 7% of Queenstown-Lakes buyers were full foreigners and their share in Auckland was 5.7%.
Around Auckland for the year, 12.9% of Waitemata buyers were full foreigners, followed by Upper Harbour on 10.7%, Kaipatiki 7.6%, Devonport-Takapuna 7.4% & Howick 7%.
Real Estate Institute says ban could be counter-productive
Real Estate Institute chief executive Bindi Norwell questioned the merit of restricting sales to foreigners throughout the country and, given the low number of sales to foreigners in Waitemata, there too: “Looking more closely at the Auckland market, Stats NZ highlighted that 19% of sales in the Waitemata board [local board area] in the March quarter were to offshore buyers. This is roughly 85 sales, and even if these 85 properties were sold to local buyers or investors it is still unlikely to significantly impact the overall market.
“As we outlined in our submission to the select committee, if foreign buyers are banned from purchasing property in New Zealand, it could significantly impact development funding which would therefore impact supply and potentially see prices increasing – the exact opposite effect the ban is seeking to have.”
Data collection transferred
Statistics NZ has taken over the analysis & publication of property transfer statistics from Land Information NZ (LINZ). LINZ produced the quarterly Property transfers & tax residency reports from 2016, and has helped Statistics NZ replicate their methodology and enhance the data series.
28 May 2018: First statistics on property transfers out in 10 days
Attribution: Statistics NZ release & tables, own observations, Real Estate Institute.