Foreign buyer ban sees drop in house sales to overseas buyers

Thursday, 2 May 2019

Who does the foreign buyer ban affect? First published in 2018.

The Government's foreign buyer ban has seen a significant drop in home ownership by overseas residents, new Statistics New Zealand data shows.

House sales to overseas buyers dropped 81 per cent in the March quarter compared to the same time last year.

Stats NZ property statistics manager Melissa McKenzie said the law changes late last year that introduced restrictions for overseas buyers played a big part in this drop.

McKenzie said the share of sales to foreigners peaked a year ago at 3.3 per cent when the law changes were being discussed.

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The number of house sales to foreigners had plunged in the first three months of the year.

Foreigners bought 204 homes in the first three months of this year compared to 1083 at the start of last year, according to Stats NZ.

Total sales to foreigners fell 3.5 per cent over the same period.

The number of sales to Chinese buyers was down 80 per cent, McKenzie said.

The Overseas Investment Amendment Bill came into force on October 22, stopping foreigners not intending to live in New Zealand from buying existing homes.

While Australian and Singaporean investors were exempt, the amendments to the bill applied to Chinese investors.

The exemptions meant sales to foreign buyers was unlikely to ever be zero, McKenzie said.

In the year to March 3874 new homes were consented in Auckland, up 24 per cent from a year before.

'While the law change took effect part way through the December 2018 quarter, the fall in transfers to overseas people was more noticeable in recent months,' she said.

In the March quarter, 82 per cent of houses were bought by Kiwis, and 0.6 per cent by non New Zealand citizens or resident visa holders. However, 10 per cent of purchases were by corporate entities, which could have had New Zealand or foreign owners.

Stats NZ does not keep a register of property owned by foreigners.

But Chinese property buyers website Juwai chief executive Carrie Law said Chinese buyers made up nearly a third of all foreign house buyers in New Zealand.

Chinese buyers made up about a quarter of foreign buyers Australia and the United States.

Law said demand for homes in New Zealand was especially strong among Chinese buyers who were studying, working or trying to get residency.

She said Auckland was the most popular city for Chinese buyers.

Over the past year 13,874 new homes were consented in Auckland, up 24 per cent from the same time a year before.

Nationwide 34,000 homes were consented

McKenzie said results were mixed in other regions, with Nelson, the West Coast, and Manawatu-Wanganui having significant growth in consents, but Marlborough, Bay of Plenty, and Gisborne declining.

Large retirement village developments have been consented in Nelson and Manawatu-Wanganui, which helped boost the total new homes consented.