BNZ chief economist suggests conducting detailed analysis on just who is buying Auckland houses and where they are from

BNZ chief economist Tony Alexander is suggesting it would be a good idea to conduct a study into just who is buying Auckland houses - and where the buyers come from.

In his latest weekly newsletter Alexander again addresses the increasingly vexed subject of offshore-based buyers.

Anecdotal evidence is suggesting large numbers of offshore buyers, particularly Chinese, snapping up houses - particularly in Auckland.

However, Alexander's efforts to quantify such activity through the monthly BNZ-REINZ Housing Survey have come up with a result that nationwide only about 3.6% of buyers are people based offshore not intending to live in New Zealand, with the Auckland figure a slightly higher percentage.

"The social media has been ablaze over the issue of perceived massive house buying by Asians in Auckland," Alexander said.

"No-one has professed an ability to distinguish Kiwi-Asians from true foreigners let alone one Asian-type from another - so that clearly clouds the issue.

"But nonetheless there is growing societal discord at the perception that mainland Chinese in particular are outbidding hard-working Kiwis in the Auckland housing market."

Alexander has previously robustly defended the results from the BNZ-REINZ survey, whilst also saying that he favours Australian-like restrictions on offshore-based buying of existing homes.

In a recent newsletter Alexander put out an eight-point plan to tackle the problems in the housing market. An interest.co.nz poll on the plan showed that among readers responding, banning offshore-based investors from buying existing homes was the most popular option.

In the latest newsletter Alexander said the data from the BNZ-REINZ surveys did not support the anecdotes about numbers of offshore buyers.

"Nevertheless, the weight of disbelief about the data for Auckland raises the issue of whether the survey is not truly capturing sales to Chinese...

"...Which of course raises the issue – which does one believe? The data or what one sees in the auction rooms? One must always take anecdotes with a grain of salt, especially as there will be an upward bias to the proportion of sales attributed to Chinese caused by inability to distinguish foreign from Kiwi Chinese, and inability to classify all the non-Asians in the room into any other group than non-Asian."

However, he conceded that more work needed to be done on the question of offshore house buying.

"Clearly the issue needs to be more deeply investigated given the societal concern in play and the clear risk that as this concern deepens in coming years yet our trade dependence upon China grows, we risk either kowtowing to keep exports up, or installing foreign property purchase controls and suffering a backlash from China.

"One avenue for investigation would be someone funding a study into all Auckland dwelling sales over a six month period (about 16,000) to see exactly who the end buyers are."

Meanwhile Alexander's comments on the whole issue of foreign house buying have attracted interest offshore.

In his newsletter Alexander said he had received a string of questions from a Chinese newspaper journalist regarding the buying of houses in New Zealand by Chinese nationals.

Included among the 14 questions were: "It is reported the local people are not so happy about the fact that a lot of Chinese people come to purchase a lot of houses. So, is it true? Could you please tell me an exact example of the local people’s view?" And also:It is reported that the government will issue a new law of housing restriction policy. So, as you see, what will the housing restriction policy be like? Please answer this question in detail."

Alexander included in his answer that: "The government has made no policy pronouncement regarding foreign house purchasing and I am not aware of any work being undertaken on development of any particular policy. There is zero chance that if a policy were developed regarding foreign house buying in New Zealand that it would be targeted toward Chinese. It would apply equally to all groups though may exclude Australians just as New Zealanders may freely purchase property in Australia (to the best of my knowledge).

"...With regard to Chinese buying of houses – I have yet to find a single person in New Zealand who agrees with the [BNZ-REINZ] survey results. Everyone believes that the true level of Chinese house buying in Auckland in particular is much higher than my survey suggests. The issue is rarely mentioned with regard to any other part of New Zealand.

"...My concern is that although I believe the level of Chinese house buying in New Zealand is not as high as the anecdotes suggest, the issue is causing societal discord and has potential to worsen in coming years and threaten the very good trade relationship between New Zealand and China.

"I advocate that the NZ government move quickly to introduce legislation influencing foreign house buying in New Zealand with that legislation applying equally to all foreigners. I hope these comments help clarify my position and make it clear that although there is high concern in Auckland about buying of property by Chinese, there is little if any support for a foreign purchase policy which targets only Chinese buyers."