By Bernard Hickey
Prime Minister John Key has rejected Winston Peters' call for a ban on non-resident buying of houses, saying he saw little evidence it was a problem, given both rents and prices were no longer rising so fast in Auckland.
Key also downplayed the need for an official inquiry or Government collection of data on the residency of foreign owners. He said such restrictions had not worked in Australia and could catch many third or fourth generation New Zealand residents with Asian or Indian sounding names.
Key said the Government did not record all the data on the residency of owners and the only data collected was not reliable.
"My understanding from talking to Tony Alexander was the way he got his data was literally to look at the surname and if it sounded Asian then he counted them as non-resident. That's a fairly heroic assumption. He himself said to me he didn't think it was a massive problem today. He just thinks it could be quite a big problem in 20 years time," Key told his weekly post-cabinet news conference in Wellington.
"Secondly, if you have a look at the most recent data from Quotable Value, residential house prices have risen by a very tiny amount in the last three months. That's probably as a result of what's happened with the LVR restrictions and if indeed the market was solely being driven by rich foreign investors buying houses and not renting them, and not living here, A, you'd see a lot of empty houses in Auckland, and I don't see a lot of evidence of that and secondly they would be unaffected by LVRs because they're very unlikely to be the sort people having to borrow enormous amounts from the bank," Key said.
"Some people may have a perception that that's a big issue, and I'm not saying some houses don't get sold to foreigners, but there's all sorts of reasons why that might happen, including quite well off parents buying an apartment for their child while they're studying in New Zealand. It could be they long term want to emigrate and they are going through the process."
Key said any restrictions could have all sorts of unintended consequences.
"Would you stop very wealthy people who might buy a high country station from making those purchases? Would that be logical because it doesn't have any impact on residential housing, say in Auckland. What would you do about someone who's been out of the country for a long time. Are they still a New Zealander or are they a non-resident for those purposes?," Key said.
Key then referred to restrictions in Australia "where it's quite challenging to buy a property unless it's new, and there's no evidence there's no evidence that it's done much to the property market."
'Not a problem at the moment'
Asked if the Government should hold an inquiry to end the debate, he said: "The indications at the moment is that it's not a problem. There may be a perception that they are a significant force in terms of buyers in the market. It's very difficult to assess that accurately for anyone. I don't think we have that data. It's one of those things that gets raised. Whether in reality makes a difference is quite a different thing."
Key said the Government had no plans for an inquiry or to legislate to get the data.
"There are some challenges to getting the data. If the house is bought in the name of a trust or a company then who actually is the beneficial owner if the directors are non-resident? It's not so straight forward."
Key said he also did not see any evidence non-resident buyers were buying properties and then leaving them un-occupied.
"Are rental prices going down in Auckland because so many houses being purchased in Auckland are not being lived in. The answer to that question is no. Have prices been continuing to gallop away and the answer to that on the most recent data is no because of some of the changes that have been made," he said.
Key said the main problem in Auckland's housing market was a lack of supply, given just 4,000 new homes had been built in the last three to four years when around 13,500 were needed to cope with natural population growth and net migration.
"It's a supply side issue. If we continue to build houses I think we'll cover it."
'Bottom line?'
Key said he would not get into bottom line negotiations with Winston Peters or anyone before the election result. Peters told TVNZ's Q+A programme that such a ban on non-resident buying was a 'bottom line' in any coalition negotiations.
"On Q+A I think he said it's always been an issue for New Zealand First, but it wasn't actually in 1996 or 2005 when we had negotiations."
Key warned that blocking foreign owners could also hurt New Zealanders.
"If you have a look at the foreign purchasers and let's say for a moment you completely take them out of the market that also has a whole set of implications. If foreigners are buying some houses then they are houses that presumably have been built by New Zealanders and created jobs. That probably supports the underlying value of their homes at the moment," Key said.
"If you really take a step back. Winston Peters is really making an argument which is about New Zealand not having international connectedness. He doesn't really want foreigners to really come to New Zealand and he doesn't want foreigners to purchase property in New Zealand and he doesn't want New Zealanders to trade with other countries. He's opposed to FTAs. He didn't sign up to the China FTA, which happens to be on most measures our largest counterpart. That's a valid proposition for someone to hold. It's just not the one I hold, because if you want New Zealand to be prosperous and successful then you need to have New Zealand engaged with the world."
Key again rejected the need for an inquiry into non-resident buying, at least for now.
'Crude analysis'
"I haven't seen any evidence to support a need for it. You can ask me what is a hypothetical question and I can't say that one day it's not something we're going to look at," Key said, referring again to BNZ Chief Economist Tony Alexander's research.
"The only person who's made a claim this is a significant issue is Tony Alexander and in the end he said he didn't have evidence to support what he was saying because no one records this data. He had to use a crude analysis of looking at someone's surname. Your surname could be an Asian sounding surname, but you might be a third generation New Zealander. Certainly even if you put restrictions on foreigners they'll then capture that person," he said, referring to New Zealand having 250,000 residents of Chinese ethnicity and over 100,000 of Indian ethnicity.
"You could get data. I'm not saying it's impossible. It's challenging because of the structure of the way that people sometimes buy houses. Secondly, it would take a long time to get that data and for it to be robust," he said.
87 Comments
Move on, nothing to see here.
"We can't deny High country farms, & luxury ranches in Queenstown to foreign buyers, so why stop foreign non-resident buyers in Auckland" says Key.
Anyway, we might damage indirectly the FTA with China.
Where are the hard-nosed reporters who can keep asking the questions? Have they done a deal where they will only ask him easy questions - limited to 3 max?
Chaston: Can you explain that
Don't see where MortgageBelt suggested or implied anyone made anything up.
Where did you get that from?
Many of Key's statements are simply dismissive and plain wrong
Key's dismissals need to be challenged
If you turn your mind to it, meaningful data can be obtained very simply
To hide behind the absence of data as a means of dismissing it is woeful
You're assuming that " the questions " you wish to be asked are of as much importance to JK & other people as they are to you ....
... some of us reckon the questions needing hard answers are one's relating to the supply of property , and the spiralling costs of compliance , sections , materials , GST on construction ... But not everyone sees those as hard questions needing answers , neither ...
Any journalist who badgers a PM or MP as some would wish , will probably be shunned in the future by those interviewees ... end of one journo's career ...
I agree Mr GBH......if they addressed the supply issue and the spiralling costs issue then houses would not be such an attractive investment.
It appears a stable economy is one where the prices of housing are increasing due to a constrained supply and hefty bureaucratic price increases......
I think they have got the wrong definition on Stable and are using the word in the context of horse housing. At the moment the Stable door is a closed box but look out when the door breaks down.
I wonder if he has bothered to listen to Duncan Garner's interview with Adam Wang, the Remax auctioneer, who has pretty much confirmed that foreigners are indeed, buying up Auckland properties, and I believe it is not confined to, although not as obvious as, Auckland
He is just not prepared to look at the whole thing because he probably suspects he will be proved wrong and then have to live up to his own words about NZers not becoming tenants in their own land.
Anyone planning to vote for Winston Peters in the hope that he will sort something out is likely kidding themselves as well. He will hook up with Key and hey presto, will completely forget about sorting out foreigners buying up NZ as he will be crowned (yes crowned) Minister of Foreign Affairs, yet again, and you won't see hide nor hair of him for 3 years, when he will exit stage left, for good.
And David Chaston, I suggest you go listen to that interview as well, straight from the horse's mouth
He himself said to me he didn't think it was a massive problem today. He just thinks it could be quite a big problem in 20 years time," Key told his weekly post-cabinet news conference in Wellington.
Even if Key is right, that it won't be for 20 years.......why is that NOT a problem? Does he not hold some responsibility for where this is all heading?
My understanding from talking to Tony Alexander was the way he got his data was literally to look at the surname and if it sounded Asian then he counted them as non-resident.
Yeah, so why not get some solid data? Seems to me Key does not want that data found.....it suits his agenda.
Also, no empty houses? WHat? I was priveleged to walk house to house for a project...over 300 houses in my area of AKL, plenty of empty houses, where neighbours said the people lived off shore.....and if you add the households which strangely had diminishing numbers on second visits.....well....it didn't take much nouse to work it all out.
If he was so darned confident that it was negligible then he would get those figures, and shut the lot of us up. He won't as far as I am concerned, because he pretty much knows that whatever the figures show, it will not be what he is saying.
And worse still, I believe he knows that as well.
You know what is draconian, Z. Draconian is for the people who can't afford to buy a home of their own and have to face unaffordable rents, such that they have to go with begging bowl in hand to WINZ to help pay the landlord, it should be the landlord with the begging bowl out, that would sort it out.
Draconian is in the eye of the beholder
This guy has got his head so far in the sand it's a wonder he's still visible.
He is running the country on idle speculation.
We don't have any data, but trust me, i had a chat to Tony and it's not a problem right now.
He says "I haven't seen any evidence to support a need for it.". Well that's because you refuse to collect the data that would provide such evidence. We can also say 'i haven't seen any evidence that it's not needed.
On the one hand he rubbishes Tony's data as inaccurate, ignore it, it's no good. Then he tries to use it as evidence that foregin buyers aren't significant.
And on rental prices, what is he on about, empty houses? Why would a foreign investor not rent their property out?
My take includes foreign buyers being active.
The bigger influences may well be new residents with money investing because it is a managed passive investment that requires little if any English language skills.
Add to that the locals who fancy themselves as investors and whose cash (provided by their bank) enables them to beat out new owner occupiers.
So let us ban the first and discourage the others with a more balanced tax system.
A friend of my brother works for an alarm company. He mentioned how he keeps getting called out to east auckland in particular because of empty houses where the alarms go faulty as they haven't been serviced. Oh but John Key hasn't seen any so they musn't exist...
That will be because this landscape has changed so much over the last few years and all over the place are appearing houses that show clear signs of no occupancy, even here in Hamilton and it sticks out like the proverbials, especially when you see more than one, even next door or across the road from each other.
There are dead set tell-tale signs for anyone with an ounce of common sense
Get out to Pakuranga and other east suburbs and up to Northcote. I spend zero to very little time around Auckland only going where I need to to visit family. On two separate occasions I went to these places and there were unoccupied houses all over the place.
Not that it matters in the great scheme. How many of those occupied houses did you suss out belong to foreign landlords then? That is even worse as I expect a great number of the houses you saw were rented and a great many of those were having to have some sort of help from WINZ. Can you tell me you are happy to see WINZ money going directly (especially with direct debits) to foreigners. I'm not. We are a bunch of wimps and need to start looking after our own.
And being an advocate of capping population and cutting back on immigration the whole, oh they might move here someday doesn't wash. They can move here first, after having passed a whole lot of rigourous tests, none of which will be, how much money do you have beyond, THEN they can buy a house
They're empty houses - no furniture. And I'm sure I'll be accused of profiling here, but he knows the name of the "client" which can speak a great deal. Let's be honest, not collecting any data on this issue is reducing our ability to address it. But then, that seems to be the government's MO: ignorance is bliss.
ZZ......Value Added did say "In particular to empty houses".........I would tend to the assumption that if a new migrant was travelling then they would be returning to a furnished house.
Why would a new migrant owner put their furniture into storage if travelling?
ZZ .........I was responding to these comments as copied for you below.
by Value Added | 08 Apr 14, 12:26am
A friend of my brother works for an alarm company. He mentioned how he keeps getting called out to east auckland in particular because of empty houses where the alarms go faulty as they haven't been serviced. Oh but John Key hasn't seen any so they musn't exist...
by Zanyzane | 08 Apr 14, 6:54am
Value Added, on any given day, there are 80,000 kiwis travelling outside of NZ according to NZ statistics. How do you know these are not the new migrants travelling?
The housing market is a grubby dirty beast with far too many distortions...if the Politicians don't get it right then the whole of the NZ economy is going to suffer. If the price of housing becomes too expensive it will cause problems and if prices drop significantly it causes problems. There is a huge need to balance this market and the Politicians and bureaucrats will not allow it.
My concern is how all these distortions will affect the general populace of NZ in both the long and short term. I do not want people having to be reliant on some type of State welfare for their personal housing needs. We are all losers under that scenario.
Factboy i read an interesting interview with John Campbell a while back. In this he explained how much trouble he was having get some MP's on his show - the reason being they were gun shy of getting a gruelling from him. Campbell is well aware that he looses out at times for this reason - one issue (forget exactly what) TV 3 had run a story for weeks trying to get an MP on...they kept refusing but when it became a national issue due to the stink he was raising...the MP came onto Sainsbury on TV1 . Sainsbury didnt have the full facts so the MP easily swiped away the questions.
Basically if a journo want access, they need to be nice.
I agree , John Campbell has a problem with his approach to interviewing politicians ( and others) , he is a self centred egotist and tries to get the better of them .
There is nothing wrong with good investigative journalism and asking the hard questions , but he is known for suddenly turning on people.
He thinks he is smart
Smart Alec
Bollocks!. Who’s going to ask the tough questions. I had to cringe watching Patrick Gower interview JK in china, he apologised before he asked a question about Collins. For goodness sake, is that the sort of sycophantic journalism that you want to see?. I’m sorry but Campbell does a fantastic job and he hammers National just as much as labour. Who could forget Helen Clark, Simon, Bridges interviews. Politicians should be accountable.
Did anyone see the interview Campbell did with John & Bronagh Key at their beach home last night? Other party leaders and their partners will be interviewed over the next wee while, except of course Peter Dunne and Winston Peters, who declined. Don't normally watch Campbell as I don't like his interview style. He seemed to have changed his style last night.
Key knows that this issue is a looser so is keen to try and brush it off. Winston with his political cunning knows this issue resonates with a very large % of NZ.
Polictics is not about facts, it's about perception. Us voters have the perception (rightly or wrongly) that overseas buyers are an issue.
Key has dug a hole and can't go back. This will get Winnie over the threshold.
The fact is Auckland needs more houses. It seems that foreign money is needed to achieve that. 'Wealthy' Auckland homeowners don't tend to build in-fill houses on their own half acre sites in Mt Eden and Epsom. Either because they are mortgaged up to the gills or freehold and like living on big sections. Curbing foreign ownership would probably be detrimental to growth as we Kiwis are already borrowing too much.
Sitting out in Rural New Zealand we dont see any of these large overseas buyups that we hear are occurring.
having sold real estate for a large company for over ten years in reasonable volumes I`ve only ever encountered one group of overseas vendors who were duped into buying sections off plans in Auckland which has helped my business onselling these.
Down here we really dont care too much as we still have plenty of houses for sale, I look at my brother and sister and family living in Auckland and wonder what the hell they are doing there paying twice as much for half the home we live in.
John Key will pick up the votes he needs in Auckland and the media etc might make a fuss but down in the boondocks the average joe blo believes him because the foreigners just aren`t here.
So here`s one vote still for John Key Factboy.
John Key is right on this issue .
We dont need an enquiry , we just need to know WHO is buying NZ property , and keep proper records of the date of birth , gender , citizenship , residence status , marital status and occupation of the persons or entities buyer(s) like they do in
- Australia
- Canada
- USA
- UK
- France
- Germany
- Italy
- China
- Russia
- Brazil
- South Africa
- Argentina
- Singapore
- Malaysia
- Indonesia
- and even Zimbabwe for goodness sake
If some folk care so much , it's not too late to form a new political group , the " Property Party " ...
... I'd reckon that'd get your concerns up in bright lights on the media stage ...
Colin Craig gets bucket loads of air time , with just 2 % support ... surely a middle of the road " Property Party " could hit the nerve with greatly more than 2 % of the voting populence ... could get the balance of power , a chance to hobnob with Winnie ... get to see his baubles of office first-hand !
Here’s how Auckland has changed over the years. I have a good friend in East Auckland, they moved there in 2000. They are in a very quiet short cul-de-sac of no more than 30 houses. Over the years all the houses were sold and bought by Asian families, they are now the only original owner left in the street! They recently got a birthday party invite from one of the neighbours addressed to “The White family”.. Yes their surname is White !!!
The cul-de-sac we bought into on Auckland's North Shore, around 2000, changed too, but in a different way.
Over the years, most of the neighboring houses were sold, one at a time, to investors. A variety of neighbors came and went. We stopped enjoying living there as the number of parties increased and the noise level from music got louder and more continuous (or maybe I just got older and grumpier). In the end, we moved out and rented the place. If you can't beat 'em ... Couple of years later we sold the house, with tenants in, and fetched a good price because of the school zone. An investor of stereotypical ethnicity bought the house. After the auction, someone on behalf of the buyer came to ask us how much we had been charging for rent. It's good to be out of there.
Every long term Prime Minister leaves a legacy they are remembered for
Jim Bolgers was to leave NZ with the rotting home syndrome after he allowed the watering down of the building code after pressure from Fletchers. He then snuck off to Washington.
Key's legacy will be the Asiafication of Auckland. History will be the judge of whether his Faustian contract to allow this to happen so that our main export destination keeps smiling was a good idea. As the number of Asians increase I would suggest they might be writing the history books themselves.
Kiwis so dumb lah!
There has been a bit of talk about how difficult it would be to get compliance to show a purchaser isn't an overseas buyer.
This week I am off to my local hospital for a very minor procedure (1/2 hour max). Before they would admit me, I had to show evidence of NZ citizenship. ie, birth certificate, passport or some such. Done in 5 minutes, just for a minor procedure.
So why should this be a problem with purchasing a $500k house?
For crying out loudest of all. And for Pete's sake into the bargain. And even oh my giddy aunt. How many houses are owned by absentee owners is not a particularly relevant metric. It is what proportion of houses this week or next week that are sold to foreign interests that matters. That is, if sales for April show that 10% of houses in Auckland are sold to non-residents, then Houston we have a problem.
Hang on, while you do not have one million patient admissions a day, you don't have one million house sales a day. You are mixing up the population being drawn from (households/people) with the transaction (housesales/ patient admissions). Based on monthly sales figues and monthly patient admissions there are a lot more patients to deal with than house sales.
ZZ - civil liberties are only an illusion. The Socialists want to pretend you have them while all the time introducing legislation to the point that you need a permit to wipe your proverbal rear end.
Yesterday I was updating business insurances. I was told that I did not have enough cover for Statutory Liability.......one day in court has an average cost of $40k. Given there are some 400 odd pieces of legislation and gods knows what else I have to comply with I upped the Statutory Liability 3 fold.
Who protects the people from the State?
The Fuhrer requires that you carry your papers at all times to protect the good and patriotic citizens, and to keep yourself safe from terrorists.
Chips are irrelevant, facial, voice and body motion recognition are all in service already. The numbers are still low, mostly for high traffic subways and airports. As the bandwidth opens up it will become more practical to use distributed processing to push search criteria to more remote camera/microphones.
Likewise plenty of the Mr Smiths will be recent immigrants from the UK. And not 4th generation kiwis like some would presume.
BTW, the whole surname thing appears to be just Mr Key making stuff up again. The BNZ survey simply asks each agent:
"What percentage of your sales are to first home buyers, investors (whatever the source), and offshore buyers?"
It's up to each agent to estimate it. There's no methodology in the survey involving surnames.
I note that same people on here that complain about foreign owners are also the ones who are ‘positive’ that prices are about to crash. Considering prices are about to crash, is it not good business to sell more of our houses to foreigners now and Kiwis pocket a handsome profit, let foreigners take the hit in the impending 'crash', then Kiwis buy them back at bargain basement prices…
With all these empty houses how long will the pressure build up before the young get the idea and we start getting squatter problems like London back in the late 80's. Back then the people in the know had a list of all the empties that was available for a small fee. With social media today what it is, watch out.
Reasons why John Key is possibly lying
1. The auction rooms appear to be crammed with Asians paying cash for houses.
2. The top Barfoot and Thompson agents are mostly Asian. All over Auckland flashy real estate brochures are published in mandarin.
3. Stories galore from Zero Hedge and other un-official sites here here and here about MASSIVE quantities of foreign capital fleeing china into Canadian Australian real estate.
4. According to the RBNZ statistics our national debt appears to be static and yet the value of housing stock has increased by 66 billion from Q3 2012 -> Q3 2013. If New Zealanders aren’t borrowing then where’s the money coming from?
5. Nice Auckland suburbs like St Heliers, Mission Bay, Remuera are SKYROCKETING in value, look here.
John Key, do you honestly expect us to believe there's no problem with foreign buyers. There’s no problem for you because you already own assets. Its just the rest of us who don’t own assets who are truly screwed! Tenants in our own country! Our future earning potential is being sold to foreigners so your constituency can cash in.
.. if you're watching Campbell Live tonight , you'll get a fair comparison between the Jolly Kid's at home ( last night ) , and the Cunnie's ...
Both families are exceedingly rich ... "LOTTO" rich ... though they didn't get stonkeringly rich by luck .... yet both of them are light-years ahead of the common suck-the-mud Rugger & Speights 4WD Kiwi bloke ..
.. mate !
It is exceptionally easy to determine the number of foreign owners in NZ.
Every council has a database of ratepayers and their postal addresses.
Count the number of non NZ addresses and BINGO! you have an estimate of the number of foreign owned properties.
This public information and many councils actually publish postal address on their websites eg:
http://www.dunedin.govt.nz/services/rates-information
If anyone has time they could search some of the university streets and count the percentage of foreign owned properties...
At the moment foreign capital seems to be targeting Auckland. The ownership details are suppressed from public view on the Auckland council website. Even if there was a free way to access this information, foreign buyers could list the address of a PO box, or corporate trustee to hide their identity.
You might like to know,
It's not hard. It's easier than you think
The mechanisms are already in place. It can be done
First hand experience
I've just recenlty bought a block of kiwi dirt
The first requirement on signing the sale and purchase agreement was to produce a certified copy of the frontis-page of my New Zealand passport proving I was a New Zealander
ZZ - I thought it was 5 hectares not 5000 hectares.
http://www.legislation.govt.nz/act/public/2005/0082/latest/DLM358552.ht…
Thx. The point is, the systems and mechanisms are already in place, the data is being provided, it is being collected and held somewhere by some agency, but, it's not being published and John Key is saying there is no evidence .. and the Fourth Estate cant be bothered asking the right questions of the right people .. humbug
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