Homes sold to overseas buyers down by 84% compared to a year ago

Property

183 residential properties sold to overseas buyers in June quarter compared to 1116 in the same period of last year

26th Jul 19, 12:12pm by Greg Ninness

There has been a dramatic downturn in the number of residential properties being purchased by overseas buyers, according to the latest figures from Statistics NZ.

The figures show that 183 residential properties throughout the country were purchased by overseas buyers in the June quarter of this year, compared to 1116 in the same quarter of last year, down 83.6%.

That meant overseas buyers accounted for just 0.5% of all residential property transfers in the second quarter of this year, down from 2.8% in the same quarter of last year.

In Auckland, where overseas buyers have been the most active, they accounted for just 114 sales in the June quarter of this year, which was 1.1% of all residential property sales in the region.

That was down from 741 sales in the same period of last year which was 6.5% of all property sales in Auckland.

The most popular location for overseas buyers remains the Waitemata board district in Auckland, which includes the CBD and upmarket central suburbs such as Ponsonby, Grey Lynn and Herne Bay, where 75 properties were purchased by overseas buyers in the June quarter of this year, down from 321 in the same period of last year (-76.6%).

The next most popular locations was Otago with 21 sales to overseas buyers in the second quarter (down from 48 a year earlier) with 18 of those sales in the Queenstown-Lakes district.

There has also been a decline in the number of homes being sold by overseas vendors.

In the second quarter of this year, 327 residential properties throughout the country were sold by overseas owners, which was 0.9% of all residential property sales.

That compares with 492 in the same period of last year which was 1.2% of all property sales.

In Auckland overseas vendors accounted for 171 sales in the second quarter, down from 315 in the same period of last year, while the percentage of total sales made by overseas vendors dropped from 2.8% to 1.7%.

The Overseas Investment Amendment Act 2018, which restricts the ability of overseas entities to buy residential property in this country, came into effect in October last year.

However the above figures do not include sales from/to corporate entities such as companies, which may or may not have overseas owners.

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133 Comments

by Yvil | 26th Jul 19, 12:22pm 1564100525

That is a massive fall indeed! Many will be surprised that house prices have not fallen accordingly

by Advisor | 26th Jul 19, 12:43pm 1564101801

House prices won't fall just because of a lack of overseas buyers. Investors may choose to hold properties till prices tick up again unless they are forced to urgently exit the market due to other factors.
Historically speaking, one or a combination of these lead to urgent exits: rising unemployment, chronic housing oversupply, contraction in business cycle, credit crunch, unfavourable regulatory changes, etc.

by Yvil | 26th Jul 19, 1:51pm 1564105866

Indeed, well said

by Retired-Poppy | 26th Jul 19, 2:37pm 1564108620

Yvil, house prices have not fallen of a cliff true but sales certainly have. It's going to take considerable time for Spruikers to realize the ground has shifted beneath them. Housing for speculative purposes is not viable if one purchases today but can't sell at a profit tomorrow with little effort put in. Paying off debt the hard way is not the attractive option. Therefore, how much accumulated losses in percentage terms that will occur over the breadth of the coming downturn is anyone's guess. One thing is for sure, the first signs of main street deterioration are starting to occur with unemployment now starting to rise. The RBNZ is poised to mandate that banks increase their reserves to help insulate the financial system against a one in 200 year event.

People need employment to repay mortgages. Those still in employment need to feel confident enough they'll have jobs tomorrow to upgrade or improve existing homes.

I suggest you brace yourself.

by Due Diligence | 26th Jul 19, 4:28pm 1564115287

Saw you on the news the other day Retired-Poppy. Stiff upper lip ay.

https://www.youtube.com/watch?feature=youtu.be&v=m1CAEzEbG34&app=desktop

by Retired-Poppy | 26th Jul 19, 4:09pm 1564114164

At 53, I own my home and am debt free. I'm struggling to see how this affects me or others like me that have succeeded financially. Anyhow, at least I haven't changed my username thinking I can reinvent myself as credible. Posting links like this is not helping your predicament. I liken your uneducated assertions to others like REA-TTP implying I'm in hardship if OCR goes -0.75 and term deposits go negative. Like you, hes oblivious to the fact that property prices would be already falling of a cliff, savers would find safe deposit boxes easier on the eye, yet they would remain solvent. Banks are Landlords, mortgagors are merely tenants. The bank pulls all the strings if your equity is fast going down the drain.

by Retired-Poppy | 26th Jul 19, 4:20pm 1564114847

The unintended consequences of negative rates explained here; https://www.stuff.co.nz/business/114328314/when-interest-rates-fall-bel…

by Due Diligence | 26th Jul 19, 4:27pm 1564115244

Congrats. Looking very dapper by the way, Alan. You’ve previously said your savings are in a term deposit that you negotiated back in Jan 2018. When does it expire, if you don’t mind me asking?

Great that you’ve purchased and paid off your own home, which will assist with a comfortable retirement. Wish you’d stop discouraging prospective first home buyers from doing the same though.

by Retired-Poppy | 26th Jul 19, 4:36pm 1564115818

...and there you go again. I'm not discouraging FHB's from buying their first home, I'm encouraging them to wait as there is no hurry. It's good to own your home but none of its yours if you're under water. Your repeated assertions they should commit now should be treated with the same suspicion as a conveniently timed Tony Alexander commentary.

by Due Diligence | 26th Jul 19, 4:56pm 1564116978

Just like your type suggested to first home buyers on this site back in 2011. Those poor folks waited for the knife to fall based on fear mongering and catastrophising, and we all know how that panned out. Those who took that advice would be pretty bitter today - but I guess that’s what you get when you listen to laypeople on the internet. A home is a long term investment and trying to time the market is very ill advised.

by Retired-Poppy | 26th Jul 19, 5:44pm 1564119843

Have you considered having a sane individual read your comments before posting? For starters, you're too busy being retrospective to notice your one trick pony is about to drop dead while you're riding it. You remind me of the type who are one more downturn away from serving themselves on a platter to the patient and wise. It's a given that this happens everytime theres a hangover. It's the greed morphing into fear over time cycle. With clear evidence of mounting global stress, it's all about the timing now, so there is no hurry. In the meantime, savings provide security and independence whereas a heavily mortgage home that's declining in value doesn't.

by Retired-Poppy | 26th Jul 19, 6:01pm 1564120892

Gosh, as a kid I was taught that through patience, hard work and discipline that if it's meant to be rightfully yours, it will be. By borrowing to the hilt right at the height, chances are greatly increased the deposit will disappear and entire home will end up belonging to the bank. Buy at these World leading prices today and there's likely remorse tomorrow.

by Houseworks | 26th Jul 19, 6:08pm 1564121304

By golly, answering your own question aka talking to oneself. Take care retired pops

by Retired-Poppy | 26th Jul 19, 6:50pm 1564123830

.....your immature response is quite telling. Patience, hard work and discipline is obviously beneath you. Borrowing to the hilt to have it all now isn't. Otherwise known as "spoilt child syndrome"

by Houseworks | 26th Jul 19, 7:44pm 1564127045

Gee touchy, it must be the falling interest rates or another churlish reply. You boast of owning a house with no mortgage (hardly unique), strangely telling others not to buy. That's just weird. It is cheaper to buy than rent.

by Retired-Poppy | 26th Jul 19, 8:38pm 1564130326

Yes, I'm sure you're right. Repayments on a 30-year mortgage combined with rates, insurance and maintenance are cheaper than renting as long as a 50% deposit is put down first lol!

by Houseworks | 27th Jul 19, 9:03am 1564175033

Some parts of New Zealand now 30 per cent cheaper to buy than rent | Stuff.co.nz
https://www.stuff.co.nz/business/113284490/some-parts-of-new-zealand-no…

by tothepoint - d… | 26th Jul 19, 10:07pm 1564135626

Hi Retired-Poppy,

And what would you know about “discipline”?

TTP

by Retired-Poppy | 27th Jul 19, 8:10am 1564171831

Since your question is telling you know little on the subject, I suggest you direct real life questions such as these to your parents?

by Houseworks | 27th Jul 19, 9:06am 1564175204

That's funny pops coming from you. For a start, your investment choices hand authority and opportunity to others, so where's the discipline in that! Someone like yourself aged 50 odd and not employed should be managing their own money unless they need someone else to hold their hand

by Retired-Poppy | 27th Jul 19, 11:37am 1564184256

... a rogue Landlord who thinks he can be my life mentor and financial advisor - priceless!

Houseworks, I know where to reach you if I need advice C/-Ron Hoy Fong.

(^o^)

by EarlyMillenial | 26th Jul 19, 2:09pm 1564106959

Doesn't work like that. And don't think any of the commentators (doomers or not) ever suggested things work like that. What has been suggested is that the overseas buyers have disproportionate effect on the market. If the collapse in just in 3% of total demand (John Key figure) can reverse the house price growth, that alone goes a long way in justifying the argument that the current valuations are propped up by foreign (mostly chinese) money.

by Fritz | 26th Jul 19, 2:26pm 1564107995

Of course things don't work like that but some are either too dumb or have too much vested interest to understand or acknowledge that.

by JimmyJames | 26th Jul 19, 2:38pm 1564108720

Sales volumes are very low, so price discovery is is not as trust worthy. People buying and selling in the same market would be indifferent to price which would define the prices now. We have yet to see sales volumes to suggest that the local market can replace the foreign buyer. That will take time to truly filter through in price discovery.

by alittle | 26th Jul 19, 3:01pm 1564110071

House market just does not change drastically overnight. It is a process and currently all data / market indicates that the process has started and that market is down from it peak. Sentiments is also very weak but for low interest rate , speed of fall has been gradual. Still the ecenomy cycle has to be completed before another uptrend starts which is number of years away.

Wait and watch.

by Yvil | 26th Jul 19, 5:30pm 1564119032

You've been waiting and watching for 3 years now...

by JediNight | 26th Jul 19, 3:38pm 1564112322

What happened to the market of million dollar plus houses in Akl over the last little bit?

by JediNight | 26th Jul 19, 3:39pm 1564112371

Hell, what am I saying - they're all pretty much million dollar plus - I mean top price bracket lol

by Pragmatist | 26th Jul 19, 4:05pm 1564113952

They have started falling.. Auckland HPI graph headed south just after the ban kicked in and hasn't stopped yet. Volume tanks, then prices..

by PocketAces | 26th Jul 19, 4:08pm 1564114126

Even in '87 the fall after the share market crash was not immediate, so there should be no surprise that there isn't now. People are just as inclined to believe there is someone out there that will pay their asking price now as there was then. This is a time when the old saw "first offer is nearly always your best offer", comes to mind.

by mikekirk29 | 26th Jul 19, 5:22pm 1564118530

Prices is too generic a term Yvil.
Some prices are falling, in some brackets and suburbs.
Median is not falling much in last 2 years, as you know.
Sales of property over $2m - 3m are down 38% and sales between 1.4 -2m are down 23% in last six months, compared to 2018.
Overseas buyers most likely were hotly in these brackets, given the expense of houses in the areas where their previous activity was most concentrated.
Prices asked for that level of house are difficult to obtain for comparison purposes.
Prices are falling in the $1.2-1.5m bracket in Hibiscus Coast, which is my area.
I am not familiar with rest of Auckland, especially Upper Harbour, which encompasses the greatest concentration of ethnicities locally.

by Toppertee | 26th Jul 19, 10:38pm 1564137492

So if there were 933 fewer scales over 3 months, multiply that out by 4 and assume average house price of $750,000. (Because concentration of purchases by foreigners is anecdotally above the National median. That’s nearly $2.8 billion of missing liquidity in the market. Given household debt grew by $13 billion or so last year (domestic debt) that’s quite a big while to fill. Auckland is very likely to see $1 billion less sloshing around its economy this year. Well over $500 per person missing from the economy.

by Toppertee | 26th Jul 19, 10:39pm 1564137543

Or on assumed rooftops of 500,000. $2000 dollars per household.
I hope the council think about it when they next look at the rates reviews because that’s an annual amount of missing liquidity since the ban.

by Glitzy | 26th Jul 19, 12:27pm 1564100826

"However the above figures do not include sales from/to corporate entities such as companies, which may or may not have overseas owners."

Is anyone aware if this is a loophole to the OBB or are there look through provisions in the act ? Thanks for the advice.

by CJ099 | 26th Jul 19, 12:57pm 1564102676

Yes it's a massive loop hold which you could drive a bus through! Trust companies are the vehicle that overseas buyers are conveniently using that's why house prices in Auckland haven't really been dropping that much just yet. So if you see a property with sales price saying TBC or N/A, that usually means that it's been bought by through a Trust company, likely on the behalf of an overseas buyer. They're easy to see just scroll around www.homes.co.nz maps in those ares and click on the recently sold red dots. Commonly the sales RE company tends to be Ray White who are well known for pushing home towards foreign buyers. Take a look at some random selection of the examples below if you click on the; View Council Records link:-
* 38 Maungakiekie Avenue, Greenlane, Auckland
https://homes.co.nz/address/auckland/greenlane/38-maungakiekie-avenue/1…
* 30 Bradford Street, Parnell, Auckland
https://homes.co.nz/address/auckland/parnell/30-bradford-street/Dg5O0#c…
* 15 Brookfield Street, St Heliers, Auckland
https://homes.co.nz/address/auckland/st-heliers/15-brookfield-street/EL…
* 125A Portland Road, Remuera, Auckland
https://homes.co.nz/address/auckland/remuera/125a-portland-road/obpJ8#c…

by house hunter | 26th Jul 19, 1:21pm 1564104063

Are you sure it's a loophole or are you just theorizing? When I read this page, https://www.linz.govt.nz/overseas-investment/find-out-if-you-need-conse…, I see the following which suggests to me that there's no such loophole or at the very least that the loophole isn't so simple:

"Persons requiring consent
You are an overseas person if you are neither a New Zealand citizen, nor ordinarily resident in New Zealand. A company, a partnership, a joint venture or a trust can also be an overseas person. You will also require consent if you are an associate of an overseas person. You will require expert legal advice to know whether you or the entity that is going to acquire the sensitive assets is an overseas person or an associate of an overseas person."

by Yvil | 26th Jul 19, 1:59pm 1564106371

CJ, I doubt you know your legal stuff. Firstly there is no "Trust Company" Either you have a Trust, typically for buying and selling assets or a limited liability Company, typically for trading.
Also when a sale price displays TBC or N/A doess not mean it's been bought or sold by a trust
It's wrong to make up stuff

by CJ099 | 26th Jul 19, 2:59pm 1564109945

Yvil the Real Estate Agent; So are you also going to disclaim that the information on www.oneroof.co.nz is incorrect? It shows in its Suburb profiles that place the expensive suburbs in Auckland have a high percentage of properties owned by Trusts. As an example Remuera's Suburb profile shows that 34% of properties are held in Trusts. Are you saying that that is made up too?

by Pragmatist | 26th Jul 19, 4:13pm 1564114398

No, but that has nothing to do with what is shown on homes.co.nz. as TBC (which is exactly what it says -to be confirmed when settlement happens)
Its simply that wealthy people create family trusts far more often than people with not much.. because they have more assets to protect, and more likely to have good legal advice available to them. Not to mention tax advice.

by Yvil | 26th Jul 19, 5:17pm 1564118264

CJ, I'm not a RE agent, another false assumption by you.
Also your point that more houses are owned through Trusts in affluent areas does not at all prove that they are owned by foreigners, it proves that you don't understand legal RE ownership structure.

CJ when you don't know something, don't make statements about it

by CJ099 | 27th Jul 19, 9:12am 1564175539

I pointed out to you before Yvil, you can't bully people in to not commenting. It's pretty obvious that Foreign Buyers are still able to purchase homes/land in NZ there are some big loop hole exceptions to the foreign buyers ban. And some will still use other methods such as Trust Companies as a vehicle to purchase homes. If prices aren't falling that much in affluent areas then we know that external funding is still happening it's just stands to be logical we all know that the locals can't afford these multi million dollar homes. We can see for the data from sites such as www.oneroof.co.nz that a huge proportion of those residential homes are acquired through Family Trust Companies.

by fat pat | 26th Jul 19, 5:19pm 1564118394

Yvil FYI - A trust company is a common entity. If you've got a trust then you can have natural persons as trustees, or you can have a trust company as a trustee. One virtue of a trust company is that you never need to retire a trustee, as you can simply appoint new directors to the trust company. For the average Joe the directors of his trust company will be his lawyers.

by tothepoint - d… | 26th Jul 19, 9:08pm 1564132110

Hi Yvil,

Certainly it’s irresponsible to “make stuff up”.......

But certain people here do that frequently. Retired-Poppy is probably the most conspicuous culprit. In one of his posts above, he mentions “discipline”...... Yet, time and time again he’s been exposed for blatant lying.

TTP

by alittle | 26th Jul 19, 3:03pm 1564110203

Got it. I thought that it has just not been updates, when it says TBA .

by Pragmatist | 26th Jul 19, 3:49pm 1564112975

So if you see a property with sales price saying TBC or N/A, that usually means that it's been bought by through a Trust company, likely on the behalf of an overseas buyer.

This is even sillier than your 30,000 Auckland houses empty theory.

by Incognita007 | 26th Jul 19, 4:42pm 1564116137

I find the TBC field to be interesting. I note in my local area I see a lot of TBC with an "ASR" Agent Sales Record, so it looks like Agents are popping on there and updating that field. The sales record and amount is still there the day before the ASR gets put in place but appears the agents are covering over it in some cases. I wonder why this is?

by Market Interest | 26th Jul 19, 1:22pm 1564104152

As my lawyer explained it to me, if a company is more than 25% foreign owned, or a trust or decisions made for the trust are more than 25% foreign controlled then the same law applies.

Of course, with any law there are bound to be some provisions that can be exploited, but certainly it seems that the intent is for the law to extend to companies and trusts.

by Glitzy | 26th Jul 19, 2:45pm 1564109118

Thanks for the answers. I will drop my conveyancing lawyer a line and see if I can confirm but inclined to think that >25% control of a company or trust means a purvhae would require OIO approval.

by mikekirk29 | 26th Jul 19, 5:24pm 1564118662

OBB does not apply to Corporates. This category at most concentrated level (gauged from studying the first batch of figures released by Stats NZ) applies to about 10-15% of sales in Upper Harbour and Central Auckland.

by Due Diligence | 26th Jul 19, 12:28pm 1564100896

2.8% is not a big number. With the exception of a select few suburbs in Auckland and Queenstown, the impact of the ban will have been negligible. I'm sure the usual suspects are about to proclaim otherwise though.

by J.C. | 26th Jul 19, 12:49pm 1564102144

Yes, however there are psychological effects. For example, this kind of "DGM" content does nothing to support the idea that there are foreigners out there who're lining up to pay a king's rnason for a piece of NZ suburbia.

by Jamin | 26th Jul 19, 1:11pm 1564103513

Yes, but to those that live in Auckland or Queenstown this is really important.

by Due Diligence | 26th Jul 19, 3:18pm 1564111107

*To those that live in those select few suburbs in Auckland and Queenstown this is really important

by Plutocracy | 26th Jul 19, 4:03pm 1564113806

What two suburbs were affected in Auckland?

Epsom? Herne Bay? Ponsonby? Remuera? Mt Eden?....

by Due Diligence | 26th Jul 19, 6:40pm 1564123224

I didn’t say two suburbs in Auckland were affected. Before the ban Waitemata board area was most popular with foreigners, which includes the CBD and central suburbs such as Ponsonby, Grey Lynn and Herne Bay. The article doesn’t break it down by suburb, so we know it is some of these in the Waitemata zone, potentially all of them, albeit unlikely. Upper Harbour and Howick to a lesser extent. Majority of Auckland board areas had low levels, particularly when you take the Australians into account.

by house hunter | 26th Jul 19, 1:30pm 1564104650

2.8% was never a true reflection of overseas buying as it didn't account for companies and trusts that were controlled by overseas people.

by JimmyJames | 26th Jul 19, 2:49pm 1564109364

Due Diligence, suburbs are connected to each other and value is defined comparative to each other. How can the house prices of select suburbs be defined in isolation?.

by Plutocracy | 26th Jul 19, 4:04pm 1564113870

Yeah, I would love to know to. Do tell us DD.

by richard1965 | 26th Jul 19, 5:08pm 1564117735

It should be big in times to come. Earlier if One Foreign Buyer / Money Launderer paid unheard price for a house even if 5 in a 100 - prices in that street will go up immediately and than....Domino effect. Give some time. Had seen houses that agents were feeling will go for $8500000 wen for $1100000 and so on (Many examples)

Now in time to come, will also have the same Domino effect but the other way round that is one house goes for low price..... but as the RE Agent tries to disguise and manipulate unlike when were going up - may be slow but once it catches up will be fast.

It is happening......matter of time. Be positive but for Very long Term and FHB and Investors will benefit if buy at the right price in this falling market instead of rushing.

by Chairman Moa | 26th Jul 19, 12:34pm 1564101250

So from only 3% of properties sold to FB, now it's 0.48%

by CJ099 | 26th Jul 19, 1:13pm 1564103595

So Greg, any chance you could take a look at the figures from residential properties bought by Trust Companies? Because I think you'll discover that they're sell quite a few Foreign Buyers purchasing homes directly through them. That will likely shed more light on what's 'actually happening'.

by Yvil | 26th Jul 19, 2:04pm 1564106685

CJ, there's no such thing as a "Trust Company", see my comment above

by CJ099 | 26th Jul 19, 3:23pm 1564111425

Tell that to www.oneroof.co.nz They have some very interesting data in their Suburbs profiles relating to residential properties obtained through family trust companies.

by fat pat | 26th Jul 19, 5:32pm 1564119178

Yes there are "Trust Companies", they take the place of natural person trustees.

by Houseworks | 26th Jul 19, 8:30pm 1564129841

You mean corporate trustee

by fat pat | 27th Jul 19, 8:47am 1564174064

Yup.

by Dogboy | 26th Jul 19, 1:38pm 1564105080

183 is Still too many!

by CN | 26th Jul 19, 2:02pm 1564106563

FYI, exemptions from the foreign buyers ban:

1) residents of NZ, who are foreign passport holders - I know of a person who has been a 40 year permanent resident in NZ (they arrived as a child with their English parents). They still have a British passport, and not applied for a NZ passport.
2) non residents of NZ who are passport holders of Australia and Singapore

https://www.theguardian.com/world/2018/oct/22/new-zealand-ban-on-foreig…

by house hunter | 26th Jul 19, 2:04pm 1564106645

And of course foreign buyers can buy apartments off the plan in big (> 20) developments.

by Glitzy | 26th Jul 19, 2:48pm 1564109284

There's a ton of additional rules too. The OIO needs to approve the apartment block, some sales must have occurred before a certain point in time etc. Also the resale must be to a kiwi or resident / exempt person (read Aussie or Singapore citizen).

by RickStrauss | 26th Jul 19, 2:27pm 1564108043

Depends. If they're buying apartments off the plan then these are contributing to the supply of housing and that is a good thing.

by kpnuts | 26th Jul 19, 1:49pm 1564105747

so a MASSIVE drop from 2.5% to .5 - wonder if the other 2% bought through companies and trusts instead?

surprised values have not dropped by 50% with the possible loss of 2% of buyers! ---

by 2 Tooth Bora | 26th Jul 19, 1:57pm 1564106234

Property industry told us 'banning foreign buyers would have little affect'
There now saying the current market won't correct because NZ is different. In fact there up beat, reporting all sorts of manipulated data to justify their case, but we know the reality is very different.

by Yvil | 26th Jul 19, 2:08pm 1564106909

Well given foreign buyers have reduced 84% and house values have barely changed, we can conclude indeed that the FBB had little effect

by Fritz | 26th Jul 19, 2:28pm 1564108128

That's a totally erroneous conclusion.

by RickStrauss | 26th Jul 19, 2:30pm 1564108222

Eh...when foreign money was rampant prior to China's clampdown on capital outflows and the FBB, prices were rapidly rising and local FHBs couldn't get a look-in in Auckland. Whereas now prices have been flat then falling year on year, and volumes are incredibly low.

Seems like these measures combined had a significant effect, and are likely to have a positive effect over time on affordability.

In this particular policy, good on Labour for governing on behalf of more than just a couple of generations of NZers.

by house hunter | 26th Jul 19, 2:29pm 1564108152

Well in the Auckland market, where foreign buying was probably highest, the HPI is down ~3.5% YoY which is significant. But as I've pointed out elsewhere, that isn't the end of it. Foreign buyers are still sitting on a lot of stock, so this is going to take a while to play out. It's different to Australia where foreign buyers face nasty land taxes if they hold on to their properties.

I don't think we're going to see the market crash, well not unless immigration is slashed and/or interest rates rise significantly, but I do think we'll see further drops in the AKL HPI that stem from the FBB.

by Voiceofreason | 26th Jul 19, 5:40pm 1564119609

The subtraction of foreign buyers will likely take a while to flow through the market. At the moment it’s a decrease in sales and obviously fewer people willing to compete at auction. I’d say next will come a greater fall in prices as sellers realise those foreign buyers willing to pay more just aren’t there.

by 2 Tooth Bora | 26th Jul 19, 3:40pm 1564112423

You must admit your conclusion is very narrow and naive Yvil. The recent ban of the marginal foreign buyer has had a hugely negative affect on market volume, value, sales including mortgagee.

by Yvil | 26th Jul 19, 5:40pm 1564119607

You must admit your conclusion is very narrow and naive 2 Tooth Bora. The recent......

by Cowpat | 26th Jul 19, 1:55pm 1564106146

Seriously any foreign buyer looking to simply park money in NZ inc and its overpriced housing will undoubtedly be taking into account the exchange rate. The fact that they are net sellers is not overly supportive.

by house hunter | 26th Jul 19, 2:30pm 1564108215

It's good to see that sales by overseas vendors now exceed purchases by overseas buyers, which is in sharp contrast to a year ago. For example, in Auckland, a year ago overseas people bought 741 and sold 315 (net 426 purchases). Last quarter they bought 114 and sold 171 (net -57 purchases). In other words, a year ago overseas people took 426 houses away from local owners but this year they gave 57 back.

However overseas buyers are still sitting on a *lot* of housing stock. This is a big difference between the NZ and Australian markets because Aus has laws/taxes that actively encourages overseas buyers to sell while we don't. I believe that's a big reason for the faster decline in the Australian market. Eventually we'll get there through natural attrition, but it's going to take a while.

by xingmowang | 26th Jul 19, 2:27pm 1564108044

Wondered why a picture of Chinese's Ren Min Bi of 100 yuan is used in this article, given there was absolutely no breakdown of the nationalities of the foreign buyers.

Biased media??

by Fritz | 26th Jul 19, 2:31pm 1564108291

The majority of foreign buyers are Chinese. Aussie buy quite a lot of NZ housing but are not classified as 'foreign buyers'

by xingmowang | 26th Jul 19, 2:35pm 1564108559

Where is the official breakdown of nationalities from Stats NZ?

by JediNight | 26th Jul 19, 3:37pm 1564112251

Stats NZ (or Dept of Guesstimation) is still trying to figure out the immigration number by waiting to see which jar of pickled onions Ian Lees Galloway is going to open, the one labelled "heaps" or the other labelled "back the truck up, my G"

by RickStrauss | 26th Jul 19, 3:56pm 1564113390

As an example:

Of these, 153 homes were transferred to overseas people with Chinese tax residency in the June 2018 quarter – falling to 48 in the June 2019 quarter.

Source: The Granny Herald

Apart from that, perhaps in reference to the abundant global media coverage and analysis of the effect of China's earlier capital outflows on real estate markets around the world.

by Gummy Bear Hero | 26th Jul 19, 4:20pm 1564114819

... I think these sadistics are in fact fake news ... if you assk Phil Twyford he'll tell you that a lot more than 183 properties are being sold to people with Chinese sounding names ....

by Rolo | 28th Jul 19, 11:16am 1564269363

That's not correct. "Overseas Buyers" include a high proportion of Brits and Australians as well.

by Rolo | 28th Jul 19, 11:22am 1564269771

Yes it is biased reporting and misleading. "Overseas Buyers" include wealthy Brits and Australians in large proportion as well. But as usual Chinese is the target of hateful and racist speech.

by Glitzy | 28th Jul 19, 10:58pm 1564311491

Rolo a.k.a. Agent Er Bai Wu (250) from troll farm 4, southern district Beijing.

by GenerationXY | 26th Jul 19, 2:32pm 1564108352

Bullish.

by Foreign buyer | 26th Jul 19, 4:08pm 1564114136

The horse has bolted. China's economy is tanking. The next GFC is upon us and it is going to be much bigger than the last. Sell all assets now and place your cash under the bed because some banks will likely fold and bail ins will be common. If you have a car loan, sell the car now and pay it off. This is going to get very very tough.

by Gummy Bear Hero | 26th Jul 19, 4:16pm 1564114606

. . oh dear ... how terribly sad .... would a Gummy Bear cheer you up ? ... GFC part 2 you say ... wow ...

by Foreign buyer | 26th Jul 19, 4:37pm 1564115828

At least one guy will be ok. Afterall, he manipulated the market by allowing in a million people so he could sell his house for millions more than it was worth to a foreign buyer. He made his banking friends happy by vastly increasing house prices so the banks profited from massive mortgages and he was rewarded with an enormous wage packet from one of these banks. He also invented a peerage system so he could be peered for causing so much damage to NZ and its hard working middle and lower classes. We are lucky he didn't waste millions on a narcissistic idea of changing the flag..... NZ's Napolean!!!

by Gummy Bear Hero | 26th Jul 19, 4:58pm 1564117121

Winston Peters... or Trevor Mallard ?

by Yvil | 26th Jul 19, 5:43pm 1564119809

I think FB was being sarcastic in his original comment

by Glitzy | 26th Jul 19, 4:57pm 1564117035

Just a thought. If this trend of an 80%+ drop in foreign buyers continues won't a ton of these new condo buildings in Auckland CBD need to be canned ?

Nearly every large new block being developed has got IOI approval to sell to foreigners and there is no way Kiwis will be buying even half of them at the prices they are being offered at.

But if the foreign buyers aren't buying then the developers are running a huge risk continuing to build.

by mikekirk29 | 26th Jul 19, 5:30pm 1564119020

Indeed. Apparently foreign sales of apartments are only counted when the deal is completed, meaning that such sales are still in the figures, as completions and sales complete. But they are building loads more, as sales implode (39% down in 6m of 2019, compared to 2018.)

by Ocelot | 26th Jul 19, 10:02pm 1564135360

It has begun.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

by mikekirk29 | 26th Jul 19, 5:28pm 1564118927

OBB was pushing on a string. Downtrend in foreign purchasing real estate in Australia, NZ, Canada and USA started in early 2017. USA for instance it is down 35% since 2017. Vancouver far more. China is withdrawing overseas real estate investment 'permission.' Impact has been on sales primarily in Auckland, but primarily within that, on apartments (39%) and sections sales (50%). Funds not coming in and being obtained by NZ vendors, WILL have a large impact on deflation of GDP and economic links to housing. But this is only now becoming apparent in GDP figures and is widely under-estimated.

by RickStrauss | 26th Jul 19, 5:43pm 1564119826

Interesting stuff going on: https://www.scmp.com/economy/china-economy/article/3012312/chinas-capit…

There was another article posted here a while back about how some countries' transparency / anti-money laundering laws had the side-effect of making it easier for the CCP to pressure citizens to move money back to China too. I assume based on Xingmowang's portrayals of the CCP and its benevolence that perhaps assisting the CCP around such transparency would be a good thing.

by fat pat | 26th Jul 19, 5:57pm 1564120629

mikekirk29 yes indeed. The die was cast by the CCP two years ago

by mikekirk29 | 26th Jul 19, 5:41pm 1564119688

A request to certain "positivists" or denialists: please can you explain why sales in NZ and Auckland especially, have fallen so much in 2019 and why they are so much lower than in 2013? Because I keep reading how prices are fine and recovery is on the way and people should buy now. As an Agent, however, I analyse an Auckland and Hibiscus Coast market where sales are down 26% and 32% respectively on 2018, s far this year and in HC are down 50% on 2016. The sensible answer is: PRICE. Which all and sundry seem to think IS the sole factor of a market. Well, it has a big effect and in general they are oo high, regardless of how low interest rates go. Plus buyers now think prices will keep going down too, for quite a while. So, many are not buying. Then there is OBB and AML (anti-money laundering, which crushed sales in January and February esp.) AML is usually ignored as a cause of sales drop. Sales are falling most in price brackets above $1.2m. Why is this?? Most foreign buyers bought in those brackets. Co-incidence? People who do not need mortgages n'est pas? So, why are they not buying all of a sudden? We DGM (or as I would say, realists and reporters of inconvenient facts) put forward our reasons for these phenomena but the more Polyanna brigade either do not want to admit them, or not analyse them, or have nothing to say in alternative to us. Auckland sales in June were only lower once since 2001 and that, you guessed it, was 2008

by Miguel | 26th Jul 19, 7:40pm 1564126859

Your points about AML/OBB are spot on. I could never figure out how house prices were rising faster than wage/gdp growth, yet the household debt to gdp wasn’t climbing.

I thought maybe people were using the low rates to pay down debt faster.

I think time will tell a lot of the froth in the market over the last few years was down to foreign capital (with a bit of money laundering thrown in for good measure).

by Fritz | 26th Jul 19, 9:02pm 1564131731

Mike I guess we need to understand that the livelihoods of some of the spruikers on this forum are on the line. They are rightly fearful, and therefore in denial and ard increasingly sensitive and defensive. I feel sorry for them.

by tothepoint - d… | 26th Jul 19, 9:17pm 1564132676

Hi Fritz,

No doubt the “spruikers” feel sorry for you.....

TTP

by Houseworks | 26th Jul 19, 9:41pm 1564134100

Not being a spruiker I will still chip in. Fritz those here who make their living from property are in far stronger financial position than those renting. It stands to reason if you don't need to work for someone else. I feel sorry for those people/families renting. Costs increasing. Equally for those who are retired who rely on fixed interest income. Falling incomes. Dare I say but landlords have the flip side

by Fritz | 26th Jul 19, 9:35pm 1564133730

History tells us that many people who have built wealth in property have also lost wealth. I wouldn't be so complacent.

by Houseworks | 26th Jul 19, 10:00pm 1564135251

Yes we know fritz. Blue chip etc. Why do you just target property investors and not all investors? Do you know far bigger crashes have happened in other financial markets? Or more likely you are between a rock and a hard place and your self interest is coming out.

by Fritz | 26th Jul 19, 9:39pm 1564133967

But you are a spruiker. You consistently lambast anyone who suggests house prices might be falling, and might fall further.

by Houseworks | 26th Jul 19, 9:44pm 1564134263

Exactly I answered your question yesterday but you failed to reply

by Fritz | 26th Jul 19, 9:36pm 1564133812

Why? I am financially comfortable, if not wealthy, and for some of us happiness means much more than an investment portfolio.

by Foreign buyer | 26th Jul 19, 7:46pm 1564127208

NZ house prices remind me of the final scene of the Italian Job. All that money teetering in a bus over the cliff. The guys counterbalancing the weight of the money are like the NZ home owners and specuvestors who now are trying to hold onto the price of their houses knowing that the values are dropping. They still believe that their house is worth its last CV and they just cannot let it go? They know that once one owner moves their price lower and moves towards the other end of the bus the party is most definitely over. NZ is at this tipping point. Pretty soon the people who have to sell will and this is when the rush will begin and over the cliff we go. Alot of people are going to get hurt, most of them greedy but not all. I feel sorry for the FHB who have been conned. Hopefully the fall happens soon so no more of them get hurt.

by tothepoint - d… | 26th Jul 19, 9:24pm 1564133083

Hi Foreign buyer,

You talk a load of bollocks......

House prices through most of NZ are rising.

Further, there’s an increasingly widespread view that the next year or two will see a lift in house prices.

Helpful if you get yourself properly informed before posting on public forums.

TTP

by Fritz | 26th Jul 19, 9:43pm 1564134185

You sound worried. I thought with all your housing wealth you'd be out enjoying yourself, travelling, dining. Why do us 'DGMs' rile you so much? If housing is such a one way bet, what does it matter what a few DGMs on here say?

by Yvil | 26th Jul 19, 9:54pm 1564134858

He does indeed but he will be extremely popular on this site. I wonder if he's not a reincarnated commenter who has been recently banned?

by Foreign buyer | 26th Jul 19, 10:10pm 1564135820

TTP, there"s an increasingly widespread view that the world is flat. If you are naive and cannot see whats coming, good luck to you, but if you can see whats coming and are part of the pyramid trying to get FHB in debt to keep yourself rich then that's something you should really try and change, its just not fair and is cruel!

by richard1965 | 28th Jul 19, 9:59am 1564264769

Karma is a bitc......

by General HubHub | 26th Jul 19, 6:25pm 1564122317

Lol!

by Fritz | 26th Jul 19, 6:40pm 1564123224

Property spruikers - whether on this website, or elsewhere - seem to be increasingly in denial.
In denial that the global and local economy has entered very choppy waters. In denial that global and local housing markets are under severe strain. It's quite fascinating to read what the spruikers are writing, in light of all the obvious evidence.
Maybe it's cognitive dissonance. Maybe it's a desperate attempt to protect their vested interest.

DENIAL:

https://wolfstreet.com/2015/10/20/why-mainstream-economists-deny-housin…

by Yvil | 26th Jul 19, 9:58pm 1564135094

Fritz, it's the understanding that, as a result of "the global and local economy having entered very choppy waters" (your quote) real estate values will be supported in the foreseeable future

by Averageman | 26th Jul 19, 10:02pm 1564135320

Time will tell. Leave the bulls alone. They are all out snapping up bargins at low rates. Good luck to them.

by THE MAN 2 | 26th Jul 19, 10:57pm 1564138635

Not too sure why, but there seems to be so many doom and gloom merchants on Interest.co in regards to housing!
Look, we understand that it must be very depressing not being able to afford to buy a home in Auckland the way prices are compared to your income and lack of sufficient deposit to be able to buy.
However, the fact is that what the DGM say is not going to have any effect on housing prices apart from giving support to other DGM who want prices lower!
The reality is, and I have said it many times, is that if you aren’t already bought a home, then you probably won’t as the borrowing conditions for your first home is as good as it is ever going to be.
Even if prices in Auckland happened to drop by 10% does this really make things that much easier to buy in the context of things?
I have bought many properties without even seeing them, and each and everytime it has been great buying!
Why do this?
Because if you know the market, you will know good buys, and good buys is where people make the money and get the good rental returns!!

by house hunter | 27th Jul 19, 8:07am 1564171657

"Even if prices in Auckland happened to drop by 10% does this really make things that much easier to buy in the context of things?"

Wrong question. A better question is how much better off will a FHB be if their mortgage is 50-100K smaller.

by Yvil | 27th Jul 19, 2:24pm 1564194262

At 4% interest the answer is $5.50 - $11.00 per day better off

by Miguel | 27th Jul 19, 2:57pm 1564196229

It amazes me how often you contradict yourself. You claim you only buy positively geared properties that yield at least 6%. And yet yields in Auckland and Wellington are around 2-3%. Therefore, if the world is full of "smart investors" such as yourself, prices need to fall to actually get these properties back into line with fundamentals. It would take more than a decade of 5% rent increases to get back to yield that would suit "smart investors" such as yourself.

... and yet you don't believe prices will fall?

And claiming that a 10% drop won't make much of a difference? It will make a massive difference to the 40%~ of first home buyers who are purchasing with less than a 20% deposit.

by THE MAN 2 | 28th Jul 19, 2:40pm 1564281648

Miguel, haven’t once contradicted myself!
Personally WE do not buy negatively geared property, but yes there are plenty of investors that buy negatively geared ones, which I do not agree with investing wise!

Many investors have secondary jobs that prop up there negative cashflow, we do not we are professional investors.

Where have I contradicted myself????????

by Miguel | 28th Jul 19, 3:51pm 1564285873

You are trying to give advice for people to go out and buy properties that you believe are overvalued and wouldn't purchase yourself.

by CN | 29th Jul 19, 12:42pm 1564360934

"Not too sure why, but there seems to be so many doom and gloom merchants on Interest.co in regards to housing!"

The mainstream media has an overwhelmingly positive bias towards continuing rising property prices which increases property buyer confidence and promotes increased property related activity. In a rising price environment, the mainstream media emphasises property price gains, and minimises property price falls in their news stories, whilst also publishing stories on the newly minted multi-millionaire property investors. Property promoters are commonly interviewed on mainstream media for their opinions and experiences (e.g Ashley Church). There is frequent advertising and promotion by real estate agents, promotion by property mentors, promotion by property buyers agents , sales promotion by property developers of their development projects, promotion and competition by banks for lending for mortgages, promotion & competition by mortgage brokers for lending, etc. After all, increased activity in property is financially beneficial for their business.

Furthermore, politicians gain when property prices increase due to economic growth and prosperity enjoyed by households, and hence their prospects for re-election in office are higher than when there is an economic recession. In summary, there is a huge vested financial interest in property promotion activity, and rising property prices. That benefits the economy in the long term and is desirable as long as financial stability is at low risk levels. The above behaviour will continue (due to the profit motivations by property related businesses) even when the risks to financial stability have dramatically increased.

The risks and vulnerabilities to financial stability in NZ have increased in recent years due to a build up of a combination of factors:
1) the large exposures of the large banks to mortgage lending,
2) the record levels of household debt,
3) the large proportion of bank lending to Auckland residential real estate
4) elevated house price levels in Auckland
5) the reliance of the large banks on overseas sources of funding
6) the pervasive belief by the general public that property prices do not fall (or do not fall by much) and
7) the high concentration of debt by a small number of households

When financial stability is at elevated risk levels, there should be a high quality open discussion on this issue as it can affect most households, businesses and other stakeholders. One part of that overall discussion is on house price levels, particularly in Auckland. Since residential real estate is the main financial asset for most households in NZ, a high quality discussion of house price risks raises public awareness of these risks and vulnerabilities, so that households can be more informed and make their own assessments of the level of risk, and act accordingly. Take a look at countries that recently experienced financial instability (where some banks needed recapitalisation) as a result of house price falls, and the resulting consequences on households and businesses - during the GFC in 2008 countries such as US, Ireland, & Spain. In Ireland, there were households that chose to ignore or dismiss the risk warnings, however they were unable to choose the subsequent consequences of their choice.

Every commenter on interest.co.nz has a very unique experience, and is in a position to see something that other commenters may not be seeing. Sharing these observations, and experiences allows for a high quality discussion for the assessment of the level of risk to house prices. There is a wide range of experiences and background of the commenters on here. Some experiences and positions of commenters:

1) experienced property price bubbles firsthand during the GFC in 2008,
2) ex commercial bankers, ex investment bankers
3) some are in property related industries - property investors, property traders, mortgage brokers, real estate agents, property mentors,
4) former founder and CEO of a publicly listed company specialising in commercial real estate in NZ
5) some have lived and worked outside of New Zealand for a period of time
6) some have studied asset price bubbles

The information, observations, analysis, and perspectives shared here helps the public to make more informed financial decisions . For example, potential first home buyers on here benefit from viewpoints on both sides of the property price discussion (and the discussion of the underlying merits of those viewpoints), as well as those nearing retirement who are considering downsizing.

Whilst there is a large financial interest in promoting property activity in the mainstream media, the financial interest for those warning of possible property price risks benefit a few. Some of those who have attempted to raise public awareness of the issue of property price risks in the mainstream media have been drowned out - the multiple media appearances and published articles by Ashley Church have likely singlularly overwhelmed all the news stories of property price warnings by informed independent insiders such as David Hisco, Don Brash, & Arthur Grimes (who seem to have very little to gain financially as a result of their warnings to the pubic).

On the flip side, too many published articles about the financial stability concerns may cause a loss of confidence by the public and result in a negative price feedback loop. This may be the reason that negative stories are published by the mainstream media after the fact that property prices have fallen substantially - look at examples in the US & Ireland, where after the property prices fell, the main stream media started publishing stories about property price falls.

So an open venue for high quality discussion by commenters is useful for financial decision making - interest.co.nz serves as one such venue.

by South_Island_Simon | 27th Jul 19, 5:12pm 1564204375

If investors and overseas buyers are out of the market, the market should normalize. That is prices would adjust to what 1st, 2nd or 3rd home buyers can afford. Normally they dont just adjust, of course, there is usually a bit of overshoot. But we have strange times wrt interest rates. They reflect an abundance of capital and a shortage of demand. And on the demand front for houses, household formation is probably lower than it was in the past as millenials delay chaining themselves to a mortgage. No hurry aye?

by Andrewj | 28th Jul 19, 4:43pm 1564289037

Could be 'this'
https://www.visualcapitalist.com/mapped-the-countries-with-the-highest-…

by Andrewj | 28th Jul 19, 4:48pm 1564289330

or this
https://croakingcassandra.com/2019/07/24/prc-may-never-match-other-adva…