Overseas owners selling twice as many New Zealand residential properties as they are buying

Overseas owners selling twice as many New Zealand residential properties as they are buying

Overseas people are continuing to sell more residential properties in this country than they are buying, according to the latest figures from Statistics New Zealand.

These show that in the second quarter (April-June) of this year, only 102 residential properties were transferred to people who were not NZ citizens or did not have a NZ residence visa.

That was down 44% compared to the second quarter of last year when 183 residential properties were transferred to non-NZ citizens or residents, and down a whopping 91% compared to the second quarter of 2018.

The number of residential properties being transferred to overseas buyers declined significantly at the beginning of 2019, after the Overseas Investment Amendment Act came into effect in late 2018, which significantly restricted sales of NZ residential property to non-NZ citizens or residents.

In the first quarter of 2018, transfers to overseas persons accounted for 6.1% of all residential property transfers in Auckland, but by the first quarter of this year that had dropped to 0.8%.

However while purchases of properties by overseas buyers has declined significantly since the beginning of last year, sales of New Zealand properties by overseas owners has remained relatively stable at just over 300 per quarter.

That declined to 243 sales in the second quarter of this year, which was severely affected by the imposition of COVID-19 lockdown restrictions on the real estate market.

However even allowing for the effects of the lockdown, more than twice as many NZ residential properties were sold by overseas owners in the second quarter of this year than were purchased by them, continuing a trend that first became apparent in the first quarter of last year.

The Statistics NZ figures on overseas buyers/sellers are not comprehensive, because they only include transfers to or from individuals in their own name.

They do not separately record transfers to or from companies or most family trusts that may be controlled by overseas persons.

So a sale to an overseas person would not be included in these figures if the purchasing entity was a company, even if the overseas person was the controlling shareholder.

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33 Comments

25
up

Pretty meaningless until the trusts and company stats are properly analysed.

Agreed. Mind you buying property now requires a fair amount of disclosure on who is involved and where the money has arrived from to meet the anti money laundering requirements.

Clearly the Family Trusts needs far more transparency as to just "who" is putting money in to them and investing through them. Hence why further laws are being introduced next year to try and reduce under the radar property investment.

The Act has look through provisions which prevent the use of companies or trusts to make a purchase.

Lets hope that it's stringent enough.

Intends to prevent. There’s still a lot going on. The most recent one I saw was a Chinese National who’d visited NZ once, for the first time for 4 days and managed to get 7 figures into the country for his second trip. Second trip mostly spent with the local lawyer and accountant setting up a trust to by some property.

Is this type of behaviour by lawyers considered to be circumventing the law?

I can't see how some (particular) law firms are still in business this long after the FBB.
One can only surmise they have worked out structures that contravene the law.

11
up

It will Interesting, post January 2021, to see how many simple family trusts have vanished. The new disclosure regimes (annual disclosure of potential interests to all beneficiaries) will have induced many to empty the trust of assets, bring the vesting date forward and Poof!

It is very disappointing to see the editor still uses this biased picture to stigmatise the Chinese community in New Zealand.

35
up

How do you know these are Chinese people in the picture? Could be American, Australian, Korean, Japanese, Vietnamese, Mexican, South African, even European. Drop the prejudice.

I think the photo is from a Thai company looking for investors at a property show in Malaysia.

XMW is still right, it's a little biased, I think the statistics showed 45% (at least before the FBB) were American.

How do you know the people in the picture aren't American?

17
up

They're not holding cheeseburgers?

haha or wearing MAGA hats

pot calling the kettle black when 31% of NZers are obese.... whoo hoo..pat yourselves on the back.

I think that photo is from Malaysia property show.

19
up

Xing, hurt Chinese feelings AGAIN ? Try feeling some empathy for the people in Xinjiang concentration camps.

Lets not bring Chinese Feelings into the picture .......... as we all know the current generation of Chinese treat real estate as a commodity.......... not sure if you remember, a few years ago people in China were getting divorced only on paper so that they could buy another apartment (poor chaps were restricted as the Govt put in a One Apartment per Family Policy, to help cope with the madness) .

Point to Consider: Especially when fueled by cheap credit, the madness is collective all over the world ......

Most foreign money coming to NZ into the real estate market in past years has been fake money issued by China's dictatorship's banking system, the people in the picture on the other side could be New Zealand citizens for all we know.

I suspect you're part of the 50 Cent Army.

You constantly seek sympathy for the Chinese regime.

What is the effect on property prices here ? Down ? By how much due to this excess selling and lack of buying ?
Is this a temporary thingy due to Covid and closure of NZ to the World ?
May be they will come back again next year ?

11
up

Something I’ve found incredibly disturbing lately is not the significant increase in For Lease/For Sale signs of retail property in Auckland central but the number of these signs that are in Mandarin.

Great about time this happen.
Thank You to the current government.

14
up

Another funds flow from overseas into NZ property that will not be picked up by these stats is illustrated by the example of a kiwi I knew who married someone from overseas. As soon as they became an NZ resident the family sent $4m and they bought 4 Auckland houses. This is an NZer buying NZ property, but there is also the foreign funds buying NZ houses aspect which is not being measured.
I won't mention which country the funds were from, lest I am branded Culturally Insensitive.

Called Benami transactions in South Asian countries.

the 4m can be used to build some Kiwi build housing let the merry go round continue

If I thought my next property purchase was from a foreigner I would be lowballing them. Foreign investors job is to buy at the peak when times are good, and sell at the trough in hard times. The price difference then stays in the host country. Quite simple really.

Can you explain what you mean when you say that it’s a foreign buyers job to sell low in a trough? What is their rationale for losing money?

So this is a common thread here, foreigners are also net sellers of equities and Bonds in Australia right now
( I cant find evidence of this here in NZ atm ) .

Basically , foreign investors in any asset class dont like uncertainty , and these are uncertain times , so maybe we should expect their preference for cash in times like this

And metals (gold, silver etc). Seems to be the start of a bit of a run on them at the moment.

I am very pleased then to hear of increased ownership by New Zealanders.