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Alistair Helm welcomes more data releases on the extent of foreign buying of NZ houses, but doubts the usefulness of one set

Alistair Helm welcomes more data releases on the extent of foreign buying of NZ houses, but doubts the usefulness of one set

By Alistair Helm*

This week we have seen two supposedly insightful pieces of data helping to provide insight to the extent of international buyering of NZ property - one from Labour and the other from National.

Irrespective of the validity of the data (I'll come to that in a minute) it clearly shows the fear and/or uncertainty surrounding the extent of international buyers' activity in the NZ property market.

Certainly from a political perspective at least.

The first set of data released was from Treasury analysis of IRD data into tax returns filed by rental property owners.

The data showed that from among 200,000 such tax returns around 12% (24,000) were from non-residents.

This data is certainly robust as there's somewhere around 400,000 privately held rental properties in NZ - allowing for multiple ownership this would cover most of the tax records.

However the question has to be asked - what relevance has this data?

Included in this total of 24,000 would certainly be ex-pat kiwis with homes or investment properties here in NZ, and with the overseas ex-pat community somewhere close to a million people by all accounts, this group could account for all of it.

Also the data provides no insight into the changes in the make up of this group of the years and thereby any inference of proportion of sales.

The only trend analysis (Figure 1) shows that this segment had not actually grown significantly over the past 15 years during which time the NZ resident ownership base grew from 110,000 to 180,000 while the non-resident (as well as "unknown" whom the analysts suspect are likely to be non-resident) actually fell from around 28,000 to 24,000. 

The second set of data released by Labour's Housing Spokesman Phil Twyford presented the statement that based on data from a Chinese real estate website New Zealand is the 5th most popular place Chinese buyers look to purchase residential property behind the US, Australia, Canada and the UK.

The website to which the statement refers is SouFun - the biggest property website in the world, whilst not publishing traffic figures to its site, it is a listed company on the NYSE generating EBIDTA of US$360m on revenues of US$640m - this is a significant company operating in a massive real estate market. A market with annual transactions in the multi-millions of properties.

However whilst the audience and presence of the website is enormous in domestic Chinese terms, the capacity of it to attract an audience to NZ listings is tiny - no correct that microscopic.

In total they host probably somewhere over 4 million properties for sale across China together with a tiny add-on of around 35,000 listings from outside China. Within that 35,000 international listings there are 23 NZ listings - yes 23, check them out.

Many real estate websites around the world host international listings.

The most significant of which is probably the UK site Rightmove which hosts over 125,000 international listings from more than 65 countries. Rightmove hosts 3,476 NZ listings which would equate to over 8% of all NZ property.

The fact is that the SouFun international section of the site is not representative of the true listing stock of any country it showcases.

The closest it comes is actually Australia where it hosts over 6,000 listings - yet that represents less than 3% of the more than 230,000 listings of Australian property on the market today.

For NZ there are 42,751 properties for sale at this time across the country and SouFun showcases 23 of them - less than one tenth of one percent.

It is therefore at best misleading and more likely totally irrelevant to showcase this data as any form of indication of true Chinese interest in acquiring NZ properties. 

Having said that there is no doubt we still need to find away to collect and analyse the data of property transactions - something I seem to be constantly championing - is anyone listening?

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The above article was written by Alistair Helm, and is republished with his approval. The article was originally published on Properazzi here

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15 Comments

Anyone listening? Certainly not Nick Smith or John Key anyway. 

Smith and Key (and all the rest of them) will be caught in an awkward dilemma between placating the suckers, I mean, NZ voters, and keeping the people paying the big backhanders and campaign contributions happy.

Only 400,000 private rentals in NZ? Don't you think, given the percentage of people who no longer own their own homes, that this figure is a bit light. Let's say there is an average of 3 people per house, that would mean that we would need around around 1.5 million houses to house them all. Given that more than half of all people rent, then we would need anything up to and more than 700,000 rental houses or thereabouts. Not sure how many state houses there are but I expect a lot of them would fit into my margins of error which would be quite large, I believe it may be less than 100,000.
To me, it would appear, that many rental properties are not appearing in those particular stats.

It's easy to look up, rather than just guess...
 
69,000 HousingNZ residences, housing 200,000 people, averaging 2.9 people per house
http://www.hnzc.co.nz/about-us
 
There were 1,765,899 dwellings counted in the 2013 census, 194,000 of which were unoccupied
http://www.stats.govt.nz/Census/2013-census/data-tables/tables-about-a-p...
 
512,109 dwellings were rented, according to the census
http://www.stats.govt.nz/Census/2013-census/data-tables/tables-about-a-p...
 
so that would mean about 400,000 private rentals, 69,000 HNZC rentals, plus 43,000 Council rentals. Seems about right to me. No issues with the stats.

My figures are not that bad actually without even looking them up. Every one is a guess but I added to it, the percentage that do not own their own homes anymore, and I see a gap.

And, let us not forget that the figures Nick Smith is using are 3 years old.

Its the interest that worries me, the debt I don't think can ever be paid back, I given up on that.
  Those dairy farmers will just have to run that bit faster to make the extra 600 million required to pay the bill. 
 Meanwhile all is not well in the rest of the world
 
http://www.zerohedge.com/news/2014-05-16/where-worlds-unsold-cars-go-die

That zerobedge thing is rubbish. Those stockpiles are stock made for a certain market, they do one run at a time for production efficiency then stockpile them. Those stockpiles grow then ebb as they ship to their intended markets. A major car company in the world would have sales figures that would have any one of those stockpiles represent about a DAY of global sales... they're not significant.

The really eerie thought is that if the buyers from offshore are not balanced by offshore sellers then there is a net accumulation. 
The NZ citizens/ expats are likely to be net sellers as some of them remain permanent overseas resident while those who are just investing are for the moment nearly 100% buyers only. That is bad for locals. Temporally good for the currency balance but ultimately bad if the " rats start to abandon the sinking ship"
Ipso facto and all that!

Ooooops - really responding to Esprit.
Tally Hoe!
 
Here was I thinking that I was reading about yet another bubble. Sleeping tight tonight.
 
But I doubt that the boss of Pugeot will be sleeping at all. His problems are already well documented.

I have pointed out before that non-resident buyers of real estate retire a local mortgage, and thus contract debt driven money supply. That eventually will shrink the pool available for business. Be interesting to see how this ties in with Ostrich's figure above. What I want to know is if the $11B in new lending gives a net overall increase in lending, and a corresponding increase in the money supply, or is offset by a greater amount of retired mortgages.

I wonder if China will send planes to rescue their property investors from Auckland when the Anti Chinese sentiment kicks in?  http://www.zerohedge.com/news/2014-05-17/over-3000-chinese-evacuated-boat-plane-vietnams-anti-china-riots-escalate-taiwan-als

This won't happen. Dissent by Kiwis against any racial group will find themselves up against equality and diversity laws which effectively will make law abiding residents criminals in their own land and labelled racists and biggots. Freedom of speech wil be a thing of the past and even minor criticisms of other races will be investigated by the politically correct police. This is how race relations are managed and enforced in the UK today.    

In the scenario that would create such animosity, the same contributing factors will mean policing the situation will be difficult. In the peak, services will go to hell including Policing.

We dont record who has bought NZ Property , its still quite unbelievable that for a country with a Germanic  approach to record keeping , we dont know the residency or nationality status of the buyers

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