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We still know so little about overseas buyers of NZ property: we need more data

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 about 12% (24,000) were from non-residents.


 

This data is certainly robust as there are 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 expatriate Kiwis with homes or investment properties here in NZ and with the overseas expriate 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 ebitda of $US360m on revenues of $US640m – this is a significant company operating in a massive real estate market. A market with annual transactions in the multi-millions of properties.

However while 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 make that microscopic.

In total they host probably somewhere over four 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 3476 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 6000 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?

Former Realestate.co.nz CEO Alistair Helm is founder of Properazzi.

Comments and questions
3

New Zealand has left itself very vulnerable to overseas buyers of houses.
Every OECD country that I know of has some form of restriction.
Just for political reasons and self interest National do not want to do anything that may cool the housing market.
The rampant house price inflation that has been encouraged by this
Government must eventually spill over to general inflation with high interest rates resulting.
I am surprised how the Government has got away with their "do nothing" approach to housing affordability
The word has got around overseas how we have no restrictions on foreigners buying our houses and no capital gains tax, foreigners cannot believe what a soft touch we are!!.

Foreign residential buyers for rental and investment are astute for the most part. A common first tool of choice is to set up a NZ company and have it own the property. The director is often a NZ resident, the shareholder foreign or a trustee. Then there are trusts. etc. The only way to get the data in an accurate way is poll under Statistics NZ that each residence disclose the final owner. Given the entire NZ economy has heavily reliance on mortgage and residential property its almost bizarre there is no registry already in this modern day and age of systems and the ease of registering cars on a compulsory basis. Watch the Government legislate and charge another levy for yet another system in conjunction with another private tech company which will become a multimillion entity overnight with the insider knowledge and connections.

While the total number or percentage of foreign buyers is not massive, it should be noted that most of their purchases are almost certainly in Auckland. So the question should be 'what & of the Auckland market are foreigners buying?' I suspect it would be at least double the 10 - 12% that is bandied about.