No surge in foreign buyer activity ahead of residential ban

Tuesday 30th October 2018

The number of New Zealand home transfers to foreign buyers continued to ease in the September quarter ahead of pending rule changes barring overseas buyers from snapping up existing houses.

The share of home transfers to overseas people fell to 2 percent in the September quarter from 2.3 percent in the same period a year earlier and 2.8 percent in the June quarter, Statistics New Zealand said. 'Overseas people' includes people who are not New Zealand citizens or resident-visa holders.

The results "may have been influenced by anticipated changes to the Overseas Investment Act 2005," Stats NZ said. The government changed the law in a bid to stop what it said were wealthier foreign buyers from driving up house prices.

The changes came into effect on Oct. 22. Under the revamped act, foreigners are still allowed to buy homes in large, newly built apartment buildings and residents of Australia and Singapore are also exempt from the laws.

While there were news reports of an increase in foreign buyers hoping to get in before the new rules took effect, there wasn't a corresponding surge in activity, according to today's data.

There were 35,634 property transfers involving a home in the quarter, up 3.7 percent from September 2017. Of those, 79 percent were to at least one New Zealand citizen and 8.4 percent where to at least one NZ-resident visa holder. A total of 10 percent were to corporate entities, that could have had New Zealand or overseas owners.

Auckland again topped the list for home transfers involving non-NZ citizens or resident-visa holders with 414 property transfers, followed by Hamilton, where there were 42 transfers and in the Queenstown-Lakes district, where there were 21.

Stats NZ took over the task of publishing the home transfer statistics from Land Information New Zealand this year in order to obtain a better picture of the housing market.

According to the statistics agency, property transfer statistics are based mainly on land transfer tax statements and capture property transfers by New Zealanders and overseas people. This includes information on the citizenship, visa status, or tax residency of people and companies involved in property transfers. The new data includes a time series to make comparisons over time easier, detailed statistics about transfers involving homes and statistics for regions.

Regarding country of tax residence - which Stats NZ underscores is not the same as nationality - 7,595 of the transfers were to buyers who were exempt from stating their tax residency because they were NZ citizens or resident-visa holders and the transfer involved the main home. Another 16,974 were to buyers who stated no overseas tax residence.

A total of 285 were to tax residents of China only. This compares with 309 in the September 2017 quarter, and 552 in the June 2018 quarter. Some 186 were to tax residents of Australia only, many of whom were New Zealand citizens.

(BusinessDesk)

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