The number of overseas home-buyers has dropped in wake of last October's foreign buyer ban.
Only 2.3 percent of home transfers in the December 2018 quarter were to non-New Zealanders, according to Stats NZ figures released today.
That’s down from 2.8 percent from a year ago, although slightly up on 2.0 percent in the September quarter. In the last year, foreign buyers made up 2.6 percent of all home transfers across the country slightly up from 2.4 percent in the previous year.
However, property statistics manager Melissa McKenzie noted that there may be a delay before the effect of the 22 October changes to the Overseas Investment Act is seen in the figures as transfers aren’t counted until the contract is completed.
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“This could take a month or longer, particularly for properties purchased off-the-plans, where it will be months before construction is completed.
“This quarter’s share of overseas home buyers is comparable to recent results, when transfers may have been influenced by discussions about Overseas Investment Act changes,” she notes.
The Overseas Investment Amendment Act 2018 did not apply to overseas buyers of new apartments in large developments or building new homes that add to New Zealand’s housing supply. The act also makes exemptions for Australians and Singaporeans.
Oneroof editor Owen Vaughan said: "There are big variations across the country. Ten percent of Auckland transfers are to foreign buyers, clustered in the inner city (Waitemata local board) where 17 percent of buyers were non-New Zealanders, up from 10 percent in the year before.
He added: "Overseas buying has dropped slightly in the rest of the city since December 2017. Buyers from China, the largest group of overseas transfers, bought 426 homes in the December quarter, just over 1700 for the year."
McKenzie notes that 80 percent of the over 46,700 transfers were to at least one New Zealand citizen, another 8 percent to at least one NZ-resident-visa holder. One in ten transfers to corporate entities, which could have either local or overseas owners.
A transfer is not the same as a sale. Transfers often involve a sale, but there are many other possible reasons for a transfer (such as marriage settlements, boundary changes, trustee changes, and changes in the share of ownership).
Stats NZ don’t record the total amount of property owned by overseas people or measure net change in property owned by overseas people.
CoreLogic senior analyst Kelvin Davidson said: "Clearly, these figures have dropped year-on-year, but the foreign buyer ban hasn’t perhaps had the ‘big bang’ impact that might have been expected.
"However, there was always a strong possibility that the reporting from this Stats NZ data series wouldn’t be able to show much effect in Q4. First, note that this series is based on settled transfers, not sales agreements (which occur much earlier in the sale process). Second, the data covers a full three-month period, which had a three-week window at the start when the ban didn’t apply. Therefore, the ability for foreign buyers to rush through agreements from 1st to 21st October, but just settle at a later date, may well have held up the figures for Q4 as a whole.
"In fact, there probably has been a greater effect from the ban. As shown by other, timelier sales figures, there was a spike in overall activity in October with a commensurate drop-off towards the end of 2018. In other words, some activity appeared to move forward to the start of October to ‘beat the ban’."
He added: "If the ban has been effective (and effectively enforced), the foreign activity in the market should fall away pretty sharply – albeit probably not to zero (because for example Australia and Singapore are exempt, while foreign buyers can still purchase and hold apartments in large-scale developments)."
