Liam Dann: Foreign buyer statistics don't solve debate

Name: Liam Dann: Foreign buyer stats don't solve debate
Uploaded: 2016-05-10T18:16:19+12:00
Duration: 78 s
Description: Nearly 60 per cent of Auckland houses sold to foreign buyers went to Chinese investors, new data shows. But the revelation hasn't come without criticism.

By Liam Dann

Business Editor at Large·NZ Herald·

10 May, 2016 06:11 AM3 mins to read

Nearly 60 per cent of Auckland houses sold to foreign buyers went to Chinese investors, new data shows. But the revelation hasn't come without criticism.

Opinion by Liam Dann

Liam Dann, Business Editor at Large for New Zealand’s Herald, works as a writer, columnist, radio commentator and as a presenter and producer of videos and podcasts.

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New data on foreign buyers in the housing market is not going resolve the big debate on the issue just yet.

At three per cent nationwide and four per cent in the Auckland market the numbers are not huge.

At the margins of a tight market a few buyers prepared to pay a premium can disproportionately skew prices - we see it on the stock market all the time.

But these were on low side even based on expectations of those in the property sector. And they certainly don't reflect levels of concern the issue generated last year as the Auckland housing market peaked.

Property economist Rodney Dickens says the numbers don't "ring any nationalistic alarm bells".

But based on the extent of the sales drop we've seen in the Auckland market over the past six months it was reasonable to assume the number of foreign buyers could have been as much as three times as large prior to the new IRD disclosure rules introduced in October, Dickens said.

He believes the slump in sales can be attributed largely to the new rules.

If that's the case then the move to collect data may have effectively neutralised the problem. For how long, who knows?

The numbers do show that Chinese nationals accounted for nearly 60 per cent of foreign buyers in the Auckland market. It is reasonable then to assume that foreign investment trends in China will have had some impact on New Zealand.

After US$1 trillion of capital flowed out of China in 2015 Beijing got worried and toughened the regime around moving money offshore at the start of this year. China experts will also tell you that the smart money always find ways around the rules.
Opposition politicians have been quick to pick holes in the data pointing out that it doesn't include trusts or business buyers.

Even the Minister of Land Information Louise Upton has admitted the data is "not ideal" and shouldn't be viewed as foreign buyers register.

So is it conclusive? No.

But these numbers are a start and regardless of flaws and loopholes they provide a baseline that will eventually enable us to measure the trend in this area.

New Zealand

1089 homes sold to non-residents (Jan - March 2016)
Number of sales / tax residency of buyers:
• 321 - China (29.5%)
• 312 - Australia (28.6%)
• 162 - people with mixed tax residency (including at least one NZ buyer) (14.9%)
• 99 - United Kingdom (9.1%)
• 51 - USA (4.7%)
• 36 - Singapore (3.3%)
• 33 - Hong Kong (3%)

Auckland

474 homes sold to non-residents (Jan - March 2016)
Number of sales / tax residency of buyers:
• 276 - China (58.2%)
• 45 - Australia (9.5%)
• 36 - people with mixed tax residency (including at least one NZ buyer) (7.6%)
• 24 - United Kingdom (5.1%)
• 18 - USA (3.8%)
• 12 - Singapore (2.5%)
• 9 - Hong Kong
• 54 - other countries

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