Overseas investors are no longer snapping up properties in Tauranga as much as they used to. The latest Stats NZ data shows the number of homes being sold to foreign buyers has dropped in the first half of this year. Property reporter Zoe Hunter talks to property experts as to what has caused the drop in numbers and what this means for Kiwi buyers and investors.
A foreign buyer ban has caused overseas investment in Tauranga's property market to drop during the first half of this year, industry experts say.
The number of home transfers to people without New Zealand citizenship or a resident visa dropped from 18 in the June 2018 quarter to less than six during the June 2019 quarter, according to Stats NZ's latest data.
Property experts say the cause was due to a foreign buyer ban, which came into effect in October last year preventing certain overseas people from buying residential property in New Zealand.
OneRoof editor Owen Vaughan said the foreign buyer ban has had a significant effect on higher-priced property markets such as Tauranga, Auckland and Queenstown.
"The pool of buyers for high-end, $2m-plus properties has shrunk," he said.
Vaughan said CoreLogic's latest data also showed a drop-off in the share of Tauranga sales to Aucklanders, moving from 31 per cent in 2016 to 11 per cent in the most recent data.
"These factors and affordability constraints will ease price pressure in the city's market.," he said.
However, New Zealand Sotheby's International Realty Bay of Plenty general manager Richard Laery said there was an increasing level of interest from overseas people.
"We expect this to continue with many people unsettled namely because of the uncertainty around Brexit and the USA/China trading issues," he said.
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Laery said international buyers were now the expats.
"It's not about wealthy Americans or Europeans anymore, unless they wish to live here," he said.
"It's all about international expats who are looking for a safe place to come home to or invest in."
Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said there was still interest from overseas buyers in the Tauranga market.
"But not that big influx we have had in the past," he said.
Anderson said Auckland buyers made up about 40 to 50 per cent of the market in 2016/2017.
"That big influx was from Auckland or Wellington who were selling to overseas buyers," he said.
Tauranga Property Investors Association president Juli Anne Tolley said the drop in overseas buyers was a good outcome to prevent house prices inflating artificially from offshore investors.
"It provides opportunities for New Zealand home buyers and investors to compete in a more equivalent market," she said.
Tolley said Tauranga had garnered a lot of attention both nationally and internationally for its beaches and lifestyle.
"All this makes it an attractive place to invest in, and with recent capital gains that has attracted attention for offshore investors," she said.
"But, [it is] now irrelevant for them with this law change."
Tauranga personal banker and president of the Bay of Plenty Chinese Business and Commerce Association, Candy Yan, said she had friends from overseas who were looking to buy but were unable to because of the ban.
Yan said many families moved to Tauranga from China to put their children through New Zealand's education system from primary school through to university.
It was part of the Chinese culture to own your own home, she said.
"Not many people are renting houses, most of them own the house if they can afford to buy one."
Colliers International director of research and communications Chris Dibble said the changes to foreign purchasing criteria had modified residential sales volumes.
"The regions and cities that have been the most popular over the past few years due to positive economic and demographic conditions, as well as supply and demand imbalances, are the locations experiencing some price growth rate recalibration," he said.
Associate Finance Minister David Parker welcomed the decline in sales to foreign buyers, which was the intent of the foreign buyer law change.
"The aim of the law is to ensure the market for New Zealand homes is set by New Zealanders, not on the international market," he said.
"It was always expected there would be an effect on prices at the margin, but it is difficult to separate those out from other inputs such as the impact of the property cycle."
National Party leader and Tauranga MP Simon Bridges said overseas buyers were not a significant factor in the Tauranga property market.
Bay of Plenty
June 2018 quarter: 30
June 2019 quarter: less than six
June 2018 quarter: 18
June 2019 quarter: less than six
Source: Stats NZ