Are the Chinese the first to walk away from Auckland property?

Reserve Bank moves to cool an overheated property market may be having the desired effect. Photo / NZ Herald

Moves to take the heat out of Auckland's housing market appear to be having an effect - and the Chinese could be the first to turn away.

Economist Tony Alexander of the BNZ said four separate moves by the Government and Reserve Bank appeared to be changing the market.

From today , all buyers must have New Zealand IRD and bank account numbers and a new capital gains "bright line test" is also being ushered in for investors who sell within two years.

A consultation is also under way on a withholding tax from next year and from November 1, 30 per cent minimum landlord rules are being brought in for Auckland investors.

Alexander said all this had resulted in "a plethora of anecdotes - and nothing more than anecdotes - of Chinese offshore buyers pulling back from the Auckland market."

"None are running scared and no-one has any stories of properties being sold. But some deals have been walked away from and the buyers are seeing too many little roadblocks being put in their way. None by themselves are deal killers - but the gestalt is becoming compelling," Alexander said.

But local highly geared investors were also being deterred.

"It is not just offshore Chinese backing away from Auckland at the moment.
Inexperienced, undercapitalised people who were entering the housing market from early this year feeling that they had to buy any old piece of crap to avoid missing out on "easy" money have also backed away - thank goodness. The figures do not show this yet, but they probably will before the end of the year," he predicted.

His comments follow auction clearance rates attendance rates dropping as soaring prices flatten out.

Other experts have also attributed a turn in the market to investors pulling out due to the new Reserve Bank rules requiring 30 per cent deposits for Auckland landlords and the looming tax on quick-flick investment properties.

Kiri Barfoot, a director of Auckland's biggest agency, Barfoot & Thompson, said last week that auction clearance rates were down a few percentage points. Auckland landlord Ron Hoy Fong, of coaching business Ronovationz, said he had noticed a sharp downturn in both auction attendance and sales in the last fortnight.

Mortgage broker Bruce Patten said he had also noticed auction clearance rates falling from unprecedented highs of about 95 per cent.

PROPERTY SHAKEUP
• NZ IRD and bank account numbers required from today
• Two-year capital gains tax bright line test comes into force today
• 30% minimum investment property deposit for Auckland buyers comes into force from November 1
• Consultation underway on a withholding tax from perhaps July next year