Lower interest rates and Government changes for foreign investors with residency visas will all boost housing in the next one to two years, Barfoot & Thompson managing director Peter Thompson says.
During winter, he spoke at a global real estate agency conference in Singapore and said it was attending events like that which made him aware of New Zealand’s popularity.
“The Government changes are a really positive move because when you go overseas and go to real estate conferences or expos, a lot of people say they want to come to New Zealand.
“These buyers don’t want to rent. The people we’re talking about want to own property and make it their home. Having that $5m setting means it keeps the effect right away from first home buyers. This won’t affect people like that. It’s well away from their price range.”
Buying finished homes rather than building is anticipated.
“Most won’t have the time to come and build. They want to invest the money as soon as they can. They see New Zealand as a safe haven.”
The investors would not leave their New Zealand homes empty but live here.
“These people will actually live here. That’s part of the legislation. We certainly don’t want any land banking.”
On September 1, Prime Minister Christopher Luxon announced plans to change the foreign investment regime.
“The Government wants to bring additional investment, skills, ideas and connections to New Zealand, and the Active Investor Plus residency visa allows that. It offers residency to a migrant who invests a minimum of $5 million to help grow the economy, passes a good character test, and has acceptable health.”
Often referred to as the Golden Visa, it requires a minimum of $5m to be invested into direct investments or managed funds. There is also a $10m category, with a wider range of options for investments.
The Government decided that people with an Active Investor Plus residency visa will be allowed to buy or build one home. The minimum value of the house that can be bought or built will be set at $5m – which equates to less than 1% of New Zealand houses, Luxon said.
Thompson doesn’t expect the $5m-plus buyers to be dominated by Chinese.
“Most of the people will be coming from Europe or America, not China. That’s the feedback I’ve received.”
Overall, it’s yet another boost to the market.
“More confidence is starting to brew in the economy with interest rates coming down. The next 12, 18 to 24 months will see more activity and more sales.”
He expects the $5m+ buyers to be drawn to Auckland and Queenstown.
He doesn’t want those with a $4m home to push that price up to $5m to attempt to make their home eligible to join that category.
“These people are sophisticated investors and will know the real worth.”
Trying to get $5m for a $4m property would result in it “just sitting there and they will miss deals if they try to list or auction it at a price too high”.
New Zealand must comply with anti-money laundering policies and procedures to detect and prevent the illegal conversion of illicit funds into legitimate assets, thereby combating financial crime.
Asked about how those in this country could ensure the money coming here from overseas complied with that regime, Thompson said that was up to the law processes.
“Obviously, banks, lawyers and real estate agents - we all have to do it, it’s a rigorous role but you can never say it’s all squeaky clean.”
At a conference of leading global real estate agents in Singapore mid-winter, Thompson spoke about New Zealand’s foreign investor regime, already open to Singaporeans buying homes here.
“The real takeaway from that conference was that many Singaporeans didn’t know they could buy now in NZ, that they were exempt already.
“They just didn’t know it, although government officials there know. There was a lot of interest.”
Better education would have helped bring more Singaporeans here, he said.
The agency has 88 offices, including in Northland, Tauranga and Whangamatā. It has 2800 contractors, employees, front-line and support centre staff.
That includes about 1500 contractors who are the licensed salespeople.
Despite the downturn, those numbers did not drop, “but we do a lot of training”. People have been made redundant from other industries and see possibilities in real estate.
The rental division manages just over 21,000 properties.
Barfoot & Thompson named its top sales staff.
Barfoot & Thompson is an advertising sponsor of the Herald’s Mood of the Boardroom report.
Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.