KEY POINTS:
Kiwis coming home are refusing to put their hard-earned British pounds into the local housing market, says a leading international recruitment agency working with top executives coming back from the UK.
"Returnees are no longer rushing into a house purchase, and are happy to wait for the market
to find a new level and the kiwi to weaken," says Richard Manthel, local managing director of finance and management recruitment firm Robert Walters.
With 5000 ex-pats on his database, Manthel is hearing this message loud and clear at information seminars in London run for returning Kiwis and potential migrants.
The New Zealand dollar, at its current levels, is giving a lot of angst to Kiwis working in the UK and wanting to come back, he says.
"Looking at returning Kiwis, a few years ago they'd charge back, buy a place and it would appreciate."
Now they are sitting on their hands because of currency concerns - the British pound to kiwi conversion rate at the moment is just under 2.5, a marked contrast from its more usual three dollars to the pound.
"All of a sudden, sterling in the UK is worth a lot less than a few years ago. A lot of them are saying they'll leave the money in sterling and wait 12 months."
When the exchange rate for the pound was strong, they were coming and buying rental property or family homes here, adds Manthel. And they had "quite a cavalier approach" to these acquisitions, because they were operating from such an advantage.
Now it's a different set of economic indicators. Kiwis abroad know as much as anyone house prices here have been pretty heady for the past two or three years, and they are suitably cautious at the moment, he says.
New Zealanders earning in the UK, particularly those with financial backgrounds, follow what the currency is doing closely, he says - far more than Britons looking to migrate here. And when the time arrives to come home, they will do anything to avoid the currency hit.
Interestingly, the adverse currency situation is not discouraging ex-pats from coming back.
"For New Zealanders coming home with pounds, we believed the current adverse exchange rate would act as a disincentive, however they are still heading home," says Manthel.
Jodi Wallace, an accounting manager at Tip Top, is one of the former UK-based candidates Robert Walters has placed in New Zealand.
She says that although the pay in the UK made it very tempting to stay on another year, she just wanted to come home.
But Wallace says she and some of her accountant friends are waiting for the currency to right itself before they buy here. She has done the sums and says it makes better financial sense to have her money in the UK earning 5 per cent interest rather than converting it and bringing it home.
"Quite a few of us came home at the same time," says Wallace. "Two friends have bought a place together but most are holding off."
The accountant is waiting for the market to drop further over the next six to 12 months.
She knows where she would like to buy, probably in Ellerslie where she is renting. "I've been to a couple of open homes but the currency is the big factor," says Wallace.
She is following the financial markets closely.
"I think while our interest rates are so high, everybody is putting their money into New Zealand and until that drops, the currency won't improve for bringing the pounds back. It's very hard to try to predict."
While Wallace has a nice deposit from the UK - accountants earn "ridiculous money" there, she says - she is aware she will be paying the mortgage off with her New Zealand earnings here, so she is loath to lose money because of timing.
Wallace does own a share in an investment property with her parents, and this is common for well-organised Kiwis, says Ian Mitchell, research manager at DT, a global property services company. They will buy before they go over to the UK and sell when they come back.
But Wallace doesn't see any point in doing this at the moment - for returning New Zealanders, there are other measures they can take to hedge their bets.
Sue Stanaway, director of Bayleys North Shore Residential, is seeing ex-pat Kiwis buying houses with long four or five-month settlement dates, in the hope the exchange rate between the pound and the kiwi will improve over that time. When New Zealanders are homesick and want to come home, they come whatever the currency is doing, she says.
"They watch the exchange rate daily but if they want to come home, homesickness overtakes what the dollar's worth," says Stanaway.
She can understand why people might rent when they first return because the housing market here has changed so much in the past five years. "It might be prudent to wait and become familiar with places again," she says.
Stanaway finds her British clients are less worried about the currency situation. She has two clients out from England at the moment and they are looking to spend about $3 million each on North Shore properties.
The market's not bothering them, she says. These discerning, savvy buyers know they are also able to buy well in the current climate.
Despite reports of pending rent hikes, the high-end rental property market is "very reasonable" for returning Kiwis not wanting to buy when they arrive back in New Zealand.
"We are getting some of them returning, renting properties and leaving their money overseas," says Jane Dwen, a sales consultant with Premium Real Estate in Devonport.
One example of the kind of quality rental property Dwen has is a four- bedroom unfurnished villa with a garden on the central King Edward Parade, which is a short walk to the ferry to Auckland, at $900 a week.
Some of the international banks, such as HSBC, have been trying to come up with creative solutions for angst-ridden returning Kiwis.
The bank helps fund the purchase of a property here, using their clients' sterling deposits as security.
The pounds stay intact in a multi-currency account, and the client can convert the money over when he or she is happy with the value of the currency, and then pay off the loan.
The loan is held on a perpetual basis, and clients have to pay for a floating rate facility. But they get the benefits if the currency shifts by 10 or 15 per cent, which will outweigh those costs, says HSBC relationship manager Andy Bowater.
Anna Parr, head of international banking at HSBC, recommends returning Kiwis keep their sterling funds in a multi-currency account in New Zealand. If they keep them in the UK, there is more of a lead time and fees to worry about if they suddenly want to bring the money home.
