PM says Chinese real estate investment minor

Prime Minister John Key put the recent surge in Auckland house prices down to improving confidence in the economy following the September election. Photo / Mark Mitchell

A predicted surge in Chinese investment in New Zealand residential real estate is something the Government needs to consider, but at the moment such investment is not a significant issue Prime Minister John Key says.

Amid growing calls for a register of offshore based home buyers, Simon Henry, chief executive of international property website Juwai recently said Chinese appetite for New Zealand real estate was set to grow.

Responding to claims Chinese investors are a significant presence in the Auckland property market, Mr Key yesterday said the overwhelming bulk of Chinese at auctions would be New Zealand residents or citizens from "Pakuranga or Torbay".

"That pattern could change over time. I accept that as China gets wealthier and other countries get wealthier they may look to spread their wings a bit more, and that's an issue that New Zealand like every other country has to consider both the pros and cons of that because there's a bit both ways."

While investors have been blamed for pushing up prices, Mr Key put recent surge in Auckland house prices down to improving confidence in the economy following the September election.

"Typically consumers stop buying and businesses stop economic activity in the month or two prior to the election as they wait to see what actually happens and what the result is, and given there was quite a significant change in tax policy between the Labour
Opposition and ourselves it's hardly surprising that some people were waiting to see."
Mr Key said improving confidence was apparent in other areas of the economy.

"It's also true for instance that car dealers have been telling me they've been very busy post the election and were quite quiet for a couple of months prior to it."

Mr Key underscored comments by his Finance Minister Bill English last week that his Government was keeping an eye on Australian moves to establish a register of foreign home buyers.

"If there's a credible register we're not afraid of such a thing, we're just saying we don't think that's the answer to the issues. All a register would give you is arguably a bit better information on what's happening and that might be of merit but realistically for us tackling the housing issue - which we're doing I think very effectively - still sits in that issue of release of land and speeding up the supply of new product."

NZ First Leader Winston Peters said other political parties were now crying "crocodile tears" over the issue of foreign real estate investment, "but when New Zealand First argued for a register of foreign land and house ownership some of their members called New Zealand First xenophobic and racist".

"We ignored that and have long had a bill on the issue of foreign ownership in the parliamentary ballot."

Mr Peters said Chinese and other overseas investors shouldn't be blamed for wanting to buy property in this country, "when we've put the welcome mat out along with flashing neon signs".

"Favourable tax treatment for foreign investment explains why we're now the fifth most preferred market for Chinese investors.

"If New Zealand does not react, this current overseas investment will become an offshore consumer flood."