English says NZ options open after claims Kiwis struggling to buy

The Government is eyeing Australian moves against foreign property speculators amid fresh claims they are forcing Kiwi first-home buyers to the sidelines of Auckland's overheated property market.

First-home buyers' hopes of getting into a place of their own receded further yesterday as the city's biggest real estate agency Barfoot & Thompson reported its median selling price had skyrocketed more than $20,000 to $756,909 in just 30 days, with prices up 10.6 per cent on the same time last year.

Barfoot managing director Peter Thompson said a post-election splurge had caused the price spike, with auction attendance extremely high and keen buyer demand.

It follows the release of Auckland Council property revaluation notices last month which showed house values across our biggest city had surged 34 per cent on average since 2011 and fears local house hunters are being "outbid and out-priced" by cashed-up overseas speculators.

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Meanwhile, an Australian Parliamentary inquiry has recommended tighter controls on foreign real estate investors across the Tasman, including a register of offshore buyers.

Earlier this year the Government indicated it had little interest in establishing a similar register, with Building and Housing Minister Nick Smith saying it would do nothing to make homes more affordable.

Yesterday, however, Deputy Prime Minister Bill English suggested the Government's stance was softening.

"Apparently Australia is looking at putting in some kind of scheme, we're open minded about whatever gives you more information.

"I'm sure if the Australians are doing it we can look at what they're doing, we're quite open minded about that."

Nevertheless, Mr English said the Government remained of the view that foreign investors were not a big influence on Auckland house prices.

But Labour leader Andrew Little said Barfoot & Thompson's data showed "a major problem" in the Auckland housing market.

Juwai.com, a Chinese real estate website which claims to be the biggest one-stop shop for Chinese seeking overseas properties, has 8500 New Zealand listings.

Mr Little said first-home buyers, especially in Auckland, were being outbid and out-priced by overseas buyers, "people who aren't even living here but want property here".

"The Government has to do something about it.

"The Australians have had a look at their programme of putting restrictions on overseas buyers, we should be doing the same thing."

Mr Little said a register of foreign buyers would help clarify the extent of the problem before restrictions could be implemented.

Even some in the real estate industry have misgivings about the role of overseas investors.

In a recent newsletter, Howick-based Bayley's agent Jenny Benoy said she had witnessed "a number of very disappointed young families who, even with parents' financial assistance, are being outbid, often by overseas and local investors".

"Is it fair on families that are living and working in New Zealand to be losing out to investor buyers?" she asked.

"Surely Kiwis should find it easier to be a home owner in their own country."

New Zealand Institute of Economic Research principal economist Shamubeel Eaqub said foreign buyers were not a significant force in the property market - making up "at most" about 8 per cent.

Any restrictions on foreign buyers were unlikely to ease inflated property prices, he said.

"Ultimately, it's about the investment focus on housing in New Zealand that really inflates the housing market - the same is true for Australia."

Auckland lawyer Arthur Loo said much of the criticism of foreign real estate investment seemed to be directed at Chinese people.

But while many purchases his firm handled were by ethnic Chinese, most were New Zealanders or New Zealand residents.

"People go to an auction and they see Chinese people there and they make an assumption that they're offshore buyers ... I can count on the fingers of one hand where people have truly been offshore buyers," said Mr Loo.

Foreign buyers

An Australian parliamentary committee set up to investigate if international buyers are pricing local middle-class families out of the housing market says restrictions on foreign buyers should be toughened. Its recommendations include:

• Establish a national register of land title transfers that records the citizenship and residency status of all purchasers of real estate.
• The current foreign investment framework applying to foreign purchases of residential real estate be retained in its current form.

Those rules are:
• All non-residents must obtain permission from the Foreign Investment Review Board (Australian equivalent of the OIO) before buying residential property in Australia. Non-residents are not allowed to buy an established (previously occupied) house. They may buy an unoccupied new dwelling, but only if the FIRB feels the purchase will not add to the shortage of properties for Aussies. Temporarily establishing residence in Australia for the purpose of buying a house is not a viable alternative to obtaining FIRB permission, since temporary residents must sell their property if they leave Australia.

• Introduce civil penalties for investors or third parties who assist a foreign investor to breach the rules, with financial penalties calculated as a percentage of the property value to act as a deterrent.