Special investigation: Auckland house prices

Labour claims the data shows for the first time the scale of an issue that is pricing first-home buyers out of the Auckland market. Photo / Doug Sherring

Exclusive: Leaked figures support claims that Chinese investors are a big influence on Auckland’s overheated property market.

The first picture has emerged of Chinese buying patterns in Auckland's pressure-cooker housing market — and it suggests a powerful, big-spending influence.

Real-estate figures leaked to the Labour Party, which cover almost 4,000 house sales by one unidentified firm from February to April, indicate that people of Chinese descent accounted for 39.5 per cent of the transactions in the city in that period.

Yet Census 2013 data shows ethnic Chinese who are New Zealand residents or citizens account for just 9 per cent of Auckland's population.

The percentage of Chinese buyers in the sales figures rises with the price of houses, peaking at just over 50 per cent for those that sell for more than $1 million.

A similar trend appears in a frequency comparison of buyers' names — Chinese names make up about eight out of the 20 most common ones among Auckland residents but fill 19 of the top 20 places for house buyers.

It is not known if the Chinese buyers were based here or overseas.

Labour housing spokesman Phil Twyford claimed the data, which represents 45 per cent of all Auckland sales over the three months, showed for the first time the scale of an issue that was pricing first-home buyers out of the market.

"It's staggering evidence that strongly suggests there's a significant offshore Chinese presence in the Auckland real estate market. It could not possibly be all Chinese New Zealanders buying; that's implausible."

DO YOU HAVE A STORY TO SHARE? EMAIL OUR NEWSDESK

Housing Minister Nick Smith attacked Labour's methodology.

"The data is unreliable as it comes from an unidentified source, covers only one of many real estate agencies and the data analysis is based on surnames rather than whether the buyers are residents or citizens.

"The real estate agency may have a client base which is more Asian-focused than average, and surnames are a poor identifier of nationality, with Auckland's growing diversity."

Dr Smith said the Government's newly introduced requirement for all buyers to have an IRD number and New Zealand bank account from October would give far more accurate information on the extent of overseas investment in Auckland housing.

Mr Twyford said Labour had worked out the buyers' likely ethnicity by comparing their surnames against electoral roll data, which covers ethnicity and other information for 1.4 million Aucklanders.

The method could not identify any one person as Chinese but was accurate across large groups. For instance, only 40 per cent of people called Lee in the city were Chinese, compared to almost 96 per cent of people called Li.

The sales data represented 45 per cent of all 8,790 property sales in Auckland during that period, according to Real Estate Institute figures.

Mr Twyford said it was unlikely local Chinese — whom he did not wish to criticise — could be responsible for so many purchases, as they made up only 5 per cent of top income earners (those on more than $50,000 a year).

The MP predicted a "tsunami" of Chinese money — estimated by Chinese real estate listings website Juwai at $16 billion — would flood into the local property market after the relaxation of foreign investment rules in China.

He said the Government should make the new register of foreign buyers open to public scrutiny and introduce controls on foreign ownership of housing, as Australia had done. Capital gains on investment properties sold within two years are also due to be taxed from October.

Barfoot & Thompson chief Peter Thompson acknowledged that there were many Chinese buyers but disagreed with Labour's analysis.

"We know there's been a large portion of Asians buying property but there's no way to tell if they're one of three categories: NZ born, foreign-born NZ citizens or foreign-born foreign citizens. If you asked me about Asian non-residents, I'd probably say between 5 and 8 per cent."

Arthur Loo, a lawyer and NZ-China Council board member, said: "Obviously, the Chinese have a strong presence in the market, but the great bulk of our clients are onshore and have some connection to NZ — based here or with children living here.

"You see them in auction rooms and people want to rush to judgment. They see people who look Chinese or Asian and they want to believe they only arrived yesterday. But some of my clients have been here several generations."

Murray Horton of the Campaign Against Foreign Control of Aotearoa said the Government needed to follow Australia and impose much tougher conditions on foreign buyers of residential property.

"For example, that they can only build a new house, not buy an existing one, thus adding to the housing stock, and that they can only own a house if they live in it themselves, not rent it out."

• Click here to read a Chinese translation of this article.

The leaked data

The data comes from one agency and does not show sales by other agencies. Photo / Doug Sherring

• Labour received leaked figures covering 3,922 Auckland property sales by one real estate firm from February to April this year. It carried out its own analysis on the figures, using surnames combined with other data.

• Labour used a statistical technique called Bayesian analysis to estimate ethnicity from surnames. This combines a number of data sets, including Census meshblock data and the electoral rolls database, to estimate the probability of whether a name is European, Maori, Chinese, et cetera.

• The analysis cannot prove statistically whether a buyer is a foreigner or local. Labour's view that most buyers must be from overseas is based on the fact that ethnic Chinese make up only nine per cent of the population but 39.5 per cent of the house buyers. However the Census figures are from a large base of 1.4 million people, whereas the house buyers data is from less than 4,000 sales.

• The data comes from one agency and does not show sales by other agencies. It does however contain 45 per cent of the sales in that period in Auckland.

• The Weekend Herald has seen the leaked sales figures data and reviewed Labour's methodology. The party updated its figures based on our feedback. We were not able to redo the analysis independently, as it relied on data sets such as the electoral rolls database, which is only available to political parties.