Chinese buyers back off housing market says economist

Chinese buyers are showing less of an appetite for New Zealand houses. Photo / File

Chinese buyers are showing less of an appetite for our houses, having "backed off" according to economist Tony Alexander.

Citing what he called "roadblocks" to them buying, the BNZ chief economist said it had now become much harder for them to purchase.

"Chinese buyers have also backed off as they see a lengthening series of small roadblocks put in their way - consider wealth lost through China's sharemarket rout and struggle to get funds out of China amidst a new crackdown on capital outflows by the authorities," Alexander said.

From October 1, a New Zealand IRD number has been be required as part of the land transfer process. Non-resident buyers and sellers must also provide their tax identification number from their home country and non-residents need a New Zealand bank account before they can get an IRD number in order to buy a property.

His comments follow concern about the influence of Chinese buyers on Auckland's rising prices. No data has been gathered on the numbers of properties they have bought and many people have also dismissed their influence.

Alexander questioned whether lower attendance numbers at Auckland open homes was a sign of the market turning.

"Some people are seeing evidence of prices falling. This is not likely to be the start of a downward trend. Instead it is likely to be asking price cuts by over-optimistic sellers who had been essentially taking the proverbial by holding out for an unrealistic price in the hope that some mug would feel panicked enough to pay through the nose so they avoided missing out.

"The fundamentals still strongly support prices going higher though, as we have noted for some time now, rising at a slowing pace now that the Reserve Bank has knocked many of the uninformed, undercapitalised people driven by FOMO out of the market," Alexander said.

Dominick Stephens, Westpac chief economist, predicted the Auckland market will slow due to tighter lending rules.

"So far there has been no slowdown in Auckland prices, but we still feel on track with this prediction - the straws of a modest slowdown are in the wind, and we are yet to see how the market responds to those tax changes and lending restrictions, which come into force in October and November respectively," Stephens said.