Century 21 owner Tim Kearins says with investors stepping back, interest from first home buyers slowing and property values sliding, it is perhaps time to widen the net.
The coalition Government banned many foreigners from buying existing New Zealand properties in August 2018, although it doesn’t apply to Australians and Singaporeans because of free trade deals with those countries. However, non-resident foreigners are still able to make limited investments in new apartments in large developments.
The ban considerably reduced the number of home purchases by foreigners, which dropped from 1,038 in the December quarter of 2017 to 174 in the December quarter of this year, a decline of 83%, Statistics NZ data show.
Last year, 630 NZ dwellings were bought by foreign owners and 1,482 were sold. That compares to 3,369 homes bought in 2017 and 1,770 sales in the same year.
In the December quarter of last year foreign owners purchased 174 homes but sold 339. Their purchases represented just 0.4% of all residential property transfers in the quarter while the disposals accounted for 0.8%.
A REINZ and Tony Alexander real estate survey this month noted “there is minimal interest in New Zealand property from people located offshore, with a net 39% of agents reporting reduced enquiries. People overseas lost interest in the New Zealand residential real estate market late in 2020 and remain disinterested”.
Kearins says when the market was heating up, the coalition Government limited investment to try to cool it. Now with a cooling market, he asks, is it time to reopen the doors to investment?
“Immigration remains well down. Maybe it’s time to carefully revisit the 2018 foreign buyer ban. At least strategically and for parts of the country really hurting.”
He says with Queenstown and Rotorua battling, an injection of offshore investment in those property markets would make a real difference. Other regions, or even types of housing stock, could also be made exempt from the Overseas Investment Amendment Act.
“The reality is people overseas are now looking elsewhere for investment property. We know this because our foreign buyer inquiries through Century 21’s global website are well down this year,” he says.
Kearins says with interest rates rising and consumer and business confidence sliding, domestic demand for housing will continue to weaken. Carefully filling any obvious gaps with targeted overseas investment would help to support and sustain New Zealand’s all-important property sector at this critical time.
“Sadly, New Zealand has lost appeal for overseas investors and migrants despite the Reserve Bank’s assurances the financial system remains stable. Should the Government now dangle some carrots, identify, and attract the right foreign and human capital to ensure Kiwi homeowners can weather the storm and protect their greatest asset?”