Opinion

Hint of xenophobia in concern at foreign buyers

It is hard not think that the concerns about Asian buyers outbidding Kiwis for properties, and pushing up the price, stem from xenophobia.

Tuesday, November 20th 2012

An Auckland real estate agent has spoken out, concerned about Chinese buyers paying top dollar for properties and forcing New Zealanders out of the market.

It comes amid claims that the New Zealand property market is one of the least regulated in the world for foreign nationals with money to spend

But every time research is done into this subject, it turns up the fact that while Asian buyers may be a favourite target for the finger-pointers, they aren’t the people buying up large in this country.

The Overseas Investment Office says foreigners only need approval under certain conditions, such as when a deal is worth more than $100 million, when more than 5ha of land is involved or if the land is deemed sensitive, such as farmland or land adjoining a reserve or on the edge of a lake.

The office’s statistics show that Chinese ownership of land in New Zealand is 150ha, compared to 20,000ha owned by US investors.

British and Australian investors are by far the biggest foreign purchasers of land in New Zealand.

Between 2007 and 2011, Australian investors paid $10.6 billion in OIO transactions. They were followed by the US, with $10b, Japan at $5b and the UK at $3b. China does not even register in the lengthy list of countries that have invested. The 2002 to 2006 figures show Chinese investors were responsible for deals of just $162 million.

The argument that absentee landlords channelling Kiwi dollars back to their home nations are bad for this country is understandable but when we start drawing lines, it’s hard to know where to stop.

If a New Zealander owns a property, and is moving overseas, should they be forced to sell, even at a loss?

If someone has their property on the market, should they be forced to take a lower offer from a Kiwi resident over a better deal from a foreign buyer?

If we are going to clamp down on foreign ownership, it should affect all foreign owners – and come with a full understanding of the potential consequences.

Comments

On Tuesday, November 20th 2012 11:15 am Mike said:

Great info; I'm more than tired of the xenophobia that dominates headlines here. Do you have any links to this information direct or did you have to go through and accumulate it? I've been trying to find out this stuff for myself but the OIO website is not very user-friendly!

On Tuesday, November 20th 2012 11:55 am Abel said:

Having foreign investors is good for our economy. It may push up the price temporarily due to supply and demand but eventually the market will balance itself. Market goes up and down. Brave are those who bought when the market was down and holding their portfolio on today's up market. Pity are those who bought during the height of the market and have to relinquish their portfolio during the down market. Let's embrace the benefits from foreign investments. Its benefits will surpass its cost. Learning from one of the known Kiwi investors in property investing...Patience.

On Tuesday, November 20th 2012 11:57 am Eric said:

I think your article shows either lack of understanding or clouded vision by your vested interest in the property market - don't muddy the waters. OIO is irrelevant for the issue we now have with foreign nationals buying residential property and these are not covered under the OIO threshold. China has 300m + people now of middle class status. Those in China with money are looking to invest and among other things lock in inter generational wealth in safe havens. NZ is seen as desirable for a number of reasons. Lack of corruption, security of investment are some of the factors. Contrast that to our population of 4.5m and you can easily see that only a fraction of a fraction of 300m people entering our housing market could have an upward impact on our natural demand population demand for housing. At the very least we need a register to record who is buying residential property by way of a question on the sale and purchase agreement. i.e. is the ultimate purchaser a foreign national/NZ citizen etc When it comes to residential property I have no problem in legislation that would allow only NZ citizens or permanent residents to own residential property and in fact suggest this. As an alternative a tax on foreign nationals entering/exiting the residential property market could be imposed.

On Tuesday, November 20th 2012 4:11 pm Miles said:

Eighty percent of home buyers in North Shore Auckland are bussed off planes direct from China. About 50 prospects are taken on whirlwind bus tours to buy virtually unseen fifty houses at a time and mostly in the $1.5 million to $3 million bracket. It would be interesting to know what they are told about the NZ house price market. Is this a real example of buyer beware or is it an example of sucker beware? No doubt 50 buyers at $2 million warrants a trip to China to obtain $2 million in commissions. My sympathy lies with the buyers. Ten trips per year suggests a $20 million income for each real estate agent. No jealousy here but it does seem to me to be forcing up house prices. What could happen if China decided that such trips were not appropriate.

On Tuesday, November 20th 2012 5:15 pm Chris said:

China and the Chinese has the will and the means to buy desirable real estate worldwide. While foreign ownership of any kind is detrimental to the economy (one-off injection of cash, long-term loss of sovereignty, capital exodus as generated income goes overseas, Kiwis pushed out of the Market), Chinese ownership is more worrying. Not because it is Chinese, but because the reasons they buy here are different from the reasons say Europeans buy. A regime similar to Thailand's where only residents can buy would be a step forward in the right direction. Disclosure: I am an immigrant myself, having arrived here 10 years ago from Europe.

On Friday, March 01st 2013 8:31 am B Johnson said:

Go to an real estate auction on any given day and the reality will become apparent. Its not xenophobic to try and provide affordable housing for the next generation. I have travelled to Asia many times and I find it insane that we are allowing wholesale buy ups of NZ property by non NZ residents. Australia's clamped down on it and so should we. BTW my partner is Chinese. And she agrees WAKE UP NZ you are destroying NZ future.

On Saturday, March 02nd 2013 2:35 pm Diana Bentia said:

I do not understand why on earth do we have to benefit China? Most of products we consume in NZ or most part of the world are from China, most of them are junks, that go to landfill before long. I do not suffer from xenophobia, but Chinese are greedy people, they only think about money and money. This makes their country superpower. Even Chinese immigrants living here only socialize and speak their own language with their own people as long as they can run business and make profit here. They do not even have a kind of social common sense in dong business by only using Chinese characters on their store and packages. Their integration to this country is questionable. If this govt allow them to buy properties in here, sooner or later, NZ will be owned by Chinese while NZer become their tenants.

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.