Foreign Buyers Ban Not Looking To Impact Hawke's Bay

Friday, July 6th 2018

Good to get through the past fortnight with the Big 50 ticked off, the sales team taken to Adelaide and up the Murray River on the Proud Mary and our company meeting all going off fantastically well.

The market continues to pump with buyer numbers still excellent and price still being pushed in many cases. The REINZ sales data for June will be out next week and I am sure we will see the median price move higher still. The winter months are usually lower in volume which helps push the median price up, with market listing numbers down significantly adding to the pressure on supply. There are many factors that could affect the current market, but I just can’t see any of these being significant enough to halt the current upward momentum. Interest rates are set to stay low, nett migration remains positive, there is still a shortage of rental properties in wider New Zealand and the ban on overseas buyers seems to be getting watered down.

So what is going on with the proposed ban on overseas buyers for New Zealand residential property? Submissions closed mid-April, with the report out from the Finance and Select Committee early June. In a poll last year by the Property Institute, New Zealanders ranked foreign buyers as the biggest determinant of housing prices - in other words the cause of the affordability crisis. However, data shows foreign buyers accounted for only 2.7 per cent of buyers of real estate for the year to March. Recent commentary from Hamilton realtor Lodge stated that overseas buyers were buying anything sight unseen prior to the law coming into play, but Hawke’s Bay certainly hasn’t experienced that. In fact, relative to Auckland Central and the Southern Lakes area, I believe the ban will have very little impact on residential property owners in Hawke’s Bay.

One interesting possibility is whether the Government will decide to exempt from the ban luxury houses owned offshore. Apparently the Select Committee considering the bill actually asked one of the submitters to offer up a new clause for the bill which would exempt “luxury houses” from the new rules. The submitter has now done this, presumably it will now also be considered. Proposed changes to the Overseas Investment Act would allow overseas buyers to buy new apartments off the plans or to develop new homes, but they would not be able to buy existing dwellings. The Committee has recommended foreign buyers be allowed to buy into larger, multi-unit housing developments such as apartment blocks, although there would still be restrictions around this. Where a new development had a minimum of 20 units, overseas investors would be able to buy units off the plans and retain them as investment properties once construction was complete. However, overseas buyers would not be allowed to occupy these units themselves and there would be restrictions on how many units in a new development could be sold to overseas buyers.

This would likely limit the number of units in a development that could be sold to overseas buyers at 60 per cent, although that figure could be adjusted either up or down by regulation. These changes have been made to make it easier for developers to secure development funding for new housing projects and increase their supply to New Zealanders.

We have been busy in the community distributing the Tremains Colouring Competition amongst schools and play centres. Please give us a call if you would like more dropped off to your children. The Colliers Rural team has also been busy with their sponsorship of last Friday’s Grape Debate - an annual event with more than 300 people attending what is always an entertaining evening, pitching local wine buffs against out-of-town experts. The Aussies were the targets last Friday night and we all love poking a bit of stick at our friends across the ditch.

Into July we now are, with Spring not all that far away. If you were contemplating bringing your home to market, now is as good a time as any to talk to your Tremains sales consultant.

Have a great week.