Have foreign buyers been driving up house prices in New Zealand, asks Teresa Chan.
Since October l last year, the Government has been collecting statistics from all property sales to identify whether overseas buyers have been driving up the house prices in New Zealand.
The statistics for the first quarter of this year have just been released.
They show the following trends:
1. Only 3% of individual buyers have no ongoing connection with New Zealand.
This means that they are neither NZ citizens nor resident visa holders, nor do they hold a work or student visa.
2. About 33% of individual buyers hold a work or student visa.
3. Accordingly, non-resident buyers who are neither New Zealand resident visa holders nor New Zealand citizens make up 36% of individual buyers.
4. Of the individuals who hold a work or student visa, 68% plan to live on the property they purchase.
The remaining 32% do not.
The above statistics are limited in the following ways:
1. They cover individuals only.
"Corporates'' are not included.
2. They cover only three months. A longer period is required to iron out seasonal or other fluctuations in the purchase patterns.
3. Some transactions were still exempt from being required to provide statistics, as contracts for them were entered into before October 1, 2015.
4. Land Information NZ states that it appears some NZ residents answered questions incorrectly as holders of work or student visas, thus inflating the figures for work or student visa holders.
The limitations will disappear in the next nine to 12 months and more accurate data will emerge.
Other parts of the statistics relate to tax residency, not immigration status.
Tax residency at any point is based on the amount of time you spend in a country and the connection you have with that country.
It is different from nationality.
You could be a New Zealand citizen or resident but have tax residency in other countries.
Or, you could be an overseas citizen but have only New Zealand tax residency.
The data collected regarding tax residency was for revenue-gathering purposes.
It provides only a partial picture of which countries NZ property buyers and sellers are connected to.
Those statistics show that only 3% of the New Zealand buyers stated an overseas tax residency.
Of those who did, 28% stated their other tax residency was in China and 27% in Australia.
In terms of the Auckland buyers, only 4% stated an overseas tax residency.
Of those who did, 58% stated their other tax residency was in China and 9% in Australia.
Only 2% of the New Zealand sellers stated an overseas tax residency.
Of those who did, 41% stated their other tax residency was in Australia, and only 8% in China.
The data to this point paints the following picture:
1. The claim the New Zealand or Auckland property market is being driven up by speculators from overseas who have no connection to New Zealand is not substantiated.
2. However, non-residents working or studying here have been buying properties here largely to live in, but some for investment purposes, and have contributed to the demand for housing.
The exact extent of their buying is a matter for wait and see, as the above limitations are ironed out over time.
Notable gaps in the current data are as follows:
● Where are the non-resident buyers from, especially those working and studying here who seem to contribute to the demand for housing?
● Where are they buying in New Zealand?
● How long do they hold properties for?
The country on their passports may be a more relevant measure of nationality than tax residency.
As a lawyer who works with clients from New Zealand and overseas, I welcome the fact statistics are now being collected. I hope that in time, the statistics will show us the real factors that affect house prices and allow New Zealand to design policies in response to those factors. As a Chinese New Zealander, I hope the data will take us, in time, beyond the political bickering and allow us to focus on real solutions for the runaway Auckland house prices. I hope to see that dream of owning your own home a reality again for all New Zealanders, whatever their ethnicity.●Teresa Chan is a Dunedin lawyer practising in property, business and immigration law.
