Foreign buyer ban not needed - or plans vindicated?

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Central Auckland had a high percentage of foreign sales.

Statistics released this week on foreign ownership of New Zealand's housing stock have left opinion divided on whether a ban on international buyers will have any impact.

The data, released yesterday, showed 3.3 per cent of house ownership transfers in the March quarter were to non-citizens or non-residents. That was up from 2.9 per cent in the December 2017 quarter.

"Though foreign transfers have increased, this is just as likely to be due to the looming ban than anything else as buyers move to buy before they're cut out," said Infometrics economist Brad Olsen.

The number of foreign buyers was higher in Auckland and Queenstown. In central Auckland suburbs of Parnell, Grafton, Herne Bay, Ponsonby, Westmere and the CBD ,almost 20 per cent of sales were to non-citzens and non-residents, but that only represented 85 sales of a total 225 in that area for the three months.

In Queenstown, about 10 per cent of sales were to foreigners.

Olsen said, when the number of foreign buyers selling property was deducted from those buying, it left a net 4 per cent of foreign buyers acquiring property in Auckland.

He said it did not prove the Government's case for restrictions on foreign buyers.

"This data does back up the points made by us and other commentators that the foreign buyer ban won't do a great deal to affect the housing shortage Auckland is seeing - or house prices in Auckland or throughout New Zealand for that matter. With only a net 1.7 per cent of all homes in the March 2018 quarter being transferred to net 'new foreign buyers', that is, 582 homes, the effect is small.

"Housing supply is now the most important part of the equation to change housing options: more work needs to be done by the Government to not only increase housing itself, but also creating the conditions, through more friendly regulation and enabling infrastructure, to let the private sector also create more housing stock."

ASB economist Mark Smith said it was notable that 8 per cent of sales were to people who were residents but not citizens. Another 10 per cent of sales and transfers were to corporate entities for which there was no ownership information.

"It's a much wider issue than just foreign buyers. Overseas participation in the property market can be directly or through migration. It can have quite an impact. It's a policy decision the Government will have to make."

Associate Finance Minister David Parker said the fact foreign activity was higher in the more expensive parts of New Zealand vindicated the move to ban foreign buyers.

"Kiwis were right to be concerned, and that is why we are passing the foreign buyers law."

He said the data measured the flow of properties into overseas hands, not the proportion of the stock that was held by overseas owners, and with more foreign buyers than sellers the number of foreign-owned homes was increasing.

"We want the prices of New Zealand homes, whether it be a lake-side station, the best houses in the Bay of Islands or the most modest homes in our towns and cities, to be set by local buyers not on the international market."

Olsen said it was not yet clear that the higher foreign interest had led to higher prices in those areas, or whether there were other factors involved.