Foreign investors 'not to be blamed for housing crisis'

Wednesday, 13 June 2018

Real estate agent Peter Young, who has been working with Barfoot and Thompson for 20 years, says Chinese overseas investors they dealt with had reduced by half compared with three years ago.

Fewer overseas property investors have bought homes in Auckland in the past few years due to policy changes, according to industry workers.

Peter Young, a 20-year real estate agent at Barfoot and Thompson, said overseas buyers snapped up a dozen houses at once years ago, but not recently.

'Chinese overseas investors that we dealt with, for example those who bought houses for rent, have reduced by half comparing with three years ago,' Young said.

'The most important factor is that it's getting harder to get a mortgage here in New Zealand.'

Gary Lin, who owns Gary Lin Property Coaching, thinks the interest from overseas property investors will decrease further.

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His comments came as the latest Housing Affordability Measure (HAM) report shows affordability for first-home buyers continues to get worse, especially in Auckland.

Young said most of the foreign property buyers he dealt with were buying for commercial purposes or because their children were international students here.

Frank Li, managing director of Luxury Infinity, says the impact overseas buyers put on New Zealand's housing market has been 'severely exaggerated'.

Restrictions on how much money Chinese residents could move out of the country, introduced in 2016, had 'definitely' stopped or slowed many Chinese investors buying in Auckland, said Gary Lin, owner of property investment firm Gary Lin Property Coaching.

He quoted tighter restrictions on lending by banks and the increased income-servicing requirements as factors obstructing foreign buyers.

'It's almost twice as hard to borrow money from main banks today, compared with that in 2016,' Lin said.

'With recent restrictions in capital transfer, bank tightening in lending, and more compliance in terms of IRD number, bright line test, Overseas Investment Office requirements, I think the interest from overseas property investors will decrease or has already decreased from previous highs when these restrictions weren't in place.'

He said New Zealand would remain one of the preferable destinations for international investors because of its favourable environment, and was still 'comparably easier' to invest here, compared with other developed countries.

While some blamed overseas buyers for heating up the New Zealand housing market, the impact was 'severely exaggerated', said Frank Li, managing director of Luxury Infinity, an Auckland consultancy company focusing on property development.

Instead, Li said the housing crisis was partly because 'Auckland doesn't have enough density in the first place', and because a considerable amount of Kiwis were moving back to Auckland from overseas.

Though industry workers didn't want to see an overheated and unsustainable market, property development in Auckland should be encouraged, Li said.

'A healthy property industry can create many job opportunities for the public and bring tax income for the government,' he said.

He also thought 'overseas investors with real needs can actually motivate local developers to provide more benign sources of houses to the market', and those investments were 'beneficial' to New Zealand.

For those who worried about foreigners' influence on housing, property coach Lin encouraged people to educate themselves on financial development and investment, and take the future into their own hands.