The foreign buyer ban is one of the biggest frustrations for agents working at the top of the New Zealand property market.
The ban, enacted in 2018, restricts purchases of existing homes to New Zealand residents as well Australians and Singaporeans.
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The move was aimed at making property more affordable, but agents claim those at the top of the market are not competing in the same price bracket as first home buyers.
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Ray White agent Ross Hawkins says the ban is a big frustration because there are overseas buyers who would love to buy here.
“We’ve got overseas buyers who want to come here with $15m to $20m to put into our economy and this Government won’t allow that,” he says.
“Now, it makes total sense to let into our economy people who can invest that sort of money because we need those funds to get through the pandemic.
“It’s just ludicrous we’re not taking advantage of that because the people you’re talking about know what good value we are.”
Ray White agent Ross Hawkins: We’ve got overseas buyers who want to come here with $15m to $20m to put into our economy.” Photo / Fiona Goodall
Hawkins says it’s a myth that the global rich would buy up New Zealand.
Before the 1987 share-market crash, he says, Japanese buyers bought a huge number of Auckland’s CBD properties and back then everyone was up in arms but when the crash hit they sold them to Kiwis - for lower prices.
“You can’t take the land away. It’s still in New Zealand. You’re effectively using it but it doesn’t go anywhere and the money stays here so why not let the money flow because if somebody from overseas comes and buys your property for $20m it gives you $20m to go spend on the neighbour’s property, or someone else’s property. The money goes around it helps everyone,” he says.
“It creates construction and jobs. There’s a huge flow-on effect.”
Hawkins says any suggestion that wealthy foreign buyers would shut out first home buyers is silly because first home buyers are never going to buy a $20m house anyway.
“But the owner of that $20m property might after selling up go onto to buy a piece of development land and deliver 100 affordable houses.”
He says wealthy people from Canada, America and the United Kingdom would definitely buy here if they could. “There’s a range of people interested in New Zealand - some older money, some newer money. These people want to put their money into good assets and they look to us as a good, safe place to come and invest.”
Bayleys agent John Greenwood, who sells high-end lifestyle and waterfront properties around New Zealand, says there is more wealth in New Zealand than people think.
“We’ve got some very wealthy individuals and unlike a lot of the world they all want to stay under the radar because we do have a pretty tall poppy syndrome.”
He adds: “In the last decade or so New Zealand has joined the world. We’re no longer a place that people have to leave in order to make money.”
And for those with money New Zealand is cheap.
“I’ve got clients who have bought a couple of apartments in the Viaduct and they basically go, ‘Well, my Singapore apartment cost me US$32m so why am I worrying about spending $8.5m to $10m down here on a leasehold property.
“People now view Auckland as a desirable global city like Sydney, where the wealthy are spending $40m on a house.”
Greenwood says land is the key factor at the top end of the market because buyers want something to call their own.
“When they’re spending that amount of money on a house they don’t want to turn up at a dinner party and have someone say, ‘Oh, you bought Dotcom’s house’, so they buy a piece of land and build their own home.”
The Dotcom mansion in Auckland’s Coatesville. The property sold for more than $32.5m. Photo / Supplied
Greenwood says the foreign buyer ban is not helping the market, though.
“At the moment there's absolutely no point even trying to buy a waterfront property if you're a foreigner. The Government just will not approve anything to do with foreigners buying coastal property. I'm not saying that positively.”
He adds: “It’s not helping our economy at all and it’s certainly not stopping first home buyers buying property. The restriction is solely so they can publicly announce we’re stopping foreigners from buying New Zealand.”
If the ban wasn’t there, we would see $100m sales, Greenwood says. “People who don’t want to sell at the moment might sell for that.”
