- Christopher Luxon announced wealthy foreign investors can buy or build homes worth at least $5 million.
- Agents expect the change to boost the high-end market and set new price records.
- Economists say the impact on the overall market will be limited, with controlled foreign interest.
“New Zealand is for sale, bring your buyers.” That was the message sent out to international real estate agents ahead of the Government's loosening of the foreign buyer ban.
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After weeks of speculation, the Prime Minister, Christopher Luxon, announced on Monday that wealthy foreign investors would be able to buy or build a New Zealand home worth at least $5 million.
Kiwi agents believe the lifting of restrictions for "Golden Visa" holders will boost the top end of the housing market, and lead to new price records.
Passengers at Queenstown airport. Agents don't necessarily think there will be plane-loads of foreign buyers in the next few months but they have noticed increased interest. Photo / Getty Images
Bayleys agent John Greenwood, who deals in expensive waterfront homes stretching from Auckland to the Bay of Islands, says some very rich people are already circling the country's top properties, including some worth over $50 million.
Greenwood said he had noticed a bit of FOMO among wealthy Kiwis in the lead-up to Luxon's announcement, as ministers teased changes to the Active Investor Plus visa, which requires holders to make a minimum investment of $5m in the country.
Positive remarks by Winston Peters on the topic "stimulated the Kiwis who have been sitting on $10m for several years now". In the last two weeks, Greenwood had received offers on two $5m-plus properties that had been on the market for two years.
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“Simply bringing [the discussion] out into the open has created FOMO."
While Greenwood expects an uptick in $5m-plus listings as a result of the changes, he does not think foreigners will open their wallets for just any old house.
“They use valuers and consultants to establish their values, and the values have been pretty tough at the moment. It's not going to increase the values but it's going to bring more buyers into the market.”
Sales would be made across the board in the $5m-plus market: “The Asian interest, if I can say, will be Auckland residential. The Americans and the Europeans will target lifestyle-type properties.
The luxury house on Parihoa Estate, Constable Road, Muriwai, was home to Hollywood star Brad Pitt when he was filming Heart of the Beast in Auckland. Photo / Supplied
“But I think the focus might have to change in that there are properties out there that are worth a lot of money, and we're talking $50m-plus.”
Greenwood was involved with two such properties, one in Northland and one in Queenstown, but he was unable to say more.
Asked if the rule change might bring American billionaires to New Zealand, he said: “Yep, and European. We're talking extreme wealth. New Zealand has an image that appeals to them, and we've been closed.”
One of his listings, the multi-million-dollar Parihoa estate, in Auckland's Muriwai, which US actor Brad Pitt rented earlier this year, was already on the radar of foreign buyers.
"A large percentage of our enquiries come from offshore already, particularly out of Europe and the USA, so potentially it will be great for Parihoa."
Jarrod Kerr, Kiwibank’s chief economist, does not think the changes will have much of an effect on the overall market. “I don't think it's going to be a game-changer. I don't think we're going to sit here and say house prices are up 10% on the back of this. I don't think it's going to be that much of an influence - not enough to move the market materially."
Kiwibank chief economist Jarrod Kerr says the change is coming "at a time when the housing market's pretty weak”. Photo / Supplied
Kerr doubted planeloads of foreigners would suddenly arrive, but said getting more foreign participation in New Zealand and attracting quality people would be helpful for the economy.
“It's kind of hard to tell until we see what their appetite is, what they are likely to buy, but it's coming at a time when the housing market's pretty weak.”
Cam Winter, managing director of luxury real estate firm Oliver Road, said most of his agency's buyers were New Zealanders, along with some Australians and Singaporeans who were exempt from the ban.
“We’ve already seen a change in the last couple of weeks with some of those people who have been perhaps sitting on their hands and not necessarily feeling any urgency - very much a switch to very active, intentional shopping.”
He attributed some of that to people feeling they had waited long enough anyway and also the better interest rates, but said a looming increase in the number of buyers was also a motivation.
Queenstown homes, like the $8.75m spread at 291 Tucker Beach Road, in Lower Shotover, could benefit from foreign buyers. Photo / Supplied
“Aussies and Kiwis, in particular, are very aware of what's going on and what is expected to change.”
Some sellers had been waiting for the changes, and Winter was confident they would now come to market, but he also said he was not expecting a rush of foreign buyers, noting the relatively small size of the top end of the market.
“I don't think there's likely to be a case of these suddenly dozens and dozens of additional properties.”
There would definitely be interest from abroad in those properties that did eventuate, and the agency had a list of foreign buyers looking to buy.
“We field inquiries from all over the world; the US, the UK, Monaco, you name it.”
He had also been getting inquiries from the likes of Switzerland and Germany: “For those who effectively want to buy a holiday home, it's a store of wealth and a place to pull the rip cord, too, if they need to. It's certainly becoming a little bit less stable over there.”
He thinks Queenstown listings, such as 291 Tucker Beach Road, could benefit from foreign buyer attention.
“It's certainly the type of property that would suit an overseas buyer. It's $8.75 million, it's a real destination, either as a holiday residence or a permanent home.”
Ross Hawkins, a Ray White agent who specialises in the high-end market, says buyers will be looking online and getting ready to jump on planes.
The rule changes would create more competition and encourage some homeowners to list. “I think it will encourage more stock on the market, and it will encourage more buyers into the market.”
Hawkins did not expect prices to rise by massive amounts because the kind of people who would be coming were smart and would do their homework.
“They are not going to pay over the odds for things, but it means properties are going to turn over and people can get on with their lives because at the moment everybody's sitting on their hands.”
Gary Wallace of Bayleys said he understood that since the “golden visa” was launched, there had been huge interest.
“There will be people who are in the golden visa pipeline that will move forward and invest in New Zealand and look to buy a home.
“I don't see an opening of any floodgates. I think it's going to be very controlled and very measured, but I think it's definitely positive. I think we will certainly be fielding enquiries from people who qualify to buy a property above $5m that are moving to New Zealand.”
A “good number” of vendors had been waiting for changes, so more expensive listings may now come to market.
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