10 May 2016

Foreign buyers 'very under reported'

7:57 pm on 10 May 2016

Figures on foreign buyers of New Zealand homes could be greatly underestimated, a financial journalist says.

Birds eye view of Palmerston North housing.

Photo: RNZ / Alexander Robertson

The figures released by Land Information (LINZ) today showed 3 percent of houses bought in the first quarter of this year were purchased by people living overseas.

It was the first time data has been made available showing how many homes are purchased by tax residents of overseas countries.

The move follows law changes in October last year requiring overseas buyers of New Zealand property to have an IRD number in this country. Data will be released every quarter from now on.

Speaking on Checkpoint with John Campbell today, financial journalist Bernard Hickey said it looked like the number was an underestimate.

He said the 3 percent number was "a very sketchy beginning".

Mr Hickey said the actual figure for foreigners buying homes here could be anywhere between 3 and 48 percent.

"Thirty-five percent of the buyers of homes said they were foreign students or had temporary work visas," he said.

But Land Information said some of those people could be New Zealanders who misinterpreted the survey question.

Mr Hickey said there would be more meaningful figures in six to 12 months' time.

That was because figures released later would also cover the 10 percent of transactions currently exempt because they happened before the rules came into force on 1 October.

"Who are the people who say they are New Zealand residents who are foreign students or had temporary work visas?

"By any usual measure they wouldn't be counted as New Zealand residents. Currently that number is 35 percent, which is pretty chunky."

Mr Hickey said adding the 10 percent currently exempt to the 35 percent who said they were foreign students or on temporary work visas, plus the 3 percent would mean 48 percent of land sales were to foreign buyers - a figure "way out of the ballpark".

Land Information has said it will redesign the survey, and this, along with the coverage of all transactions, meant proper data would not be available until the end of this year or early next year.

LINZ chief executive Peter Mersi said the figures released today gave some information about overseas interests, but he conceded it was not a register of foreign ownership.

"Of about 45,000 property transfers in that quarter, for 3 percent of those transfers, at least one of the parties associated with being a buyer had an overseas tax residency."

Mr Hickey predicted housing, especially housing supply in Auckland, would be a major election issue next year.

Get the new RNZ app

for ad-free news and current affairs