Article: Our House = Our Home

Foreign Buyers  Not Shown The  Resi Door? with Carie TownleyForeign Buyers Not Shown The Resi Door? with Carie Townley

Ms Ardern has just fired her first missive by reining-in runaway house prices by banning foreign buyers from buying residential property. But what are the implications for supply? And why is the national property market looking good despite credit tightening? Read on to stay in-the-know.

Foreign buyers not shown the resi door?
PM Ardern campaigned hard about reining in the runaway horse of house values. This made sense because NZ’s median price rose by over 60% in the last decade and doubled in Auckland where there’s a chronic housing shortage and the average house costs over $1 million. Statistics New Zealand, says foreigners gobbled up 7.3% of Auckland’s homes in the March quarter… So how will our PM tame the beast?

Ms Ardern has just fired the first missive—banning foreign buyers from our residential property market. Taking foreigners away from auction day is what pointy-headed economists call “demand-side housing reform”. But, it’s not a full ban—they can still buy new apartments in large developments and multi-storey blocks. Just not houses — except for Aussies and maybe Singaporeans, but this is still being decided…

And this brings us to the flip side — foreign buyers usually focus on new developments. Their participation in the market encourages developers to build new stock and eases the problem of a housing shortage like Auckland’s. All this, as our population surges towards 5 million. Since last March, 100,000 people have chosen NZ as their safe, politically-stable place to live — the sharpest rise since 1974.

NZ property market: Looking OK for now
New Zealand’s biggest property markets are in reasonable shape — prices are stable in Auckland, Dunedin’s are growing and Wellington has been recovering its losses since March. This is happening even while many banks will only lend to borrowers who can afford 7% interest rates. So how can the property market be looking this good while credit is tightening?

1. Auckland is trying to build away its housing shortage issues. And when housing is built, lots of businesses, professions and trades get a piece of the action. The wealth spreads across the economy, there’s even more economic fuel and the development train keeps chugging along… For now…

2. Unemployment just hit a super low 4.5%. So why does it matter if your graphic designer cousin finally has to get up at 7am like everyone else? Well, because a stronger jobs market means people are more cashed up, confident and secure. And this means more demand for housing. This helps keeps a floor under property values, i.e. no crash…yet.

While the RBNZ is feeling reassured, the Guvna’s fingers stay off the rates rise button. Not bad, eh? For now…

For a personal mortgage reduction analysis to identify the strategies that are in your best interest, contact Carie today on 0275 228 940, email .(JavaScript must be enabled to view this email address).

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