Despite new restrictions on sales to overseas purchasers, it’s largely business as usual in the housing market
In spite of the high-profile build up, Kiwis with a passing interest in residential property could be excused for barely noticing the introduction of the new foreign buyer restrictions. The new rules didn’t send seismic waves through the market. But they have brought about changes to the process that will affect all buyers of homes in New Zealand.
Every purchaser of residential land – regardless of residency or citizenship status – must now complete a legal statement confirming their eligibility. If you are a New Zealand citizen or resident, it’s a straightforward form to fill in – but one you must complete before settlement.
The changes to the Overseas Investment Act 2005 relating to residential land purchases came into effect on 22 October. They mean that existing homes can now generally be bought only by New Zealand citizens and residence-class visa holders who have spent the majority of their time in in this country.
New Zealand residents who live overseas can apply to the Overseas Investment Office (OIO) for consent to buy a home. Australians and Singaporeans are exempt from the changes.
If in doubt, potential buyers should seek independent legal advice. Your lawyer or conveyancer can also help you complete the Residential Land Statement form confirming your eligibility to buy.
The new rules were introduced in response to concerns that foreign buyers were investing heavily in New Zealand property, fuelling price rises and exacerbating housing unaffordability.
Official figures shedding clear light on the activity of overseas buyers in the market have been hard to come by, though Stats NZ’s figures show that in the quarter to September last year, 2.3 percent of home transfers nationally involved no New Zealand citizens or resident visa holders; in the year to September 2018 the figure was 2 percent.
The highest proportions of purchases by people without citizenship or a resident visa were in Queenstown-Lakes and Auckland – though it should be noted that a good number of those sales were to buyers with work or student visas, many of whom will go on to become permanent residents and citizens.
These seemingly low figures are borne out by those who work in the real estate business and have first-hand experience of the buyers populating auction rooms.
“Talking from experience, the Government’s low figures seem about right,” says Daniel Coulson, Bayleys’ national residential and auction manager. “The majority of the demand we see is from families – mums and dads – wanting a good home.
“Historically, overseas investors have never had a major impact in our marketplace, but
recently there has been a noticeable level of enquiry from potential vendors asking how the change may affect the market, and a number of owners attempted to list and sell before the rules came into effect.
“Buyers, too, have been enquiring as to what the changes in the market will be. However, our view at Bayleys is quite straightforward – it’s business as usual.”
Domestic demand, not foreign buyers, has been the overriding driver of the housing market in the past, and it is Kiwis buying and selling homes that will continue to drive sales into the future. For ordinary Kiwis looking to buy and sell heading into the new year and beyond, little has changed.