Mood of the Boardroom: National’s foreign house buyers plan ‘sensible’, says real estate boss

Being able to buy a house here would ease the pathway for many, says Barfoot & Thompson managing director Peter Thompson. Photo / NZME

Highly-qualified doctors and surgeons are people we need and they want to buy when they move here. They don’t want to be renting.

The immigration of people New Zealand needs would be spurred if National is elected and axes the foreign buyer ban, Barfoot & Thompson managing director Peter Thompson says.

Being able to buy a house here would ease the pathway for many because the proposal to allow foreigners to be able to buy $2m+ properties if National is elected next month would allow them to purchase when they re-settle, instead of renting.

Europeans and Americans would be keen as well as Chinese, he thinks.

“What National is proposing is very sensible and will help immigration of people who are business leaders, bringing more knowledge into the country, more start-up businesses.

“Highly-qualified doctors and surgeons, for example, are people we need and they want to buy when they move here. They don’t want to be renting.”

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Canada and Australia allowed a regime similar to what National proposed, taxing people who bought houses in the country if they were not citizens. “I’ve been overseas recently; a lot of people want to buy in New Zealand, but they can’t.”

He expects many transactions in that category. The agency sold 29 Auckland properties over $2m in August. Allowing foreigners to buy would not damage the first home buyer market, he said.

On first home buyers being charged high-interest rates, Thompson said he had long warned that mortgage rates would rise; buyers should have taken that into account when they decided where to buy and how much to spend, he said.

“People got a false sense of security when rates were so much lower.

“First home buyers must purchase in areas where they can realistically afford lower-priced homes, not necessarily where they want to be, and buy in a lesser suburb where they can pay off their mortgage, regardless of interest rates.

“Interest rates are now more reflective of what they have been a few years ago, not in recent years.”

On National promising to make life easier for landlords, he expects interest deductibility to be allowed again and he wants that.

“We’re seeing investors get out of the rental market and it’s leading to a shortage of rentals in Auckland. That’s putting rents up. In the last month, the average rent went up $20/week in August across the average of all the agency’s rentals.

“It’s simply the supply crunch. If we’ve got more supply, then hopefully rents remain a little more stable.”

Major investors are affected by not being allowed to deduct mortgage interest, but not to the same extent as the “Ma and Pa” investors who are a good 50 per cent of Barfoots’ rent roll with one to two properties.

“Their lifetime savings had gone into those places,” he explains. The agency manages just over 21,000 properties.

“But under Labour, investors are having to pay all the costs yet returns are nowhere near what they had been. “That’s meaning many are deciding to sell,” he said.

Whatever National planned, landlords need to be transparent about their expenses, he said.

Peter Thompson’s top three business priorities:

• Increase productivity in all sectors of our business
• Give our customers a better experience
• Support our people with better systems.