For many people, the leaked property sale figures reported in the Weekend Herald will have contained just one element of surprise. They concluded some time ago that overseas Chinese buyers were behind the boom in the Auckland property market. Anecdotal accounts from auctions had led them to discount a survey of real estate agents in 2013 that attributed only 8 per cent of purchases to this group. Even so, many will have been astonished to learn that as many as 39.5 per cent of sales may be to buyers of Chinese descent. That figure, whatever the question-marks surrounding it, raises issues that need to be addressed.
Deriding the finding as politically motivated and statistically unsound is easy, but essentially a red herring. Compiling an estimate of the ethnicity of purchasers from their surnames, as Labour's housing spokesman, Phil Twyford, has done, is not ideal. But the basis, figures covering 3922 Auckland sales from one real estate firm from February to April this year, is reasonably comprehensive. And it is better than anything else available. Regrettably, there is an information vacuum because this country has no register of foreign buyers.
But perhaps we should not be totally surprised if Chinese buyers are, indeed, having a big influence. The Beijing Government is allowing more of its citizens to buy overseas property, and interest rates in China are much lower than here. This has led to Auckland housing being marketed aggressively to Chinese investors. They have been alerted especially that this country has no land tax, stamp duty or other of the restrictions of the likes of Canada, Australia, Hong Kong and Singapore.
So far, the Key Government has acted directly only to the extent of requiring overseas buyers to have an Inland Revenue number and a New Zealand bank account from October. Mr Twyford's finding will ramp up the pressure to do more. To some, it will represent evidence that the extent of Chinese investment, and a readiness to pay over the odds, is, beside its ramifications for the economy, creating an untenable situation for local buyers, especially those seeking their first homes.
There needs to be a high degree of caution, however. First, Mr Twyford's finding has to be substantiated by statistics whose accuracy cannot be challenged. In that context, figures made available by the new government requirements for overseas buyers need to be made available to the public. Secondly, if these figures underline Mr Twyford's conclusion, the response must be carefully calibrated. It would be easy to follow Australia's lead and require overseas investors to build new houses. This makes some sense in increasing supply rather than adding to demand.
