Overseas buyers have been staying home the last few summer - and in some parts of the country that's adding to the pressure on house prices. Bruce Morris reports.
The real estate agents call them "swallows". And, next time you're around Mangonui, Kerikeri, Nelson or Wanaka, you may spot one or two in a local cafe.
What to watch out for: they speak with an accent. Possibly English or American, but perhaps German, Swiss or Canadian. Even French, Italian or Swedish, for that matter.
You may think they are taking a break from a campervan holiday, and perhaps they are. But it could also be they own the house up the road.
"Swallows" are here for a good time in a short time. They probably discovered the delights of New Zealand on an earlier trip, fell in love with the place, did their research, came back for a second look - and then bought a holiday home to enjoy for three or four months of our summer.
Generally they are retired, or close to it, and have a bit of money sloshing around in their bank accounts. Invariably, they are enchanted by our relatively gentle pace of life, the beauty and the wide open spaces. Most of all they want to get out of bleak Northern Hemisphere winters to a warm, safe and friendly part of the world.
When the world economy was roaring and money was easy, the swallows hit New Zealand in their thousands. Not everyone bought, of course, but they were all looking, testing the waters.
The mid-far north has always been popular and stories of passengers coming ashore from cruise liners in the Bay of Islands and returning to their cabins with a sales contract are not all pub talk.
The same goes for Mt Maunganui - what else does a rich bricks-and-mortar man do on a cruise stopover when he looks in a real estate window and sees how cheap things are in such a pristine part of the world?
Further south, the hunters of the campervan brigade - on a mission to suss out likely spots or simply seduced by a lakeside sunset and cheap international prices - boost sales in areas such as Nelson-Marlborough, Queenstown and Wanaka.
The influence of swallows is difficult to quantify because no records are kept of the nationalities of people who buy residential property in New Zealand.
When the world economy is going well and the New Zealand dollar is struggling, the swallows start dreaming... and flying. But those wings are clipped by a high dollar against the euro and the pound, and economic uncertainty in Europe.
When times are right, Kerikeri is a prime target for offshore buyers. Often primed by internet searches, they have pushed local demand and helped to make the Northland town the fastest-growing in the country.
The population sat at 4884 in the 2001 census (up by 17 per over the previous five years) and jumped 20 per cent to 5856 in the 2006 census. Today, it is thought to be around 6500 and is predicted to double over the next decade.
The influence of swallows has been substantial over the years. Bruce Holmes, Barfoot & Thompson's manager at Kerikeri, suggests that overseas non-resident buyers - mainly British - have at times figured on as many as 40 per cent of local sales agreements.
But since the first ripples of the global financial crisis towards the end of 2007 - sending the European economies and currencies into a nose-dive - the swallows have turned dead duck.
The sort of people with the means to buy property overseas and enjoy summer holidays offshore have been bruised by the crisis. While the Northern Hemisphere signs are that the recovery is on track, Europe still has pockets of concern and it will be a year or two yet before
confidence returns.
Last year, with just 151 total sales in Kerikeri (compared to the 445 contracts in the boom year to April 30, 2004), Holmes thinks overseas buyers were probably behind fewer than 10 per cent of deals.
But the swallows are always hovering. Before Christmas, his office sold a Totara North property to a European buyer who spotted the listing on the Barfoot & Thompson website and bought it without setting foot on the land.
During the boom years, Kerikeri prices got ahead of themselves as offshore buyers using strong currencies competed with Aucklanders moving north to fuel values to unrealistic levels. QV data suggests a 10 per cent decline in values in the two years to the end of 2010 - and a greater drop since the slide began in 2006-2007.
The latest Far North District Council rating valuations reflect a slide in values right across the region over the three years to September 2010. Kerikeri has done a little better than other Northland towns of interest to swallows - such as Paihia, Russell and Mangonui - but the figures are fairly depressing. Capital values in Kerikeri dropped 11per cent from the 2007 survey, and land value was down more than 23 per cent.
The historic town, an appealing part of the country to retiring Aucklanders, will continue its growth path once the local economy regains its confi dence. But it may be a year or two after that before the swallows start gathering in sufficient numbers to push prices back to 2007 levels.
Further north at Doubtless Bay, Barfoot & Thompson's Gary Jones agrees the lack of offshore buyers is contributing to the low level of sales and depressed prices.
In good times, up to 20 per cent of sales may go to nonresidents, he suggests, but the figure is much lower now, with barely 20 total sales in the whole area last summer and no sign of a resurgence.
"But, having said that, an Italian family recently bought a place on Karekare Peninsula, so there's still interest," says Jones. "And, really, there always will be demand from people who don't enjoy the sort of lifestyle at home which we take for granted. They come here, walk in the sand, swim in the surf, catch a fish, ride a horse - all with good priced property. Not bad, is it?"
FURTHER INFORMATION
New Zealand is one of the most deregulated countries in the world and there's nothing stopping an overseas resident with no permanent right of residency here from buying a holiday home.
There may be issues if the would-be buyer has his or her eye on a farm or a few hectares of coastland. In those cases - referred to in the Overseas Investment Act as "sensitive" land - they'll need special
permission from the Overseas Investment Office.
Here are some examples of "sensitive" land from the Land Information New Zealand website:
• farm land that exceeds 5ha
• land that exceeds 0.4ha and adjoins certain types of reserve or conservation areas (that also exceeds 0.4ha)
• land that exceeds 0.2ha and adjoins foreshore
But, if the property is standard residential, there should be no problems. Real estate agents know the rules, and lawyers will confi rm them to keep it simple for offshore buyers.
For further information, try the Land Information website: www.linz.govt.nz/overseas-investment/index.aspx
* From the New Zealand Herald's quarterly 'Property Report' - a guide to house prices and great places to live.
