June 7, 2018 / 6:17 AM / 5 months ago

Foreign property buyers target New Zealand's economic and scenic hotspots

SYDNEY/WELLINGTON (Reuters) - Foreigners bought almost one in five of the residential properties sold in downtown Auckland in the first quarter, official figures showed on Thursday, compared to just three percent throughout New Zealand.

FILE PHOTO: Residential houses can be seen along a road in a suburb of Auckland, New Zealand, June 24, 2017. REUTERS/David Gray/File Photo

The data, released by Statistics New Zealand, shows foreign buyers targeted hotspots such as the economic hub of Auckland and the southern tourist destination of Queenstown, stirring debate around the causes of soaring house prices.

The majority of overseas buyers were from China and neighboring Australia, according to Statistics New Zealand.

The proportion of foreigners buying homes varied wildly throughout the country.

Nationwide, just 3.1 percent of property transfers - which include administrative ownership changes such as inheritance as well as sales - were to non-citizens in the first three months of 2018, Statistics New Zealand said.

Foreign ownership has attracted criticism in recent years as the country grapples with a housing crisis that has seen average Auckland prices almost double in the past decade to more than NZ$1 million ($704,000) and rise more than 60 percent nationwide.

New Zealand’s Labour-led coalition government, with popular 37-year-old Jacinda Ardern at the helm, successfully campaigned in 2017 on a promise to clamp down on house price growth and reduce high rates of homelessness, in part by banning foreign buyers.

A law restricting most foreigners, including many with short-term residential visas, from purchasing residential property was introduced to Parliament in December and is set to come into force this year.

Ollie Wall, from boutique Auckland real estate firm Graham Wall, said realtors had seen a “flurry” of overseas buyers get in ahead of the ban on foreign buyers, which could have contributed to the first quarter result. “If there is a ban on foreign buyers there would be fewer houses built. That I am sure of,” said Wall, adding that the 19 percent rise in downtown Auckland sales was likely due to the large number of apartments being built by Chinese developers.

The country’s robust population growth, driven in part by many expatriate New Zealanders returning home, is a large factor in pushing up prices, according to economists.

($1 = 1.4209 New Zealand dollars)

Reporting by Nicholas Ford in Sydney and Charlotte Greenfield in Wellington; Editing by Eric Meijer

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