Are there really more overseas buyers snapping up NZ properties
The survey states that "The evidence (from the survey) does not support the anecdotes that Chinese buyers are snapping up properties".
The data says that 9% of all sales were to people offshore, with 40% of these buyers indicating that they intended to shift to NZ, by implication indicating that 60% of the buyers were buying and would not be moving to NZ to live in the property. In Auckland the figures were higher at 11% of sales to foreigners and 42% planning to move to NZ.
I have a problem with this data and the survey on a number of counts.
Firstly the methodology. The results come from an email survey of real estate agents. The survey is sent out by REINZ to its database of agents. There are c. 10,000 agents and for this month 355 agents responded - that means 96.5% of all agents did not respond. The response rate was well down on the January survey when over 500 responded.
If the data is to be believed 9% of all sales in NZ being made to foreigners that would mean that in a year over 6,500 properties would be sold to foreigners - that would be over $3 billion of sales largely supported by foreign funds - I don't think so. I think if we started to see 1 in 10 of all properties owned by foreigners we would really notice this.
The problem is that the survey has a natural bias. Real estate agents are very focused people, they are self employed and if they don't work they don't earn. If they are successful it is because they focus on their market, their customer base and are really not too worried about the big picture and the world of surveys and data analysis. To validate this just look at the volatility of the other survey questions. I fear that those that respond are either agents with time on their hands or branch managers who poll the views of the sales team and not in first hand contact with buyers.
The other issue I have from the survey is the view that 60% of these overseas buyers are not planning to move to NZ. The survey asked the agents to answer Yes / No / Don't know to the question: Did the overseas buyer intent to move to NZ? The judgement was made that the 'don't know's' were classified as NO and that is why we get the 60% - the more likely fact is the agent did not ask the buyer at the time and therefore the 'don't know's' cannot be inferred as No.
So I think the fact is, little can be drawn from this survey either way. It is however likely that we are seeing more foreign buyers, and we will see more in the future - why? Well NZ is attractive to overseas property investment - no GST, no stamp duty, accessible immigration, trustworthy society, good education, strong legal titles, great environment, safe and friendly - who would not want to invest here?
I was interviewed on TV One Breakfast on this subject, the video is accessible clicking below: