House sale stats continue to mislead on foreign buyers

Monday 01 August 2016 03:19 PM

House sale stats continue to mislead on foreign buyers, says Labour

By Pattrick Smellie

Aug. 1 (BusinessDesk) - Statistics intended to allay concerns about the number of houses being bought by foreigners continue to show only about 3 percent of buyers are foreign tax residents, but the Labour Party insists the figures are misleading.

Compiled by Land Information New Zealand, the figures for house sales between April and June this year show 60 percent were purchased by New Zealand tax residents, up from 50 percent in the statistic for January to March, in which a large number of buyers' tax residence couldn't be determined because the property transaction was agreed before LINZ began collecting data, last October.

Notes to the LINZ figures stress the figures cannot be interpreted as a "foreign buyers register" as they only collect tax residency. For example, a foreign national could use a New Zealand-registered company or trust to purchase a residential property and that would show up as New Zealand tax residency.

The data collection was established after political pressure came to bear on the government when Opposition politicians alleged foreign buyers were a major factor in pumping up property prices, particularly in Auckland.

Since the release of the first quarter figures, the major trading banks have all announced restrictions on lending to foreign buyers who rely on foreign income to back their ability to pay.

The latest statistics show that of the 57,678 property sales in the three months to June 30, 34,512 - or 60 percent - stated their only tax residency as New Zealand, 3 percent were foreign tax residents, and 37 percent were main home transfers where tax information is not required.

Of the 1,749 foreign tax residents who bought property in the quarter, 555 were Chinese, 393 were Australian, and 207 were "mixed", including New Zealand tax residents. The United Kingdom was the fourth largest group of tax residents, at 138.

Labour leader Andrew Little issued a statement saying "the government continues to mislead the public about foreign speculators with its selective data underestimating their impact on the New Zealand housing market by up to 75 percent".

“National has removed the ability for corporations and trusts to be identified as foreign so has skewed the data from the start. They have also counted foreign students and temporary workers who don’t intend to stay in the country or live in the home they’ve bought as New Zealanders.

“Both these groups would be excluded from buying existing properties under Labour’s policy to ban non-resident foreign buyers," he said. The LINZ showed 2,300 properties were bought by non-residents in the last three months, and a further 5,700 were bought by people on temporary visas.

“That’s 8,000 houses sold to foreign buyers in the past three months;13 percent of total sales and four times the number the government is claiming," Little said.

(BusinessDesk)

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