We still know so little about overseas buyers of NZ property

by Alistair Helm in , ,


This week we have seen two supposedly insightful pieces of data helping to provide insight to the extent of international buyering of NZ property - one from Labour and the other from National. Irrespective of the validity of the data (I'll come to that in a minute) it clearly shows the fear and/or uncertainty surrounding the extent of international buyers' activity in the NZ property market. Certainly from a political perspective at least.

The first set of data released was from Treasury analysis of IRD data into tax returns filed by rental property owners. The data showed that from amongst 200,000 such tax returns around 12% (24,000) were from non-residents.

This data is certainly robust as there's somewhere around 400,000 privately held rental properties in NZ - allowing for multiple ownership this would cover most of the tax records. However the question has to be asked - what relevance has this data?

Included in this total of 24,000 would certainly be ex-pat kiwis with homes or investment properties here in NZ, and with the overseas ex-pat community somewhere close to a million people by all accounts, this group could account for all of it. Also the data provides no insight into the changes in the make up of this group of the years and thereby any inference of proportion of sales. The only trend analysis (Figure 1) shows that this segment had not actually grown significantly over the past 15 years during which time the NZ resident ownership base grew from 110,000 to 180,000 whilst the non-resident (as well as "unknown" whom the analysts suspect are likely to be non-resident) actually fell from around 28,000 to 24,000. 

The second set of data released by Labour's Housing Spokesman Phil Twyford presented the statement that based on data from a Chinese real estate website New Zealand is the 5th most popular place Chinese buyers look to purchase residential property behind the US, Australia, Canada and the UK.

The website to which the statement refers is SouFun - the biggest property website in the world, whilst not publishing traffic figures to its site, it is a listed company on the NYSE generating EBIDTA of US$360m on revenues of US$640m - this is a significant company operating in a massive real estate market. A market with annual transactions in the multi-millions of properties.

However whilst the audience and presence of the website is enormous in domestic Chinese terms, the capacity of it to attract an audience to NZ listings is tiny - no correct that microscopic.

In total they host probably somewhere over 4 million properties for sale across China together with a tiny add-on of around 35,000 listings from outside China. Within that 35,000 international listings there are 23 NZ listings - yes 23, check them out.

Many real estate websites around the world host international listings. The most significant of which is probably the UK site Rightmove which hosts over 125,000 international listings from more than 65 countries. Rightmove hosts 3,476 NZ listings which would equate to over 8% of all NZ property.

The fact is that the SouFun international section of the site is not representative of the true listing stock of any country it showcases. The closest it comes is actually Australia where it hosts over 6,000 listings - yet that represents less than 3% of the more than 230,000 listings of Australian property on the market today. For NZ there are 42,751 properties for sale at this time across the country and SouFun showcases 23 of them - less than one tenth of one percent.

It is therefore at best misleading and more likely totally irrelevant to showcase this data as any form of indication of true Chinese interest in acquiring NZ properties. 

Having said that there is no doubt we still need to find away to collect and analyse the data of property transactions - something I seem to be constantly championing - is anyone listening?


Asian interest in NZ property is strong

by Alistair Helm in ,


The latest survey carried out by the BNZ through the real estate industry into the proportion of sales being made to overseas buyers shines a powerful light on Australians as the number one overseas buyer group. The survey found that Australians are the biggest single group of overseas buyers with 22% of all property purchases by foreigners. Chinese are second at 20% and British at 13%.

However there is further insight to be gained on this subject from within Asia through the real estate websites in the region who carry out their own surveys.

One such website group is PropertyGuru which is Asia’s leading online property group and operates in Singapore, Malaysia, Indonesia and Thailand. The company undertakes regular property sentiment surveys, the most recent of which is the Property Affordability Index for Q2 2013 which provides a benchmark for property affordability in PropertyGuru’s four key markets. The survey takes into account survey measurements for overall satisfaction, future price perceptions and intention to purchase property as well as perceived government effort. The survey also identifies interest in overseas investment sentiment based on the 1,282 respondents to the survey who indicated intention to purchase overseas properties in the next six months. This interest is especially strong for Australian properties amidst growing concern over expensive domestic property prices in Singapore, Malaysia, Thailand and Indonesia. The survey also includes questions in regard to New Zealand property investing.

The trend to invest in NZ is not as strong as that of investing in Australia, but there is still demand especially from Malaysia and Singapore. Out of all respondents from Malaysia and Singapore who are looking overseas to invest, 1 in 5 have indicated that they are looking to NZ.

In terms of ranking, Singaporeans rank NZ in 5th place after the perennially favourite markets of UK and Australia and the recently booming property markets of Thailand and Malaysia.

In the case of Malaysia, NZ was placed fourth after Australia, UK and the neighbouring Singapore.

 

Property Guru Q2 2013 index.png

For Thailand and Indonesia investors are far more focused on investing within the South-East Asia region before considering NZ or Australia.

The commentary to the report indicated that demand for overseas investing is also driven largely by growing dissatisfaction about real estate in each of the local markets. In particular, 3 out of 4 respondents have highlighted overpriced properties and an expectation of further property price increases as the main reason that fuels interest in overseas investments. The exception is in Singapore, where despite prices for all property types are seen as costly, 40% of Singaporeans do not anticipate a further increase within the next 6 months as a result of the introduction of government policies on property in the country in Jan 2013.

Steve Melhuish, CEO of PropertyGuru Group “As South-East Asia becoming more affluent, increased property buying, selling and investing will inevitably drive property prices up and creates a ripple effect where investors will set their sights beyond their borders for cheaper alternatives”

PropertyGuru developed and started tracking the Property Affordability Index in 2010. In collaboration with Added Value-Saffron Hill, a Singapore based independent professional research agency, the quarterly survey aims to provide insights into the local property market through the consumers’ perspective and shed light into how property trends affect their property decisions over time. These perspectives are based on a representative sample of 4,062 online respondents aged 21-69 across Malaysia, Indonesia, Singapore and Thailand who are influencers or decision makers on property.

 


Overseas property websites report strong interest for NZ property

by Alistair Helm in


The leading property website for the UK Rightmove produces a very detailed report on the source of visitor traffic to their extensive selection of overseas properties. Over 3.6 million visitor sessions per month check out the more than 80,000 properties on their specialist selection of properties from around the world.  

The latest report for September highlights a seasonal trend that sees interest in warmer countries as the northern hemisphere winter approaches. One of the countries to benefit from this increase is NZ. Of all the countries profiled in the search content of listings NZ ranked at #11 rising one place with Australia in  6th place behind the leading countries visited by property seekers - Spain, France, USA. Italy and Portugal.

As ever seeing such a rich set of the data in the report got me wondering that given the sheer scale of the competing countries ranking higher up the league table, if the data was to be weighted on population for example the picture might look somewhat different.

Well the fact is when adjusted to reflect the population of each country the ranking looks somewhat different - especially when you see just how fascinated brits are for some of the smaller Mediterranean countries!

The weighted data of visitors to NZ property per million population pushes NZ to # 6 in the league of most viewed property locations - certainly reflecting the interest of potential emigrants to NZ.