NZ drops in eyes of Chinese investors

  • 12/01/2016
NZ drops in eyes of Chinese investors

By Fiona Rotherham

The head of a company that helps Chinese buy properties overseas says New Zealand's popularity ranking has slipped a notch since the Government and Reserve Bank introduced new buyer restrictions last October.

Juwai co-founder Simon Henry said New Zealand shifted to fifth from fourth most popular country in the world with potential property buyers in China between the third and fourth quarters of 2015.

But Henry, whose Chinese language website has 2.6 million unique users monthly, predicts Chinese buyers' interest in New Zealand will return in force by mid-year once they've fully digested the new requirements.

They include non-residents and New Zealanders buying and selling any property other than their main home to provide an NZ tax number, requiring non-residents to have a New Zealand bank account, a "bright line" test to tax gains from residential property sold within two years of purchase, and residential property investors in Auckland needing a deposit of at least 30 percent.

Since October, local real estate players have reported Chinese property investors have been scarce in the formerly rampant Auckland market after being regarded as a major factor in the last year's rapid price increases.

The latest Massey University home affordability survey, published yesterday, showed a 1.4 percent improvement in the affordability of Auckland homes in the last three months of 2015, although they remain 59 percent less affordable than houses in the rest of New Zealand.

Henry said the reaction is likely to be only short term, particularly for Chinese investors looking to immigrate or send their children to New Zealand.

Juwai is forecasting 10 to 15 percent growth in global property investment by Chinese investors in 2016.

"Coupled with financial sector reforms, plus increasing demand from business and individuals, it's likely to be another bumper year of outbound investment", Juwai said.

China's recent sharemarket turmoil was unlikely to halt the momentum of China's growing middle class and high net worth individuals buying property offshore, said Henry.