House sales to foreign buyers dry up

An economist isn't surprised by the dramatic drop in sales from overseas buyers.

New data shows sales went down more than 80 percent in the March quarter compared to 2018, which follows the introduction of a foreign buyer ban in October last year.

CoreLogic senior research analyst Kelvin Davidson says the major decline was expected.

"Probably the sharpest drop-off has been in the areas that you'd expect - central Auckland's seen a sharp fall, Queenstown, areas that were previously really important markets for foreign buyers."

Stats NZ's figures show only 0.6 percent of home transfers involved people without citizenship or resident visas, compared with 3.3 percent a year earlier. Citizens of Australia and Singapore are exempt.

The drop follows the Overseas Investment Act, which came into force on October 22.

Davidson says it will open up the market for local buyers.

"Previously some local buyers would have been beaten to the punch by foreigners - certainly that would have happened in a fair few cases. Now that they're not in the market, there will be opportunities."

But he says there are other factors too.

"I think it would be wrong to say the foreign buyer ban's the only factor in causing those markets to slow. Affordability is still poor in those areas, and we've got tighter credit than before."

Only 90 of the 31,729 transfers involved Chinese tax residents, down from 459.

The average national house price is $686,975, according to QV, up 2.7 percent in a year.