A week ago today Labour’s spokesperson for housing, Phil Twyford, released some data which apparently showed that Chinese buyers are currently snapping up 40% of all homes on the market in Auckland, although Chinese residents in Auckland are just 9% of the population. I felt, as did a lot of people, that the way in which Twyford (and the Herald) went about this was divisive, not constructive. See here for a good roundup of commentary, or here for a review of the methodology. That second link also makes a key point: “The root problem is that Labour’s analysis doesn’t measure residency. It measures ethnicity”.
Twyford neglected to look at current immigration patterns, of course, since that didn’t suit his argument. But for the record, some quick number crunching shows that in the last year, there were nearly 12,000 “permanent and long-term arrivals” from people previously living in China, Hong Kong or Taiwan. That’s an NZ-wide figure, but my guess is that the vast majority of them would have come to Auckland. This would be more than 20% of Auckland’s immigrants in the last year, so it explains part of the discrepancy (not all).
Anyway, what Twyford really wanted to say (but stumbled over) was that foreign buyers – wherever they may come from – are having a big effect on house prices here, making it hard for Kiwis to afford homes. These are valid concerns, and worth discussing. Various commentators have suggested that the government should be collecting information on how many homes are being bought by non-New Zealand residents, which they sort of will be doing from October. Others are going further and suggesting that non-residents should only be able to buy “new” homes, not existing ones.
I’m generally in favour of open markets, so I don’t actually mind if people overseas want to buy property in New Zealand, even if that means a permanent shift to higher house prices (other people will have different views, and fair enough, and we can have civilised discussions about that). The main issue I have is the possibility that offshore demand leads to a bubble in prices.
For example, in a few years time the overseas buyers might lose interest, sell up and shift their money to a different country. Or, if it is indeed Chinese money pushing up prices in Auckland, the Chinese government might regulate to stop its citizens moving their money offshore, with the same result (however, it seems that the government is loosening the restrictions, not tightening them).
I don’t have any policy solutions here. I don’t even have particularly strong views on the “no restrictions” thing. Maybe we do need to restrict offshore buyers to only buying new homes – if only because we’re not currently building enough new homes, and this might help to boost supply. On the other hand, why would we make restrictions on houses when we don’t do it for anything else? At any rate, it’s possible to debate these things constructively, and I don’t think Labour’s move last week did that.