Effects of the foreign buyer ban

PHOTO: CoreLogic

Today’s data from Statistics NZ doesn’t show any clear effect from October 22nd’s so-called foreign buyer ban in the residential property market. However, because they measure final transfers rather than the earlier agreement, the three-week window in October to push through agreements has probably artificially raised the figures for Q4 as a whole. In other words, we won’t be able to detect any genuine influence from the ban in these figures until the next release (for Q1 2019) on 2nd May.

CoreLogic Senior Analyst Kelvin Davidson comments:

“The figures showed that in Q4 2018, there were 885 purchases by people without citizenship or a residency visa, equating to 2.3% of the total. In the same quarter a year ago, there were 1,038 purchases, equating to 2.9% of the total. The most purchases in Q4 were in Waitemata, at 159, down from 189 a year ago.

Clearly, these figures have dropped year-on-year, but the foreign buyer ban hasn’t perhaps had the ‘big bang’ impact that might have been expected. However, there was always a strong possibility that the reporting from this Stats NZ data series wouldn’t be able to show much effect in Q4. First, note that this series is based on settled transfers, not sales agreements (which occur much earlier in the sale process). Second, the data covers a full three-month period, which had a three-week window at the start when the ban didn’t apply. Therefore, the ability for foreign buyers to rush through agreements from 1st to 21st October, but just settle at a later date, may well have held up the figures for Q4 as a whole.