Welcome to the second part of our look at the wins and losses of 2018 in the property market, in part one we looked at the wins of the past six months, and now it’s time to flip the coin and evaluate some losses.
The Overseas Amendment Bill
At the tail end of 2017 we saw a major change in government as the Labour party took over and with that brought some major changes to government including some pro-active bills around housing, but also some controversial.
One such bill is the Overseas Investment Amendment Bill, which is currently in its final legs of being approved. The controversial bill aims to restrict overseas investors buying property in New Zealand, with some amendments such as the exception for apartment complexes.
Investors will be able to sell some unbuilt units “off the plan” to foreigners if their complex is 20 units or larger. Foreign buyers will be forced to either on sell the apartment at completion or rent it out – they could not live in the apartment without a residence-class visa.
Economists are worried that the ban could greater depress prices in the property market than some have predicted. While stats NZ revealed that only 3 per cent of sales are to overseas buyers, others dispute these figures suggesting the number could be higher, with ASB senior economist Mark Smith stating that “anything from 11 per cent to 21 per cent of purchases in the March 2018 involved a non-New Zealand citizen.”
The bill continues to have strong opposition, and in six months’ time it will be interesting to see if A) the bill makes it through parliament and B) what effect it will have on the property market.
Auckland Housing Prices Down
Another effect of a new government is always a slight fall on the property market as investors and first-time buyers hold off in the first month to see what changes may occur to the market from new policies and restrictions.
But six months down the track and national and local markets are still slowly declining, as of June, the national asking price is now down 4.2%, the average asking price in June was $645,133, compared to $658,170 in May and $661,129 in April. This has seemed to be an ongoing trend in Auckland which has been on a slow but steady decline since February’s peak of $994,873 which is down 8.3% to $912,071 in June – the lowest it has been since July last year.
There has also been a decline in properties being listed which could be a result of many waiting until the summer before listing and testing the waters of the new government, historically the property market does see a small rise in the summer, so it will be interesting to see what comes to be in the coming months.