Time to widen the net – real estate boss

Here's why the government should probably boost interest from outside the country in property

By Mina Martin

08 Nov 2022

The latest rise in mortgage interest rates has led to more investors and first-home buyers stepping back, said Tim Kearins (pictured above), owner of Century 21 New Zealand. To help sliding property values, Kearins said that “perhaps it’s time to widen the net.”

His comments follow the release of the REINZ & Tony Alexander Real Estate Survey.

“There is minimal interest in New Zealand property from people located offshore, with a net 39% of agents reporting reduced enquiries,” REINZ said. “People overseas lost interest in the New Zealand residential real estate market late in 2020 and remain disinterested.”

Kearins noted that when the market was heating up, the government limited investment to try to cool it. Now that it was cooling down, he asked, “Is it time to reopen the doors to investment?”

“Immigration remains well down, and all non-residents remain banned from buying existing Kiwi homes,” he said. “Maybe it’s time to carefully revisit the 2018 foreign buyer ban. At least very strategically and for parts of the country really hurting.”

Kearins said with the likes of Queenstown and Rotorua battling, an injection of offshore investment in those property markets would make a real difference. Other regions, or even types of housing stock, could also be made exempt from the Overseas Investment Amendment Act.

“The reality is people overseas are now looking elsewhere for investment property,” Kearins said. “We know this because our foreign buyer enquiries through Century 21’s global website are well down this year.”

With interest rates rising and consumer and business confidence declining, Kearins said domestic demand for housing will continue to ease. By carefully filling any obvious gaps with targeted overseas investment, New Zealand’s property sector would be supported and sustained, he said.

“Sadly, New Zealand has lost appeal for overseas investors and migrants despite the Reserve Bank’s assurances that our financial system remains stable,” he said. “Should the government now dangle some carrots, identify and attract the right foreign and human capital to ensure Kiwi homeowners can weather the storm and protect their greatest asset?”