Market insight: What's happening with Chinese investors?
In the last year there's been so much talk about foreign investors, both good and bad, true and untrue. It's easy to get in a panic about people you're rubbing shoulders with in the race to buy a home, but with the right information you can get a clear head and a clear way forward.
That's where Joanne Chen comes in. She is a business development manager here at Squirrel, and for the last two years she has been an invaluable resource when it comes to unlocking the Chinese investor market. Here's what she had to say about the current situation:
Legislation curbed the enthusiasm
On October 1 last year, the government introduced rules that meant overseas property investors had to have a New Zealand bank account number and IRD number. Now, this is something that is daunting enough for people that live here - according to Joanne, it was a downright confounding prospect for many Chinese investors.
"People didn't understand the policy," she says. "They didn't know what the IRD was, and were freaked out by the prospect of paying extra tax in a foreign country."
For this reason, Joanne adds, Chinese buyers flocked to the NZ property market in droves leading up to October 1 implementation of the legislation. And once the deadline passed?
"October and November just died," she stated. "Nobody was buying."
This afforded a window of opportunity for locals on the lookout for mortgage advice and a new property. After all, if you didn't have the buying power of an overseas investor that could put up in excess of $1.5 million for a home, you might have found it tough to get ahead.
It's especially true when you factor in the Chinese market last year. Joanne noted that terrible conditions in their economy and an inviting exchange rate saw lots of Chinese buyers looking to secure their money by investing in New Zealand property. So it's slowed down now - what's coming next?
A triumphant return?
Eventually, Joanne says, the Chinese market will return here in full force. January and February are big months for families visiting New Zealand, she says, looking at homes and the lifestyle and working out if they will move to New Zealand. School zones - any kind of school zones - and family homes are often their focus.
These aren't the buying months though. Joanne adds that the process is still very complex, and Chinese buyers often have a lot to learn before they can confidently make a purchase in the New Zealand market. That's where she excels, teaching foreign investors the intricacies of taking out a home loan and buying local real estate.
"We give them advice on how to buy, link them up with real estate agents, help them set up accounts and transfer money - everything they need to get a foothold here in New Zealand."
Buying a property isn't a matter of waiting for the market, she adds. "If you're a first home buyer, you should just buy when your situation enables you to."
For more insight and advice, don't hesitate to get in touch.