Who are the Foreign Buyers of New Zealand Homes? Where do they come from?

Last month, we have a discussion (Yiu, 2019) on the hypothesis that whether banning foreign buyers can help dampen house prices? Empirically, after one year’s implementation of the ban in New Zealand, it seems to be effective in Auckland.

However, it is out of many experts’ expectations, as the proportion of foreign buyers in New Zealand is a very trivial percentage (less than 3%). Why such a tiny percentage of foreign buyers can trigger house prices surge is still unresolved. My initial conjecture is that because owners can only observe the transacted prices in the housing markets, and would follow the trend of the transacted prices. Thus, even though there are only a tiny proportion of foreign buyers, but their successful bids become the leading price signals and would affect all the other bidding prices. Yet, I have not worked out the theoretical derivations or simulations, if you can help to work it out, please let me know.

Let’s show how many homes are bought by foreign buyers in every quarter first. Figure 1 shows the chart comparing the total home transfers (blue line, left axis, of about 35,000 houses in each quarter) against the number of foreign buyers’ home purchases (red line, right axis, of about 800 houses in each quarter before the ban, and fell to about 500 houses in each quarter after the ban). The foreign buyers account for less than 3% of the total home transfers even before the ban.

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Figure 1 Total Home Transfers and Foreign Buyers’ Home Purchases in New Zealand, 2017–2019. Source: Stat.NZ

Where do they come from? I think you may have guessed correctly. Buyers from Mainland China rank the first, then buyers from Australians, USA, UK and Hong Kong rank the second to the fifth before the ban, as shown in Figure 2. After the ban, Australians become the first, because they are exempted from the ban.

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Figure 2 Where do the Foreign Buyers Come From? Source: Stat. NZ

You may wonder why there are still about 500 home transfers to foreign buyers after the ban. It is probably the figures of foreign buyers buying new homes, which are not banned. Mainland Chinese are still very active in buying new homes in New Zealand, even after the ban. It may be important to know why they are interested in buying houses in New Zealand. Bearing in mind that they are neither citizens nor residents, their houses are for investment purposes only. Maybe they are rented out for long term returns. It requires more investigations before we can draw any conclusions.

Lastly, it has to be pointed out that foreign buyers can buy existing homes in New Zealand in the capacity of a company, so as to bypass the ban. In fact, the statistics show that there are a large number of home transfers engaged by companies. We do not know whether these companies are local or foreign-based, not to mention their origin of funding.


Yiu, C.Y. (2019) Is banning foreign buyers an effective measure to suppress housing prices? — New Evidence in Auckland, Medium, Dec 23. https://medium.com/discourse/is-banning-foreign-buyers-an-effective-measure-to-suppress-housing-prices-b6daac72b6cb

ecyY is the Founder of Real Estate Development and Building Research & Information Centre REDBRIC

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