Chinese investment in New Zealand went down a notch since last October due to new buyer restrictions implemented by the Reserve Bank. The said slowdown is only temporary, according to a head of a company that facilitates the overseas property purchases of Chinese buyers.
According to Juwai co-founder Simon Henry, in the last two quarters of 2015, New Zealand declined from the fifth most popular country in the world with potential property buyers in China to being the fourth.
Although he noted a decline, Henry predicted that the interest of Chinese investors in New Zealand will return in force by the middle of 2016, once they have familiarized themselves with the new requirements.
He asserted that Chinese investors will continue to show interest in the New Zealand market as they send many of their children to school in the country. He also highlighted that there are many immigrants coming from China who will, undoubtedly, invest in New Zealand's property market.
The new buyer restrictions require both non-residents and New Zealanders who are buying and selling any property other than their main home to provide an NZ tax number. They should also have a bank account in New Zealand and undergo a "bright line" test to tax gains from residential property sold within two years of purchase. Additionally, residential property investors are obligated to shed out a deposit of at least 30 percent.
Since October, local real estate professionals have reported a fall in the volume of Chinese property investors who used to dominate the New Zealand market especially in Auckland. They regarded last year's rapid price increases as another factor to the slowdown.
On a brighter note, the latest Massey University home affordability survey which was published last January 12, showed that recent improvements in the market. Based on the data, the affordability of homes in Auckland increased by 1.4 percent in the last three months of 2015.
