The media commentary of the last few days has polarised around the impact of returning kiwis and increased long term migration:
- The National Business Review – Migration won’t effect housing until 2010
- Interest.co.nz – Net migration to NZ up again in April, but not returning expats
- The NZ Herald - No jobs for expats (returning from Dubai)
Whilst most of the articles in commentary or in posted comments are quick to dispel the presumption that such increased demand will fuel property prices, none can refute the assertion as the NBR commentary rightly says “Certainly they will all need somewhere to live. The buyer pool will be boosted and rental properties will have more tenants scrambling to get in the door“.
This is exactly what has been witnessed by some key indicators of international searching for NZ homes for sale and homes for rent on this website over the past year. We have analysed these trends and provided some detailed statistics.
Searching for homes for sale
This is the largest segment of the website – currently there is over 53,000 listings of properties for sale including lifestyle properties. In the past month there were over 134,000 searching sessions from countries outside of NZ for these properties – around 1 in 3 of all visitors to the realestate.co.nz website are viewing from overseas, making it the #1 website of choice for international visitors.
The top 20 countries searching for property to buy is detailed below:
The major markets in terms of traffic are the big 3 of Australia, the UK and the USA which account for close on 70% of all international traffic. Significant year on year growth is seen from the US up 63% in a year as compared to total international traffic up 14%. The UK and Australia however are flat or in the case of Australia down 9%.
Significant increases in traffic are seen from China and Spain both showing growth of over 200%, equally Russia, Taiwan, Singapore and not surprisingly United Arab Emirates feature with traffic more than doubling in the year. A very significant drop has been seen from South Africa, which a year ago, was the 5th most active visiting country, slipping now down to 17th with a 49% decline in traffic
Rental Properties
Interest from overseas tenant looking for property to rent of which there is over 7,000 on the site currently has grown by 17% over the past year with over 25,000 visitor sessions in the past month.
Again as with searching for property for sale the same top 3 countries dominate. In this case the growth again is from the US with another decline from Australia and a flat performance from the UK. Canada at #4 equally showed significant year-on-year growth up 82%.
Big movements are witnessed with interest from Spain and Ireland, the latter up 172% moving up from 12th to 7th place. Just as with property for sale – South Africa is witnessing a decline in rental property searching recording a 55% fall although the scale of interest still warrants a top 5 spot.
India ranks much higher in rental property search (#10) as compared to #20 in terms of property for sale with a more than doubling of interest for rental properties over the past year.
Notable departures from the Top 20 are Fiji and Switzerland, the former seeing a 33% decline in rental property.
Note
The data of traffic for Australia has been adjusted to account for the significant increase in traffic to realestate.co.nz following the closure of the website of allrealestate.co.nz in Dec 2008. That website a subsidiary of the leading Australian real estate website (www.realestate.com.au) derived a significant percentage of traffic from Australia which now re-directs to realestate.co.nz.
To enable a like-for-like comparison the historical data from that website for Australian traffic has been de-duped with the data of traffic from realestate.co.nz for those months of last year to create a true picture of Australian searching trends.
Alastair,
Very interesting analysis. It’s great to see all that data in a digestible form. Cheers.
I just wonder though about the implication of demand from cashed up expats or new migrants. This data shows property buying interest from the UK and Australia (the source of most of the returning expats or cashed-up new migrants) is flat to falling from a year ago. Whereas interest in rentals is higher. This may be due to them struggling to sell their own houses or not having them to sell.
This may increase rents, although the numbers are relatively small, but I doubt it will boost house prices.
Also, the interest from the United States is problematic for those wanting to sell properties to these migrants. Firstly, many will be selling in a dire market and our housing is now vastly more expensive (even in US dollar terms) than US housing. House prices have to fall to make them attractive.
cheers
Bernard
What we need are real numbers – how many houses are purchased by foreign owners or returnees?
I’d also like to see some ongoing stats on the number of people per house – which is likely to be rising as times get tougher and people move to flatting or back home.
Some data on rental prices would be good – are they falling due to soft demand as people consolidate, or are they rising? Can we get this broken down by rental price ranges – I have a suspicion that this is skewed somewhat.
Also – how many houses are unlet – is their a timeseries on this?
I’m hypothesizing that there are plenty of people at the top end of the market struggling to let their house for anywhere close to their mortgage. How do we capture this in a statistic?
Between the two of you Bernard and Alistair, are we able to get a good handle on these?
Bernard,
Appreciate as ever the comments and interpretation.
My subjective view would be that given the economic issues and uncertainty it would be more likely that returning expats and new immigrants will choose to rent before they buy, but naturally they will be drawn to review the availability and pricing of property on the market in the period prior to returning to NZ.
What Bernard says… It’s not the most attractive proposition in the world to move to a country where the housing is eyewateringly expensive and incomes comparatively low.
Renting here isn’t great either. Look for the worst house in just about any street: what’s the bet that that’s a “rental investment property”?
Lance – that is a lot of questions. Some of the data is available, some is not so easy to access.
The key thing is the demonstration of the need to provide rich and contextual information to empower buyers, sellers, tenants and landlords.
I like the challenge and the insight you have highlighted.
What we need are real numbers – how many houses are purchased by foreign owners or returnees?
I agree with Lance, this would be more interesting than hits to a website.
Is it possible?
Andrew,
The short answer is no – we have no involvement with sales data, this is collected by the REINZ and I do not believe that it is possible to identify location of purchaser.
I think it is important to remember the context of this data – this is trending data of lead indicator of interest – sure no one can identify the correlation between search / enquire / buy, however without this set of data we are only making suppositions about trends.
Only a very small sample but of my last 20 sales:
1 migrated here from the UK
1 Australian couple moving to NZ
2 Kiwi couples returning from Australia
1 Kiwi based in Europe
15 local residents either relocating from another suburb or moving within Pt Chevalier or Westmere
Very little sign lately of either ex pat Kiwis or fresh migrant arrivals.
Most of the activity has been people taking advantage of good market conditions for trading up ie a seller of a $650,000 home may have got $750,000 at the peak but the seller of a $1.1m home may have got $1.3m at the peak.
So better off by $100,000 trading up in this scenario than you were in late 2007.
We now have only one home left for sale that is not under contract and that has an offer being negotiated this evening.
Volume of homes on the market in Pt Chevalier today is 16 – that’s the lowest I have seen in 10 years. At an average sell rate of 15 homes per month we have only just over one months stock left on the market.
If there was a migration surge we would not have much left to sell them!
If we could get another 25 or 30 homes in the $450,000 to %$900,000 range we could sell the whole lot within 3 weeks.
So far this year over 70% of our homes have had multiple offers presented and most sold in less than 3 weeks.
Sellers have been prepared to take less and realistic asking prices have been seeing results.
I would like to hear some commentary/opinion as to why there are so few people wanting to sell at the moment.
Do they think it’s a really bad time to sell, want to wait for a recovery, trapped by high early repayment penalties? It all seems very strange to me.
Personally I had several potential sellers who decided to stay put as the pressure came off when they refinanced at less than 6% for 3 or 5 years just over a couple of months ago.
Valuable insight Ross – thanks for that.
We will be releasing our monthly “NZ Property Report” for the month of May on Monday 1st June and it will be interesting to see the state of the new listings that have been added to the market. Certainly from my conversations around the industry this message of a low level of listings (quality listings is a phrase I have heard).