Real estate agency Paterson Luxury is reporting a surge of enquiries from Europe, the US and Asia following the National Party’s announcement that it would allow overseas buyers to purchase properties upwards of $2 million and tax those transactions at 15%
Caleb Paterson of real estate agency Paterson Luxury, says news of the policy reached buyers in offshore markets almost immediately, triggering a surge in calls to his firm. He has since been fielding enquiries from high-net-worth buyers from around the globe.
“There has been pent-up demand from our international clients who have been unable to access New Zealand property for the past six years, and they are highly motivated to seize this potential opportunity.
“While many of us are struggling with the cost of living and current interest rates, for those without budget limitations, New Zealand is a very desirable place to live. Internationally we are perceived as a ‘safe haven’ following COVID-19 and as the Ukraine war continues to impact Europe,” he says.
Paterson says there is a significant difference in buyers looking for a $3m property compared to those at the $30m+ end of the market.
He says there is even potential to scale the level of taxation so that those at the upper end pay a greater percentage.
“While paying $4.5 tax on a $30m property may sound significant to most of us, the opportunity to purchase in New Zealand freely outweighs any tax the government would throw at them.
“If this policy is introduced, it will be a return to a time when we are dealing consistently with billionaires again. This segment will come in and buy what they need and what they want – with little concern for price if the property is right.
“The higher the price point of property the less the buyer is concerned with tax, and it is possible that taxation for this segment could be scaled so that these buyers pay 20% or even 25%.
Paterson believes an influx of these buyers will also help arrest the decline in the construction sector.
“We know that with all of the new legislative changes and new building code coming out in September it is going to be even more costly for Kiwis to build. However, the introduction of foreign buyers could stimulate the construction as foreign buyers seek to build more luxury properties, or domestic buyers downsize and build something smaller of their own.
“Greater access for foreign buyers could also pave the way for international developers to come back into New Zealand, purchase larger land lots and create more housing stock for the general market,” he says.
He says if the policy were to be introduced before Christmas, they would expect a flood of activity in January.
Paterson says demand for property is already high in Auckland, Queenstown and Northland.
“There is huge interest from some of the billionaires we are dealing with for property in the Bay of Islands. They are looking for acres of land on the water so they can park their launch, but also have room to land their helicopter. These buyers want to fly in with their friends easily and also need room to build additional amenities,” he says.
Paterson’s advice for local buyers and vendors now is relative to their personal circumstances.
“Buyer activity is really strong at the moment. I have $50m worth of listings coming on the market in the next six weeks and I have had a call from every single homeowner waiting to know if they should wait.
“For buyers, they should be trying to grab stock right now but from a vendor’s perspective, they might be better off waiting – depending on what their needs are and whether they plan to reinvest in the market once they sell.
“For those looking to move sideways, it is irrelevant. But if you are looking to downsize, there could be significant potential upside to holding off.
“Regardless of this, this policy would bring a flood of money into New Zealand,” he says.
