Will borders opening affect the property market?
Will open borders bring a flood of new buyers? Experts think not.By Trade Me Property team 24 February 2022
If you’re preparing to sell, and you’re harbouring hopes, after the border opens from 27 February in stages, that returning Kiwis are going to come back into the country in floods, and snap up your home for squillions, think again.
A number of economists say the border opening could just as easily unleash a flow of Kiwis out of the country possibly outnumbering Kiwis coming home. Kiwis looking to return aren’t taking the current border opening dates as definite either, say real estate commentators, so they’re treading carefully.
Will it make a difference?
CoreLogic chief property economist Kelvin Davidson says he’s indifferent about the border openings ahead. “I don’t know if it changes the game too much,” he says
“There may be a few more Kiwis coming back but the world is opening up faster than us, so outflows could be faster than inflows,” he says. Some younger Kiwis will go back to their plan of going travelling and doing their OE before settling down and buying a home in NZ.
The credit crunch and rising mortgage rates will more likely affect the real estate market than net migration, he says. Anyone coming back isn’t going to go straight into buying a house, he adds. They’ll have to have three months of financial records and then it’ll take some time to find somewhere.
If returnees already have property here and have continued a relationship with their bank through that ownership, they’ll find it easier to buy their next home, says Kelvin.
Cameron Bagrie, an independent economist, says a number of houses in New Zealand have already been bought by Kiwis overseas, closer around the time of the first lockdown in 2020. That buying activity was particularly been seen in the Auckland market.
“There were a lot of sight-unseen purchases where people made de facto real estate commitments back in NZ,” he says. They’ve rented the homes out for a period until they’re ready to return, he explains.
Some people will arrive, others will leave
Cameron has no doubt that when the borders open, the allure of other countries will attract some Kiwis away.
“At the end of the day, the global economy is learning to deal with Covid quicker than we are, they’re opening up, whereas we have this very risk-averse approach. The freedom that people have got overseas will be very enticing for a proportion of New Zealanders,” says Cameron.
But everybody around the globe, including Australia, will be scrapping for skilled and unskilled employees, predicts the economist. For skilled professionals in IT, money’s going to talk and in some instances, technology will be a great leveller, says Cameron. You could live in New Zealand and collect a global salary.
Director of Residential Sales at Bayleys, Johnny Sinclair is sanguine about the opening of borders and the effect on the real estate sector.
Open borders are only going to add to our cause, says Johnny, who says Kiwis and skilled migrants coming into the country would typically represent 5% to 8% of the buyer pool.
And they won’t act in a rush when they return, he predicts. “What we’ll see with people who have spent a long time overseas, is they’ll be looking at which region to live in and they’ll rent for six months or so,” he says.
Kiwis are likely to rent upon arriving in the country.
Kiwi returnees likely to rent first
CEO of Goodwins Properties, Catherine Goodwin, says she saw a lot of inquiry for rental homes from overseas families in December anticipating the then 17 January border opening and she’s hoping that demand will come back. Often, the first signal she has of returning Kiwis is through their relocation agents and inquiry on the Goodwins website, she says
For families from the executive market. they may have put off coming home until the Northern Hemisphere school break in June.
Many expat Kiwis coming back will rent while they determine what to do next, she says.
Goodwin has a good selection of large homes, fully furnished which is useful for families coming home with their furniture in the packing.
She finds returning families have done a lot of due diligence on where they want to live before they arrive back. One family she helped was coming from Canada and hadn’t lived in New Zealand for 20 years. One of the parents grew up in Mt Albert and they were keen on renting and buying something there.
“It never changes, what you know provides a bit of comfort when you’re making such a huge move,” says Catherine.
Where are Kiwi expats looking for property?
Central and Eastern Bays Bayleys sales agent, David Nightingale has seen inquiries from overseas-based Kiwis prior to Christmas, some of whom came close to buying at auction.
The bulk of inquiry he’s seeing is from Australian-based Kiwis, as well as some in Singapore and others in the UK, he says.
Those who have family or friends looking on their behalf until they arrive tend to be more engaged, says David.
10 Vista Crescent, Glendowie, Auckland City.
Buyers looking in the $3 million-plus price bracket may be uncertain when they can get back but would have no trouble finding tenants for their home until their return in, say, three or four years’ time, says the Bayleys agent.
An international audience is watching the real estate market in New Zealand, he says. And he doesn’t think they’ll be in a rush. He stresses for those coming from overseas looking for bargains, won’t have much luck.
Most of the vendors are financially strong and aren’t going to discount their homes. They can sit and wait longer. They can afford to test the market and if they’re not offered a fair price they won’t sell, he says.
Pt Chevalier agent, Ray White’s Lawrence von Sturmer says he’s hearing from Kiwis overseas, for instance a client who lives in Sydney but is working in Dubai at the moment.
Expat buyers can expect to see more houses selling by negotiation and by asking price, rather than by auction in Auckland, says Lawrence. It’s a bit harder to get finance and this will suit overseas Kiwis as they prepare to come home, he believes.