Labour's 'half-baked' property data turns Chinese buyers into 'scapegoats'

NZIER principal economist Shamubeel Eaqub says Labour's data on overseas-based Chinese buyers turns them into scapegoats ...
Chris Skelton/Fairfax NZ

NZIER principal economist Shamubeel Eaqub says Labour's data on overseas-based Chinese buyers turns them into scapegoats for Auckland's property problems.

A lack of legitimate data about foreign property buyers has led to "half-baked" information verging on racism in the Auckland housing market, an economist says.

New data released by the Labour Party suggests overseas-based Chinese buyers are increasingly purchasing Auckland property.

Labour's housing spokesman Phil Twyford has released details of 3922 Auckland property sales carried out by "one of Auckland's leading real estate agencies", which he refuses to name, from February to April.

NZIER economist Shamubeel Eaqub says there are a number of factors influencing Auckland property prices and it was ...
Photo: Joseph Kelly

NZIER economist Shamubeel Eaqub says there are a number of factors influencing Auckland property prices and it was unfair to point the finger at Chinese foreign buyers.

Labour then grouped buyers into ethnicities based on surnames using electoral roll data.

Following the surname analysis, Labour found buyers of Chinese descent accounted for 39.5 per cent of sales in Auckland during the period, Twyford said.

The figure is more than four times the 9 per cent level of ethnic Chinese in Auckland's population who are New Zealand residents or citizens.

Labour housing spokesperson Phil Twyford says his party's analysis of Auckland property sales figures shows foreign ...

Labour housing spokesperson Phil Twyford says his party's analysis of Auckland property sales figures shows foreign buyers are snatching up Auckland homes.

"That's an enormous discrepancy. I don't believe there's any other plausible explanation that could account for such a large discrepancy other than that foreign buyers, offshore Chinese investors, have a very significant presence in the Auckland real estate market."

But NZIER principal economist Shamubeel Eaqub said the data was problematic. He said New Zealand was "in the darkness" when it came to legitimate and real data on foreign buyers.

"In the absence of that, what we get is this half-baked information from people - we have no idea what they have done with the data or where the data has come from."

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Eaqub said it was hard to understand the legitimacy of Labour's data without knowing who supplied it and the conditions surrounding the figures.

"It draws this line across race and ethnicity, which is very damaging for a multi-cultural, welcoming place like New Zealand."

The increase of property buyers with Chinese and Indian surnames corresponded with the inflow of recent migrants, he said, adding that recent migrants were largely Chinese and Indian.

Based on Labour's data Chinese surnames Wang, Zhang, Li and Chen were the top four buyers, with Kaur and Singh also appearing in the top 20.

Statistics New Zealand migration figures showed the country recorded its highest ever net gain of permanent and long-term migrants for the year to May 2015 of 57,800.

Indian migrants led the way, with 12,100 settling in New Zealand during the 12 months to May. Chinese migrants followed with 7700.

The fact that Chinese and Indians were buying property fitted with the life stage and financial position of those migrants, Eaqub said.

Information compiled from the migrant figures from Statistics New Zealand and Auckland house sales data from REINZ shows Auckland house price gains closely follow migrant net gains (see graphs).

Eaqub said in the current climate it was impossible to have a conversation about Auckland housing without people pointing the finger at Chinese foreign buyers.

"It's really important that we talk about housing in New Zealand because the situation in Auckland is a crisis. Housing is ridiculously unaffordable.

"But we also know that there's probably a whole bunch of different things that are driving house prices higher and to point the finger at just one cause, which is kind of the scapegoat route, is not helpful and that persists in the absence of legitimate accurate information."

Massey University's Quarterly home Affordability Report for the three months to February 2015 found housing affordability in New Zealand improved by six per cent during the period but Auckland bucked the trend.

Auckland homes had become 22 per cent less affordable during the year to February, according to the Massey University report.

The government has refused to set up an overseas buyers register like Australia uses, but said in this year's budget that foreign buyers would need to have an IRD number and a New Zealand bank account from October.

Eaqub said these conditions, coupled with transparency of the data, would paint a more accurate and legitimate picture of who was buying property in New Zealand.

There was a "real urgency" to get legitimate data, he said.

Twyford agreed that the government needed to make data relating to foreign buyers accessible.

There would not be a debate about the legitimacy of the data if the government gathered data about foreign buyers and made it publicly accessible.

It was "cynical" and "irresponsible" of the government to deny this was an issue and to refuse to make the data available, he said, adding that if Labour was in power it would ban foreign buyers.

Twyford said Chinese-New Zealanders were also being disadvantaged by foreign buyers.

"Chinese New Zealanders, like the rest of us, want to have the dream of affordable home ownership.

"They want their kids to be able to buy a house in Auckland just like any other New Zealander.

"They are disadvantaged by offshore speculators, no matter where they come from, sitting on the other side of the world, trading in our houses for capital gain," he said.

"It's having a significant impact on skyrocketing house prices."

A New York Post article says similar things are happening in Vancouver's property market, with housing unaffordability leading to xenophobia towards Chinese buyers.

The Auckland housing crisis and the Chinese government's move to "dismantle" capital controls, which was expected to lead to billions of dollars of Chinese investment flooding into New Zealand, meant it was important to raise the issue now, Twyford said.

Housing Minister Nick Smith said Labour was playing the "oldest political trick in the book" by picking on one ethnic group.

Smith said Labour's data was not reliable, as it was from one real estate agency and made guesses at who was a New Zealander and who was not.

The housing issue was about supply, which was why the Government's focus was on getting more houses built, Smith said.

"The Government will not be making housing policy based on people's surnames."

Labour's figures showed Chinese buyers targeted more expensive properties, which tended to influence the rest of the market.

Buyers with a surname that indicated they were of Chinese descent made up only 33.1 per cent of sales between $400,000 and $600,000, but this rose to 36.1 per cent in the $600,000-$800,000 bracket, 42.9 per cent for $800,000-$1 million homes and 50.1 per cent of those buying properties sold for more than $1m.

In comparison, only 36.3 per cent for Europeans, the next largest group, bought properties that went for more than $1m.

Chinese sellers (23.1 per cent) and Chinese agents (35.7 per cent) were also out of proportion to the resident population, according to Labour's figures. While Twyford would not release the name of the real estate agency that supplied the figures, he said he was confident in the data, adding that it had been analysed by an independent source.

 - Stuff


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