The rumours have been circulating for months, and now the luxury property market is officially open for some overseas business after the government announced it’s loosening the rules around foreign property ownership for high-net-worth individuals.

Since 2018, only citizens, tax residents and nationals from Australia and Singapore have been able to freely buy houses in New Zealand. But now the changes linked to the so-called ‘golden visa’ scheme will allow high-net-worth buyers to purchase or build high-value properties, requiring a minimum $5 million investment into New Zealand.

At the time of the announcement, Prime Minister Christopher Luxon said there had already been more than 300 applications for the Active Investor Plus residency visa since it was re-launched in April, and if all of those applications are approved, it means a minimum of $1.8 billion worth of potential property sales.

Bayleys National Director of Residential Johnny Sinclair says a further 100 applications have been submitted since, and expects that activity to continue ramping up.

“Around 55% of them are from the United States, but there’s also been strong enquiry from Hong Kong, Korea, and Taiwan. Because of that, I suspect that there will be a lot more transactions that will take place over the coming months, and while it’s not going to completely solve the market slowdown, it will help to restore overall confidence”

“What’s also important to remember is that in the luxury market, the work doesn’t just stop with the real estate agent; it also creates work for mortgage brokers, lawyers, accountants and tradies. It’s not just a transaction play; this move will benefit the overall economy.”

But even before the latest changes were announced, Sinclair says his team noticed an uptick in overseas enquiries.

“I'm on a call with global independent real estate consultancy Knight Frank every single month, and there have been definite murmurings out of Europe and Asia. They're reading the news, and they certainly have their fingers on the pulse.”

Now with the OCR currently at 2.5% and potential for a further cut before Christmas, there’s a firm belief that the government’s move will also do a lot to help restore confidence right across the market.

“In a tough market, confidence is low, and in a buoyant market, people are happy to transact, because they believe the economy is doing well. So anything to turn confidence around is going to help.”

“I think changes to the foreign buyers ban sends a really good, strong message that we're trying to get things back on track at every end.”

WHAT LOCATIONS ARE SET TO BENEFIT?

Around 0.5% of New Zealand’s property market sits in the $5 million-plus price bracket, which equates to around 7000 homes. Sinclair says 80% of that comes out of Auckland and Queenstown and expects those centres to experience the most benefit from the recent changes, alongside other pockets up and down the country.

“Auckland offers a combination of waterfront living, premium schools and connectivity, while Queenstown delivers that unparalleled alpine lifestyle, world-class golf and adventure tourism.”

Around 1500 homes worth more than $5 million are scattered across other locations, and Sinclair says a number of listings are attracting attention.

“We’re expecting to see heightened activity in lifestyle destinations such as the Bay of Islands, Omaha, Hawke’s Bay and Mount Maunganui, which tick both the lifestyle and investment boxes.”

“We’re talking about beachfront estates in Omaha, vineyards and lifestyle blocks in Hawke’s Bay. These properties don’t just offer a house, they offer a complete lifestyle package, and with supply at this end of the market traditionally tight, they represent rare opportunities.”

As for the kinds of buyers most likely to enter this part of the market, Sinclair says he’s typically seen strong demand from the US, Hong Kong, China, Singapore and the UK.

“The easing of restrictions is expected to reignite that interest, particularly among expats looking to return home or invest in a safe haven market. Enquiries from Europe are also picking up, and with ongoing global uncertainty, New Zealand is increasingly viewed as a stable and attractive destination to live, work and invest.”

WHAT ARE SOME OF OUR AGENTS SAYING?

Heather Walton from Bayleys Omaha says she’s already seeing a boost in activity following on from the announcement.

“Not only fresh enquiry, but people who enquired about homes a lot earlier in the year have come back to enquire again and have progressed from an online query to coming in to see the property in person.”

With buyers from the US and Australia, she says a lot of what’s driving them is lifestyle changes, and a location that makes them feel safe and secure. Walton is also expecting to see a raft of new listings over $5 million too.

“It's given vendors a renewed confidence. Some who have previously lowered their price expectations below $5 million are also now feeling more confident about holding their price and are happy to weather the storm a bit longer to test that the market is on the mend.”

In Queenstown, Bayleys salesperson Sarah McBride has seen a similar level of enquiry.

“They’ve come from a range of locations, but we’ve mostly seen contact out of the US and parts of Europe.”

Like Walton, McBride believes vendors will be encouraged to push go on listing their high-end properties now that the landscape of overseas buyers is much wider.

“But it may take some time for us to see the full effect, as there are still queries around timeframes and what the process is regarding the visa process.”

In the meantime, she says that other buyers appear extra motivated to purchase before the market lifts.

“It has definitely created a sense of urgency in the market from buyers that we haven't seen for a while now. Enquiries from Australia are very strong currently.”

On Auckland’s North Shore, Bayleys salesperson Victoria Bidwell says the uptick in enquiry levels has been growing steadily in recent months in the lead-up to the announcement.

“I’m currently working with buyers who have already been approved to buy, and in some cases fast-tracked, from the United States, United Kingdom, and Germany.”

“There are also buyers I’m working with from mainland China and Hong Kong. Most are families relocating to New Zealand with plans for their children to attend school here. Others are retirees seeking a high-quality lifestyle.”

She says New Zealand continues to appeal as a “bolt hole” and a safe and beautiful destination for wealthy buyers.

“Especially those with family ties here, or those wanting an overseas living experience in a safe haven with their children whilst in the primary school years.”

She also believes international interest could push some homes valued around the mid-$4 million mark up into the $5 million bracket.

Gary Wallace from Bayleys Remuera says the overseas buyers he’s been dealing with are mostly from the US.

“These buyers have been quite selective and have been specific and focused around Te Arai and Tara Iti golf courses, Kinloch in Taupo and the Queenstown Lakes District.”

He says while he doesn’t expect the announcement to open the floodgates, that it’s definitely a step in the right direction.

“We see it being a very measured approach. It’s a good start, which should provide a much-needed boost in confidence across the high end of the market.”

COULD THE GOVERNMENT GO FURTHER?

While Sinclair has welcomed the move, he says he’d like to see the criteria for holders of the Active Investor Plus residency visa widened even more.

“I would like to see it go further. I'd like to see the rules allow for the purchase of property above the $3 - 4 million mark, because it's such a small part of the market that it’s unlikely to affect everyday Kiwis trying to get onto the property ladder.”

Over the last financial year, just 963 residential and lifestyle properties were sold for more than $3 million across the country.

“When you look at Auckland, the median sales price currently sits around the $1 million mark, so I think we can afford to have a pragmatic approach to this. What we're trying to do here is bring in foreign investment to help our economy, and I think this is a fantastic way to attract high-net-worth individuals to New Zealand.”