New Zealand's rate of cash sales does not indicate any increasing presence of foreign buyers in the market, Property IQ says.
By Susan Edmunds
The firm of property analysts said it wanted to tackle the question of how many buyers were from overseas, in response to anecdotal information about people paying over the odds, particularly for Auckland property.
“While we can’t specifically nail down whether sales are in fact from foreign buyers, we can look at the proportion of house sales that were supported by a mortgage. This then gives us the flip side, the amount that didn’t have a mortgage and were therefore purchased freehold or ‘cash’.”
Between 2004 and 2007, the number of sales reached about 9000 a monthand up to 18% of those were done without a mortgage.
The downturn between 2008 and 2011 resulted in a drop to 3500 to 5000 sales a month and cash sales increased to a quarter of transactions. First-home buyers and investors were largely absent from the market.
From 2011, the number of sales picked up again and cash sales have been up to 20% of the market over the past year – similar to the previous boom.
Auckland has significantly fewer cash sales, of about 12% to 13% of turnover, compared to up to 23% in the rest of New Zealand. Since 2011, the percentage of cash buyers has dropped from about 15% to 12%.
Property IQ said that suggested there were not more cashed-up foreign investors in the market than usual.
Spokesman Jonno Ingerson said cash sales were most likely on mid-to-low value homes. He said there were occasions where many different types of buyer bid more than others thought was reasonable, to secure a home.
Many were buyers who were frustrated at having missed out on other properties, he said. “In the Auckland market demand is such that you can’t sit and think about it because someone else will come in and grab it.”
A lot of Christchurch sales are cash because they are made by people with EQC payouts.