This afternoon, the Reserve Bank of New Zealand raised the Official Cash Rate by another 50 basis points to 3%, its highest level since 2015. The Reserve Bank of New Zealand now expects the Official Cash Rate to peak at 4.1% as it tackles inflationary pressures, up from its previous forecast of 3.95%. Monetary Policy Committee members believe monetary conditions need to tighten further to bring annual inflation back within the target range of 1–3%. Keep following YIJU New Zealand's upcoming articles for more on how this OCR increase will affect mortgage rates.
Of course, recent news for the property industry has not all been bad. Under the 2021 fast-track residence programme announced by the New Zealand Government last year, Immigration New Zealand has so far approved one-off resident visas for 84,000 people. Applications for this special visa closed at the end of July. According to figures published on Immigration New Zealand's website, it has received 106,000 applications to date, of which more than 43,000 have been approved. A OneNews report last month noted that most migrants applying for the 2021 fast-track visa came from the Philippines, China, South Africa and India, and worked in sectors including construction, education, health and primary industries. Such a large influx of new residents is unprecedented good news for New Zealand's currently subdued property market. Under the relevant rules, new migrants holding New Zealand resident visas are eligible to buy property once they have spent at least 12 months in New Zealand and lived here for at least 183 days during the previous 12 months. They are then exempt from the ban on foreign homebuyers introduced in October 2018. More importantly, most of these migrant families have a steady income, which has helped them qualify for the one-off resident visa and can also enable them to obtain a mortgage covering a proportion of the purchase price.
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Over the past fortnight, real estate agents around the country have reported a general increase in buyer enquiries. Nick Kochhar, a partner at Harcourt Mt Roskill, has noticed a sharp rise in recently approved residents eager to buy property. He said that over the past six days alone, he had received enquiries from 20 new migrants interested in buying new builds. An open home for another property he was marketing attracted 9 groups, eight of whom said they had received their resident visas in the past few weeks and were very keen to buy.
Kochhar said many prospective buyers attending these open homes were Asian migrant families who had moved to New Zealand 6–7 years ago and planned to buy a home as soon as they gained residence. They appeared very excited and were considering using their bank savings either to buy property or to start a business. These buyers knew that, rather than paying high weekly rents for their current 3- or 4-bedroom homes, it made more financial sense to put that money towards buying. Kochhar said these new migrants, buying to meet their own housing needs, were mainly interested in new builds priced at NZ$800,000–1,100,000, because they could buy with a deposit of just 10%, even without participating in the KiwiSaver first-home assistance scheme. The 20% deposit required for an existing home could put them off that option. He also noted that these first-home buyers urgently needed sound guidance from real estate agents to help them understand that buying a home of their own was preferable to paying rent that serviced their landlord's mortgage.
Sara Hartigan, a mortgage adviser with Umbrella Group, said she had noticed the same trend. Since the end of July, increasing numbers of new migrants holding resident visas had approached her for advice on buying a home. They had waited patiently for their visas, and with the property market now cooling, she believed they should seize the opportunity: buying now was a very sensible move. Hartigan also agreed that they were mainly considering new builds, as this was the type of property most currently lived in, and they preferred new homes to older existing properties. For first-home buyers, a new build could avoid many additional maintenance costs and offer good value. Hartigan expected more new migrants to join the house hunt over the next three months.
Encouragingly, this surge of new migrants looking for homes is not confined to populous Auckland. Steve Lovegrove, head of real estate company McDowell, said agents in Rotorua, where his company operates, had noticed the same phenomenon over the past week: far more recently approved residents than usual were looking for properties. Meanwhile, Lodge real estate salesperson Blair Pointon said he had sold a property near Waikato Hospital in Hamilton last week to a couple who had just gained residence. He believed their motivation was easy to understand from a buyer's perspective. Many new migrants wanted to build their lives here and buy a home, but had seen property prices rise wildly in the preceding period. Now that prices had fallen, they were entering the market without hesitation. He found that buyers looking in Hamilton were mainly seeking entry-level freehold properties priced at 500,000–900,000. Hamilton Lake and Melville, for example, were popular with hospital workers, many of whom were new migrants.
Immigration adviser Kelly Coetzee said most applications under the special residence programme had been submitted from March 2022, and Immigration New Zealand had begun issuing resident visas to these migrants in early July. Around 21 of her clients received approval last month, far more than in previous years. She expected the remaining applications to be approved over the next 3–4 months, and Immigration New Zealand had told them all applications would be processed within 12 months. She found that new migrants were very excited when they gained residence. Many had lived in New Zealand for years, waiting for their resident visas while saving in preparation for buying a home.
These views give us reason to believe that a large influx of recently approved residents into the property market will provide a rare piece of good news following the local market's downturn. YIJU New Zealand therefore spoke again with several experienced Auckland real estate agents for a deeper interpretation, aiming to present the most accurate possible picture of the market.
Rocky Liu
Barfoot & Thompson Northcote branch
Residential sales team
Gavin Han
Barfoot & Thompson Mt Albert branch
Sales consultant
Q: Have you and your team noticed a recent increase in buyer enquiries? What proportion comes from new migrants whose resident visas have just been approved?
Rocky Liu：Overall, homes that meet essential housing needs and properties with scarce, sought-after features remain relatively popular. New migrants account for around 20–50% of enquiries for these homes, depending on the property type and location. Properties offering access to education and convenient transport are particularly popular.
Gavin Han：That is certainly consistent with the market feedback I have received. Quite a few recent open-home visitors have just had their resident visas approved. Most are looking in the 800,000–1,200,000 price range. They are relatively flexible about location, but give more consideration to the condition of the house and its surroundings.
Q: Will these 106,000 new migrant families become the next source of growth for the housing market?
Rocky Liu：My answer is: it depends. The key is the balance between supply and demand, and whether new migrants can become a major buying force that fills the gap in transactions caused by the current downturn. Although their housing needs are essential, this does not necessarily mean they will buy. Front-line feedback from immigration advisers suggests that a proportion of the “lucky fast-track migrants” have expressed the following concerns, which indirectly affect their willingness to buy. 1. A sense of belonging: they may not immediately integrate into mainstream society culturally or in their everyday habits, indirectly reducing their motivation to buy a home and settle down. 2. The feasibility of funding a deposit and having sufficient disposable income: as we all know, buying a first home is generally difficult, and the deposit is often the first hurdle. Without support from family or other sources, new migrant families need considerable time to save a deposit of NZ$100,000–200,000, delaying their purchase. Like everyone else in New Zealand, new migrants are also struggling with the high prices brought by inflation. Their greatest challenge is adapting their spending habits to cover basic food, daily necessities and transport, while organising their savings more effectively under the pressure of today's high mortgage rates.
Gavin Han：New migrant families entering the housing market will become a major source of enquiries for some time to come. However, the prices they pay and the speed at which they buy will depend on bank lending policies and the influence of media coverage. If the process of viewing and buying takes too long, I believe their impact on the market may be limited.
Q: What advice would you give new migrants buying their first home?
Rocky Liu： There is no universally perfect piece of advice, but I would focus first on assessing the stability of your employment and its potential for sustainable development, particularly in the post-pandemic era, when the economy remains somewhat uncertain. Before buying, consult property professionals and treat your purchase as a business plan. Use a business mindset to develop your own plan, analysing the 2 dimensions of purchasing power and market conditions as thoroughly as possible to identify the gap between the actual market and your ideal property, both in expectations and affordability. Plan your search for a bargain and prioritise value over price. This may help new migrants seize good-value properties whose availability can be fleeting, putting their first purchase on a fast track to capital growth and helping them get ahead in building personal wealth. Please contact our team members. We would be very happy to help you grow your wealth through property investment and avoid unnecessary detours.
Gavin Han：I believe buyers should avoid excessive hesitation and being overly influenced by outside opinions and media coverage. When buying your first property in New Zealand, be clear about your needs and purpose: is it primarily a home to live in or an investment? Do your homework and list your essential requirements, such as an easy commute, convenient motorway access, school zoning or proximity to friends. View properties actively and set yourself a timeframe for making a decision. Arrange a building inspection and consult a lawyer. A home purchase can easily involve millions, so do not let the inconvenience put you off or try to save on these necessary costs.
The views above do not represent YIJU's position and are provided for reference only.