The luxury property market is in line for a boost after the government announced it’s loosening the rules around foreign property ownership.

The changes linked to the golden visa scheme will allow high-net-worth buyers to purchase high-value properties, requiring a minimum $5 million investment into New Zealand.

New Zealand’s largest full-service real estate company, Bayleys expects the move will entice more vendors into listing their properties for sale, helping to boost activity at the upper end of the market.

“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 slow-down, it will help to restore overall confidence,” says Bayleys National Director of Residential Johnny Sinclair.

“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.”

While Sinclair has welcomed the move, he says he’d like to see the criteria 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 million mark outside of Queenstown and Auckland, because it's such a small part of the market that it is unlikely to affect everyday Kiwis trying to get onto the property ladder.”

Sinclair says over the last financial year just 963 residential and lifestyle properties were sold for more than $3 million across the country, of which only 20% were sold outside of Auckland and Queenstown.

“When you look at Auckland, the median sales price currently sits around the $1 million dollar 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.”

Sinclair expects Auckland and Queenstown to see the most benefit from the recent changes, alongside other pockets up and down the country.

“There will be parts across the Bay of Islands, as well as Omaha, Matakana, Hawke’s Bay and Mount Maunganui where there’ll be a boost in activity as well.”

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.”

With the OCR currently at 3% and further cuts expected before Christmas, Sinclair says there’s a lot going on to restore market confidence.

“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 buyer ban send a really good, strong message that we're trying to get things back on track.”

For more information, contact your local Bayleys office or salesperson.