Great Britain’s exit from the EU sent shockwaves around the world as each country wondered how this change would affect their economy and culture. Given our close ties with the UK, many of us in New Zealand have been especially curious about the local impact that Brexit may have. In the real estate community, there has been a lot of discussion about how Brexit may affect property prices. While it’s all speculation at this point, a few early reports show that some Brits are wondering if New Zealand might be a better place to call home. Only time will tell whether this will greatly impact our markets or if it’s only a knee-jerk reaction to the referendum.
Increased interest in New Zealand property and immigration
Following the June 2016 referendum, Stuff reported that the popular real estate website realestate.co.nz experienced a 27% increase in web traffic from British visitors. What’s more, these visitors spent about 8 minutes of time looking at the website. According to a spokeswoman from realestate.co.nz, this represents a higher than normal level of engagement and activity from UK site visitors.
Stuff also noted that UK traffic to the Immigration New Zealand website more than doubled immediately following the UK’s decision to leave the EU. An official from Immigration New Zealand reported that they received 2169 registrations of interest from Brits in just 3 days. In a normal month, they usually receive 3000 registrations.
Potential impact on the NZ property market
These two reports make one thing clear – British nationals are definitely thinking about greener pastures after the Brexit referendum. At the moment we can only speculate how an influx of British immigrants will impact our property market. Presumably, the Brits who do move here will have the financial resources needed to immigrate. This means that they’ll be in a position to purchase property or secure a comfortable rental home. An influx of would-be property owners tends to drive up property prices. This is great news for anyone wanting to sell, but disappointing for Kiwis looking to purchase a new home or investment property.
An influx of renters could exacerbate the rental crisis
We can also assume that these new arrivals would need to rent a property in New Zealand while they look for a home to purchase. We predict that this will further drive up weekly rental rates, especially in larger cities will Brits are most likely to settle. Again this is great news for landlords who will benefit from a larger tenant pool and increased profits, but could lead to disappointment to local tenants who can’t afford higher rents.
How soon can we expect changes?
The question on everyone’s mind is WHEN. When will Brits begin arriving? When will I start to benefit from an increase in rental rates? I don’t think we should expect an instant deluge of immigrants. For many Brits, the immigration process will be slow. While NZ offers a number of visas for young people, skilled workers, professionals, and retirees, Immigration NZ are notoriously choosy and the process can be long and drawn out. My guess is that we will start seeing an increase in British immigrants in the next 2 – 3 years. Of course, those fortunate enough to hold dual citizenship could arrive even sooner.
Is it time to prepare for an influx of Brits?
Despite all the speculation, the reality is that immigrating to a new country is a daunting process. While many Brits may be dreaming of a move to New Zealand, the reality is that far fewer of them will actually arrive here. Bottom line – I don’t think you need to rush out and buy a new property because you’re worried about a price hike as a result of Brexit.
That being said, there’s no time like the present to ensure your rental property is as appealing as possible. Put in a little extra money and elbow grease over the coming years and you might soon be landlord to new arrivals. Or you might retain your current tenants even longer! There’s really no downside to keeping your investment property attractive and rentable.