New Zealand government issued a bill banning the sale of existing residential properties to foreign buyers in an effort to make housing more affordable to residents. The ban is applicable to all nationalities except to buyers from Australia and Singapore.
Under the Overseas Investment Amendment bill, foreign buyers are prohibited from purchasing existing properties but they will be allowed to purchase new apartment complexes in large scale block developments and other specified parts of the real estate market.
The government believes that this new law will entice construction companies to build smaller, family-friendly houses.
David Parker, Associate Minister of Finance said “We think the market for New Zealand homes and farms should be set by New Zealand buyers, not overseas buyers”
“That is to benefit New Zealanders who have their shoulder to the wheel of the New Zealand economy, pay tax here, and have families here. We don’t think they should be outbid by wealthier people from overseas.”
On Wednesday he told the parliament:
“We should not be tenants in our own land.”
New Zealand has become a popular haven for the rich and famous like billionaire investor Peter Thiel and former NBC host Matt Lauer.
New Zealand Prime Minister Jacinda Ardern is blaming foreign buyers for the soaring prices of residential properties. The market value of houses have doubled over the past decade making it difficult for the local residents to buy properties in their homeland.
Economist Shamubeel Eaqub remains lukewarm to government’s recent move. He believes that the bill would discourage foreign investors to get involved in building new housing units:
“The kind of property that billionaires buy is never going to be used for public or social housing. Locking out multi-million dollar buyers doesn’t mean developers will start building smaller, basic houses. There is never a market for poor people, it is not profitable to build houses for poor people. That’s the challenge.”