New Zealand Implements Law Banning Foreigners From Buying Property
The Parliament of New Zealand implemented its law banning non-resident foreigners from purchasing existing homes. Prime Minister Jacinda Ardern kept her election promise to clamp down on the escalation of property prices and reduce homelessness rates by shutting down access to foreign buyers.
Prices have gone up 60% in the last decade and prices have doubled in Auckland making it extremely difficult for young Kiwis to purchase their first homes. Ardern put the blame on overseas speculators and made housing a major campaign issue during election period.
Associate Finance Minister David Parker lauded the passing and official implementation of the law:
“This is a significant milestone and demonstrates this government’s commitment to making the dream of home ownership a reality for more New Zealanders.”
However, critics do not see the Labour-led coalition’s move as the answer to the problem because banning foreigners won’t create much of an impact in a market where economists estimate there is a shortage of around 100,000 homes.
Bindi Norwell, Chief Executive at the Real Estate Institute of New Zealand (REINZ) believes there are better and more feasible measures to address spiraling prices of property:
“Increasing the level of supply, speeding up the consenting process, creating consistency at Councils around New Zealand and reducing LVR [Loan to Value] restrictions for first time buyers are all more appropriate measures that will help with affordability ahead of banning offshore investors.”
Dave Platter, spokesman of Chinese real estate portal Juwai.com, offered his opinion from the side of private enterprise:
“Is the ban wise or useful? We think it’s neither. Foreign buying tends to be focused on new development, making clear again that foreign investment leads to the creation of new dwellings. That’s vital in a market with a housing shortage, like Auckland.”
Real estate data revealed that foreign buyers from China are rushing to buy properties before the ban is fully implemented. Chinese buyer inquiries for houses in New Zealand rose by 59% in the third quarter, according to Chinese real estate portal Juwai.com.
A big number of young Chinese go to New Zealand each year to study and seek employment while others have chosen to invest in properties to serve as their retirement homes.