In a move to provide housing as a right to residents of New Zealand, the new Prime Minister Jacinda Ardern announced new measures to stop the escalation of housing prices which have been attributed to foreign homeownership. Under the proposed housing legislation, Australians and foreigners who are New Zealand citizens or residents would be exempt. Foreigners could also continue to buy residential land to build new homes. Restrictions would also be enacted to limit the foreign ownership of farmland and infrastructure.
But the idea that prices are being driven up by foreign homeownership is itself controversial. As an opposition leader noted in The Globe and Mail “This is a policy that’s designed to solve a political problem. Evidence in both Australia and here in New Zealand is that overseas buyers don’t have a significant impact on the housing market”.
The legislation will be introduced in November with enactment in early 2018. Australia is watching these proposed changes as cities such as Sydney and Melbourne grapple with foreign buyer purchasing available properties. In New South Wales eleven per cent of properties were purchased by foreigners, with 33 per cent being purchasers from China.
A four per cent foreign investor surcharge was introduced in New South Wales which has now been doubled to try to cool the housing market. House prices in Sydney have also doubled since 2009. Australian research suggests that foreign buyers have not impacted housing prices, noting that the price increases may be a surge of activity among “domestic investors, who continue to benefit from generous tax breaks and account for about 40 per cent of all property purchases.”
November 1, 2017