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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.”
 
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Comments

  1. “…foreign buyers do not affect the domestic market.”
    Someone please inform Kerry Gold and Elizabeth Murphy.

    1. “Evidence in both Australia and here in New Zealand is that overseas buyers don’t have a significant impact on the housing market” is the quote. And it’s true.

      1. Yes, I get that, Dan. But Gold and Murphy seem to lead their readers into the narrative that it’s primarily foreign wealth that has driven housing prices to the stratosphere, and that the act of developing on the land follows closely behind. By inference banning foreign ownership of real estate and slowing development will be some kinda magic pill.
        Meanwhile, supply (housing and land) are dismissed along with upzoning now-obsolete large lots in a land-constrained Metro. Cheap mortgages and the sheer weight of regional demand also do not receive any analysis from these quarters.

        1. I think you misread my reply, Bob. I agree with you that foreigners are scapegoated for the normal effects of supply-and-demand capitalism. I can’t say they have zero influence, as they do add to the demand pool. But in NZ as in BC, prices are high because there is more demand than supply.
          NZ Labour’s new restrictions (still not outright bans) on foreign ownership are a short term political move. Not one that will ‘help’ anyone other than the politicians who proposed them.

    2. You keep beating this tired drum Alex. Tell me, how many local buyers would qualify for a mortgage on the $2 million it requires to buy a house west of Main these days, with even 20% down? Doug Porter, Chief Economist at BMO, did a study that showed even Canada’s 1% couldn’t afford a home in Toronto worth $100k in hand. Imagine how it is in Vancouver:
      http://www.huffingtonpost.ca/2017/03/17/toronto-one-percenters-priced-out-of-housing_n_15427692.html
      So unless you have some super secret data that the lead economist for one of our big banks has, why not stop with obfustication and faux outrage?

      1. The tied drum beating is all about the unaffordability of the West Side and SDHs on large lots in the context of a finite land supply, as if that example applies to the entire Metro.
        I hate to break it to you, Bob, but that Dunbar house sitting on a 4,000 ft2 lot you so lust after is just not gonna be affordable ever again. It’s time you faced up to this fact.
        Meanwhile, the city will hopefully start allowing infill and low rises in SDH districts east of Main where land is far cheaper.

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