New Zealand to implement ban of foreign buyers
New Zealand is set to ban foreign buyer from buying property in the country
In its bid to resolve the property crisis, New Zealand is preparing itself to ban foreign property buyers purchasing property in the country. The ban on foreign buyers purchasing established property in the country was on the list of campaign promises made by the country’s newly-elected Prime Minister Jacinda Ardern. It was a major issue during the election campaign.
The influx of foreign property buyers has driven property prices higher. Currently, New Zealand is facing a crisis of home affordability for its citizens. The policy of ban on foreign property buyers is already in place in New Zealand’s neighbouring country of Australia but it exempts New Zealanders and New Zealand is expected to reciprocate. Prime Minister Jacinda says that her government is determined to make it easier for Kiwis to buy their first home. The law will come into effect next year after amendments to the country’s Overseas Investment Act takes place this year. After the amendment takes place by Christmas, the housing sector will be classified as “sensitive”. The Jacinda government is a coalition one which includes the New Zealand First Party and Green Party. The leader of New Zealand First Party, Winston Peters, played a key role in forming the government.
According to figures by Real Estate Institute of New Zealand, property prices in the country have soared 10.4 per cent over the past five years. The figures are high for the capital city of Wellington and Auckland. Prices have risen 12 per cent in the capital, while the rise is 8.1 per cent in Auckland. Auckland featured fourth on the list of 92 major cities in the world which was dominated by Hong Kong, Sydney and Vancouver. The survey by Demographia showed that it took more ten times the city’s median house price of $746,225 (£563,026).
However, some analysts do not agree that foreign buyers are exclusively responsible for driving the prices up. They cite a number of other factors to be responsible for the soaring house prices. According to them, the policy will not have much impact as seen in the case of Australia. Sophie Chick, head of research at Savills says that foreign buyers are blamed for property crisis, but there are other factors such as low interest rates and an imbalance between supply and demand that are also responsible for the issues facing the property sector, as seen in the case of Sydney. She said the ban will have little impact on the market and not change it fundamentally. New Zealand’s Trade Minister, David Parker said that if the ban is not done now, it cannot be done ever.