In a bid to tackle a chronic housing shortage and homelessness among citizens, New Zealand has proposed a ban on foreigners buying existing homes.
Alongside the ban, the proposals include building 100,000 affordable homes, preventing sell-offs of state housing, and offering more funding to ease homelessness. Housing speculators selling properties within five years of purchasing them could also see a new tax imposed.
But according to research from the Real Estate Institute of New Zealand (REINZ), the upcoming ban on overseas buyers purchasing property in New Zealand is expected to have a minimal impact on sales.
A survey recently undertaken by REINZ revealed that, currently, only a minority (3.8%) of buyers are from abroad.
REINZ chief executive Bindi Norwell said: “Ahead of the government’s upcoming foreign buyer ban, we were interested to understand exactly what percentage of residential sales were made to international buyers as there is minimal data available.”
Norwell added: “Our survey indicates that only a small number of sales are made to buyers from offshore – the clear majority of sales are made to locals (63.9%) and those from other towns or cities from within New Zealand (29.8%).”
Following Australia’s lead
New Zealand housing minister Phil Twyford said when Australia banned investors buying existing homes, $30bn was poured into new housing.
Twyford added that he hoped the same would happen in New Zealand, as the new regulations would still allow investment in new-build homes.
Economist Shamubeel Eaqub said that similar legislation in Australia helped create a building boom in Melbourne that had cooled the market.
“For New Zealand I think it makes sense for us to follow because we simply can’t keep up with population growth and demand growth, and taking away a little bit of demand at the margin will help, but this is not going to be the panacea,” he said.