A ban which prevents foreign property investors from buying property in New Zealand came into force earlier this week.
In recent years, foreign property investors have been blamed in some quarters for driving up property prices throughout the country, with values in some areas of New Zealand having increased by more than 60 per cent in the last ten years.
In response, the government had planned a blanket ban on all foreign property investors looking to enter the country’s property market. However, earlier this year that approach was relaxed slightly. Non-residents are now allowed to own up to 60 per cent of units in newly built apartment buildings, but not existing homes.
Australians and Singaporeans are also exempt from the ban, as are foreigners who hold NZ residency permits.
Yet critics believe that simply banning foreign property investors from purchasing a home in NZ will not make a huge difference to the housing situation, with economists estimating there is already a shortage of around 100,000 homes.
“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,” said Bindi Norwell, chief executive at the Real Estate Institute of New Zealand (REINZ).
Indeed, official figures suggest foreigners only account for 3 per cent of the homes bought nationwide, though the data does not capture property purchases made through trusts and corporate entities.
Article published 23rd October 2018