Asia Minute: New Zealand Restricts Foreign Real Estate Purchases
The rapid rise of housing prices is a concern in many places around the country---including Hawai‘i. Different communities are taking various approaches to deal with that trend. And one of the most distinctive is coming from New Zealand.
New Zealand is banning most foreigners from buying property.
Parliament passed a law this week that will bar most non-resident foreigners from purchasing existing homes. The move is designed to help tamp down housing costs, which have skyrocketed more than 60-percent around the country in the last decade. They’ve spiked even higher in areas such as Auckland – where they’ve nearly doubled.
Not everyone believes the measure will have its desired effect. The vote in parliament was 63 to 57.
The International Monetary Fund warned the change in the law might slow foreign direct investment.
Critics say foreign buying represents a relatively small part of real estate sales. Less than 3-percent of overall sales in June, according to the Real Estate Institute of New Zealand.
The government agency Statistics New Zealand says the biggest foreign buyers are from China and Australia.
The move should slow Chinese investment, which has grown dramatically in recent years, but it will have no effect on Australian buying. That’s because of free trade agreements — which make residents of Australia and Singapore exempt from the ban.
The government’s associate Finance Minister called the move a “significant milestone,” saying it “demonstrates this government’s commitment to making the dream of home ownership a reality for more New Zealanders.”