Wellington - New Zealand's parliament
passed a law on Wednesday to ban many non-resident foreigners
from buying existing homes, completing the Labour-led
government's election campaign pledge.
Jacinda Ardern, New Zealand's popular 38-year-old prime
minister, campaigned before September's election on a promise to
clamp down on house price growth and reduce high rates of
homelessness, in part by banning foreign buyers.
"This is a significant milestone and demonstrates this
government’s commitment to making the dream of home ownership a
reality for more New Zealanders," Associate Finance Minister
David Parker said.
Foreign ownership has attracted criticism in recent years as
New Zealand grapples with a housing crunch that has seen average
prices in the largest city, Auckland, almost double in the past
decade and rise more than 60 percent nationwide.
House price growth has tapered off in the past year in part
due to restrictions imposed on lending by the central bank,
which was becoming alarmed at the potential financial stability
risk of an overheated market.
Figures released by the Real Estate Institute of New Zealand
on Wednesday showed median house prices had slipped 1.8 percent
to NZ$550,000 ($360,140) in July from the previous month,
although they were still 6.2 percent higher than the same time
the previous year.
The government slightly relaxed the proposed ban in June so
that non-residents could still own up to 60 percent of units in
large, newly built apartment buildings but would no longer be
able to buy existing homes.
The International Monetary Fund called on the government in
July to reconsider the ban, warning the move could discourage
foreign direct investment necessary to build new homes.
Official figures suggest that the overall level of foreign
home buying was relatively low - about 3 percent of property
transfers nationwide.
However, the data did not capture property bought through
trusts and also showed property transfers involving foreigners
was highly concentrated in certain areas, such as downtown
Auckland and the southern scenic hot spot of Queenstown.
The majority of overseas buyers were from China and
neighbouring Australia, according to Statistics New Zealand.
"Is the ban wise or useful? We think it’s neither," said
spokesman Dave Platter of Chinese real estate portal Juwai.com.
"Foreign buying ... tends to be focused on new development,
making clear again that foreign investment leads to the creation
of new dwellings. That's vital in a market with a housing
shortage, like Auckland," he said.
The government has said the ban would not apply to
Australians and has been negotiating with Singapore, whose free
trade agreement with New Zealand allows foreign ownership, on
whether to grant an exemption.