Source: “New Zealand Passes Ban on Foreign Homebuyers Into Law,” Reuters
Lawmakers in New Zealand are hoping to combat soaring home prices and rising homelessness by banning nonresident foreigners from purchasing residential property in the country. “This is a significant milestone and demonstrates this government’s commitment to making the dream of homeownership a reality for more New Zealanders,” Associate Finance Minister David Parker told Reuters.
New Zealand officials have blamed an influx of foreign buyers in recent years for overheating the country’s real estate market. Home prices in Auckland, New Zealand’s largest city, have nearly doubled in the past decade; prices elsewhere in the country have risen more than 60 percent.
But government regulations on foreign buyers, such as tighter lending restrictions, helped to bring the country’s median home price down 1.8 percent month over month to 550,000 New Zealand dollars (360,140 U.S. dollars) in July. Still, that’s about 6.2 percent higher than a year ago.
The International Monetary Fund has urged New Zealand to reconsider the ban on foreign buyers, saying such investment is critical for the homebuilding industry and to address the country’s housing shortage. “Foreign buying tends to be focused on new development, making it clear that foreign investment leads to the creation of new dwellings,” says Dave Platter, spokesman for Juwai.com, a Chinese real estate portal. “That’s vital in a market with a housing shortage like Auckland.”
The majority of foreign buyers in New Zealand are from China and Australia, according to Statistics New Zealand. The government says the ban does not apply to Australians.