New Zealand bans foreigners from buying homes to combat soaring house prices

New Zealand bans foreigners from buying homes to combat soaring house prices

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New Zealand has sought to restore the “dream of home ownership” by banning foreigners from buying homes – a move its government hopes will tackle surging house prices.

It comes as the country passed legislation which only permits people from New Zealand to buy homes – with the exception of foreigners with residency status and those from Australia and Singapore, thanks to existing free-trade deals.

The housing market had been open to the world up until now and the country had seen scores of wealthy foreigners purchasing ranches in picturesque parts of rural New Zealand.

Wealthy Chinese buyers have also been known to outbid locals on suburban properties in the main city of Auckland.

However, statistics show just 3% of New Zealand’s homes are sold to foreign buyers in total. When broken down, the figures show it rising to 5% in the scenic Queenstown region, and 22% in central Auckland.

The International Monetary Fund’s executive board urged New Zealand to reconsider the legislation last week, saying it thought it was unlikely the move would improve affordability for New Zealanders.

The government though is convinced foreign buyers are driving up house prices and that the only question which remains is – by how much.

Associate Finance Minister David Parker said: “We’re here today to take another step toward restoring the great New Zealand dream of home ownership.

“This government believes that New Zealanders should not be outbid by wealthier foreign buyers.

“Whether it’s a beautiful lakeside or oceanfront estate, or a modest suburban house, this law ensures that the market for our homes is set in New Zealand, not on the international market.”

Opposition politician Judith Collins said the bill was not needed, adding: “We don’t believe that it actually fixes any problem.”

Foreigners who already own property will not be affected. And the new legislation still allows overseas buyers to make limited investments in large apartment blocks and hotels.

Houses in New Zealand remain among the most expensive when compared with average income.

Real Estate Institute of New Zealand figures show the average house price in Auckland is 835,000 New Zealand dollars (£431,000) and nationally NZ$550,000 (£284,000).

(c) Sky News 2018: New Zealand bans foreigners from buying homes to combat soaring house prices