New Zealand – Pixabay
New Zealand – Pixabay
In an attempt to regulate and stimulate the local housing market, New Zealand has taken a bold step in banning the sale of homes to foreign buyers.
According to proponents of the foreign buying ban, housing prices in New Zealand have skyrocketed beyond the means of average citizens. This unaffordability has led to the lowest rates in local home ownership, and the highest rate of homelessness, in over 50 years.
The new homeownership law, first reported on by The Independent, has been welcomed by politicians and residents – but economic analysts have warned that disallowing foreign buyers from entering the housing market may stifle growth.
The Overseas Investment Amendment Bill passed its final parliamentary hurdle on Wednesday and will come into effect in two months time.
Statistics, used to exemplify the current housing crisis within the country, point to New Zealand having amongst the highest cost of housing in the world compared to residents’ total income.
This imbalance has resulted in only a quarter of New Zealand’s adult population owning property. Housing costs in the country have ballooned more than 60% in the last decade.
The worst affected cities are Queenstown and Auckland – the latter owing 22% of its housing market to foreign interests.
David Parker, New Zealand’s associate finance minister, commented on the progressive piece of legislature, saying:
“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.”
While the new bill prohibits foreigners from owning homes in New Zealand, there are some noteworthy exceptions.
Namely, foreigners with New Zealand residency status will still be allowed to buy and sell property. This also extends to people from Australia and Singapore, owing to existing free-trade agreements.
Further exceptions include foreigners who already own property in New Zealand.