Amid falls in the number of homes owned by New Zealand born residents, the New Zealand government have been accused of xenophobia after introducing a bill that would ban the sale of existing homes to foreign buyers.
Speaking in Parliament this week, Associate minister of finance, David Parker told MPs: “We should not be tenants in our own land.” He believes that introducing the ban will lead to housing becoming more affordable for locals and result in an increase in supply as construction companies are induced to build more smaller, family-friendly homes. Parker stressed that the government believes “the market for New Zealand homes and farms should be set by New Zealand buyers not overseas buyers.”
The National Party’s finance spokeswoman Amy Adams believes the ban is “xenophobic” and has already sent a chill through the international business investment community. Business confidence is already suffering and is at its lowest level since 2008. Her view is that if the Bill becomes law, it’s likely to “make the problem far worse.”
A Growing Problem
Recent years have seen people, mainly from China and other parts of Asia, the USA and the UK moving to New Zealand. The country is seen as a safe haven amid rising terrorism, civil unrest and fears of a nuclear war.
Statistics illustrate just how big a problem the New Zealand housing market has become. A report published by the Economist last year found that the country has the most unaffordable house prices in the world.
Under the previous centre-right National Government, the amount of land sold to foreign buyers saw a dramatic increase. In 2016, the figure was 465,863 hectares (1.63m acres), six times higher than in the previous year equating to 3.2% of farmland in the country which only has a population of 4.7m people.
The last economic quarter has seen 10% of homes in the popular Queenstown Lakes district (where USA multi-millionaires Peter Thiel and Matt Lauer have homes) and a fifth of homes in Auckland central, where house prices increased by 7555% before a recent fall, being bought by overseas buyers. Overall, 3.3% of homes sold in the last quarter were foreign purchases.
Home Ownership Falling
Another damaging statistic is the fact that in the past 27 years the number of adults in New Zealand owning their own home has fallen from 50 to 25%. The last five years has also seen an increase in the number of people who are homeless. With New Zealanders having to live in garages, cars and under bridges, it’s clear some action must be taken.
The proposed ban will apply to all nationalities except for Australia and Singapore. Foreigners would still be able to buy apartments in large-scale block developments. Peter Thiel would still be able to buy property as the previous government gave the PayPal co-founder New Zealand citizenship despite having only spent eight days in the country, something the current government won’t allow in the future.
Bill Could Affect Overseas Investment says Economist
The government plan has committed to building 100,000 affordable new homes in the next ten years and increase social housing stock by 6400 homes in four years. However, those plans have met with criticism with economist Shamubeel Eaqub saying they lack ambition. Of the foreign buyers ban, he believes it would make it “cumbersome” for those overseas to invest in building new housing stock in New Zealand leading to less homes and apartments being built.
“Locking out multi-million-dollar buyers doesn’t mean developers will start building smaller, basic houses. There is never a market for poor people, it is not profitable to build houses for poor people. That’s the challenge,” he said.