Fast track for foreign buyers ban
Wednesday 20 December 2017
ACT party leader David Seymour
Legislation banning foreign buyers from purchasing existing homes is being rushed through Parliament, after passing its first reading last night.
By Miriam Bell
The Bill will now head into the Select Committee stage – but this period has been truncated to February 20, which is a much shorter period than usual and includes the Christmas/New Year break.
Under the new law, only New Zealand and Australian Citizens, and permanent residents of both countries, would be able to buy an existing home in New Zealand without going through screening from the Overseas Investment Office.
Associate Finance Minister David Parker says the objective of the law is to ensure that the New Zealand housing market is shaped by New Zealanders.
The government wants to encourage foreign investment where it adds to the New Zealand economy, he says.
“But investment in existing homes by those who have no right to reside here, and no intention to live here, does not achieve that objective unless they add to housing supply.”
Parker says he doesn’t expect the change to have a huge impact on prices at this stage in the property cycle.
“But it would have a greater impact at other times, for example if and when overseas buyer interest surges again.”
While the Bill may have passed its first reading, it generated some fiery debate in Parliament and opposition from both the National and ACT parties.
ACT party leader David Seymour says the government’s decision to ban foreign home-buyers shows it has bowed to populist pressure and is not serious about tackling the housing crisis.
“The evidence from jurisdictions which have restricted foreign home-buyers is that these measures do not work.
“Hong Kong, Vancouver, Sydney and Melbourne have all banned or taxed foreign home-buyers and yet are still in the top ten least-affordable cities in the world.”
In his view, it is the Resource Management Act’s "bureaucratic processes, red-tape and anti-development bias" that has helped create the housing crisis.
"Until the government shows it is willing to fix the RMA and free up land for development, it cannot be taken seriously on housing.”
There needs to be separate urban development legislation, a prioritising of land supply, and a reducing of red tape on developers to address the housing crisis, he says.
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New Zealand’s housing market might be cooling but it’s in sync with global trends – unlike the Australian market’s dramatic decline, according to a major bank.
Investors interested in a property that’s a bit different, but provides good returns, should check out one of the niche sectors on offer in the commercial sphere.
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