New Zealand plans to make sweeping changes on regulations for foreign investments on residential properties, as it seeks to solve an ongoing housing crisis.
The government will implement a ban on offshore buyers to bring down surging home prices. In Wellington, for instance, property values have increased by 57 per cent over the past ten years. The restriction, however, will not include foreigners’ plans of building new houses.
Still, the ban will provide locals with a wider selection of properties, including those in Hawera. First National Mills & Gibbon has noted that Real estate sales have increased 17.8 per cent in November, possibly because of foreigners making the most of the time left before the ban takes effect.
Foreign Investment Ban
The ban will exempt buyers from Australia and likely those from Singapore. These foreign nationals may acquire properties without the need for screening tests. The government may still allow Singaporean buyers, so as not to affect New Zealand’s free trade agreement with the country.
Foreign buyers will no longer be able to buy homes beginning in early 2018. Housing Minister Phil Twyford said that this move would allow Kiwis, especially first-time buyers, to find a house that suits their budget.
This has forced many people to become homeless due to the rising property prices in the country. A Yale University study in July estimated that 1 per cent of the population, or around 40,000 Kiwis, live on the streets or in emergency accommodation.
Exemption to the Rule
According to Land Information Minister Eugenie Sage, the ban will allow overseas buyers to acquire properties, if they can prove that the transaction will increase the housing supply or convert the residential property for other purposes.
We will have to see whether or not the ban will improve affordable housing in New Zealand, although it is better than doing nothing about the current problems in the country’s residential property market.