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New Zealand bans sale of homes to foreign buyers

August 16, 2018 06:31 AM


New Zealand bans sale of homes to foreign buyers
New Zealand’s government will ban foreigners from buying residential property, making good on its promise to crack down on offshore speculators who it says are partly to blame for spiraling house prices.

The Overseas Investment Amendment Bill, which places limitations on foreign purchasers, passed its final reading in parliament on Wednesday in Wellington.

The restrictions will take effect within two months of the law receiving formal assent from the Governor General, the symbolic head of state, associate finance minister David Parker said in a statement.

“This government believes that New Zealanders should not be outbid by wealthier foreign buyers,” said Parker, who shepherded the legislation through parliament.

PM Jacinda Ardern campaigned on a foreign buyer ban in last year’s poll, saying overseas speculators had driven up house prices and made property unattainable for Kiwis. Prices have surged over 60% in the past decade amid record immigration and a construction shortfall, driving home ownership to its lowest since 1951.

The new law classifies residential land as “sensitive”, meaning non-citizens can’t purchase existing dwellings without the consent of the Overseas Investment Office.

Foreign buyers will need to show they are either increasing the number of residences and then selling them, or converting the land to another use, the government said. They will need to convince regulators that whatever they do will have wider benefits to the country. The government has faced objections from investors who have warned that the ban may curb broader investment and hurt New Zealand’s reputation in offshore markets.

Dominick Stephens, chief economist at Westpac Banking Corp said: “We simply do not know how the foreign buyer ban will affect the market.” Westpac’s expectation is that annual house-price inflation will slow to around zero by the end of 2018, he said. Overseas investors will still be able to buy new housing, particularly apartments, rentals and homes under rent-to-own or shared- equity arrangements

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