A new law was passed in New Zealand on Wednesday, August 15, that no longer allows foreigners to buy property in that country. The only nation exempt from this ban is Australia, while Singapore is in talks with the government of New Zealand for a similar exemption. Both nations have entered into free trade deal with New Zealand that permits foreign ownership.
Prime Minister Jacinda Ardern included in her campaign promises last year a pledge to prevent an increase in the price of housing and to decrease the number of the homeless, through disallowing foreigners from purchasing property.
The law passed on Wednesday showed that Ms. Ardern is serious about fulfilling her pledge.
Associate Finance Minister David Parker called the new law “a significant milestone and demonstrates this government’s commitment to making the dream of home ownership a reality for more New Zealanders.”
A housing crisis has caused the average price of housing to double in the past ten years, at least in Auckland, the nation’s biggest city. Around the rest of the country, the price of houses has gone up by more than 60 percent. This has given rise to criticism of foreign ownership of property.
The increase in house prices has leveled off recently because of restrictions from the central bank, in concern over the possible risk of financial instability due to a housing market that’s become overheated.
Data from the Real Estate Institute of New Zealand recently showed that the median house prices have dropped by 1.8 percent to NZ$550,000 ($360,140) from June to July, but this figure is still 6.2 percent higher than figures for 2017.
The International Monetary Fund (IMF) has asked New Zealand to re-think the ban, since it could possibly discourage direct foreign investment that is allotted for property development.
Most foreigners who buy property in New Zealand are from China and Australia.
Dave Platter, a representative of Chinese real estate portal juwai.com said, “Foreign buying … tends to be focused on new development, making clear again that foreign investment leads to the creation of new dwellings. That’s vital in a market with a housing shortage, like Auckland.”