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Title is too broad. "We have agreed on banning the purchase of existing homes by foreign buyers," said Ms Ardern My point is that non-residents will still be

Title is too broad. "We have agreed on banning the purchase of existing homes by foreign buyers," said Ms Ardern My point is that non-residents will still be able to build new houses. This policy brings New Zealand in line with Australia which already has a similar policy.

xxgreg 9y ago
Agreed. Funny that everyone is focusing on that point, which probably won't have much affect. I expect other policies such as below, will likely have more affect. Encouraging more housing at the lower end of the market seems like a good idea. Rather than pushing low income earners into the exurbs. "LABOUR WILL PARTNER WITH THE PRIVATE SECTOR TO BUILD 100,000 AFFORDABLE HOMES KiwiBuild will deliver 100,000 affordable houses over ten years for first home buyers. Half of these will be built in Auckland. That is a ten-fold increase in the number of affordable houses being built in Auckland each year, from 500 to 5,000." http://www.labour.org.nz/kiwibuild http://www.labour.org.nz/kiwibuild
- elyobo 9y ago
  The main price driver is speculation, so I'm not confident that increasing supply in anything except for absolutely massive numbers (which 10k/year is not) would have much price impact.
  - xxgreg 9y ago
    I think speculation is part of the equation, but not the only part. There is also lack of reasonably priced rentals and housing within a reasonable distance from transport infrastructure. Current build out is focused on the high end of the market, or green field sites in the middle of nowhere.
skybrian 9y ago
Also, it appears that residents of New Zealand (who may be foreigners) can buy existing homes [1]. So apparently it would still work if you can move there and establish residency, but not for buying a second home while living elsewhere. Seems pretty sensible? [1] "The country’s proposed ban on foreign buyers, which would only apply to non-domiciles" https://www.theguardian.com/world/2017/oct/25/new-zealand-to-ban-foreign-buyers-existing-homes-jacinda-ardern https://www.theguardian.com/world/2017/oct/25/new-zealand-to...
- raquo 9y ago
  No, it seems toothless, with obvious loopholes. A sane housing market is way more important than allowing temporary residents to buy a home. They can rent until they either leave or become permanent residents. Just look at Vancouver where incomeless foreign students are buying supermansions.
  - elyobo 9y ago
    Yeah, if they're planning on allowing those with only temporary residence rights to continue to buy then the policy is useless.
  - msie 9y ago
    It doesn't matter who's buying supermansions. Most people aren't looking to buy supermansions.
    - raquo 9y ago
      Obviously they're buying other houses as well, and not only students but other foreigners as well. This example is just a good illustration of toothlessness. Also obvious is that increasing demand on one type of housing puts upwards pressure on the prices of other types of housing because they are (in part) substitute goods.
    - soperj 9y ago
      everything in vancouver is priced as a supermansion.
  - deleted 9y ago
    [deleted]
dang 9y ago
We've added 'existing' above. Also changed the url from http://marginalrevolution.com/marginalrevolution/2017/10/seems-will-ban-foreigners-buying-homes-new-zealand.html http://marginalrevolution.com/marginalrevolution/2017/10/see....
elyobo 9y ago
Australia's is toothless though, in that enforcement is minimal and so are the penalties. NZ's may be equally crap or it may be quite effective, but I haven't seen details on the above and so it's hard to compare the policies at this point. A policy like Thailand's, where those found to be buying against the rules have their property taken off them without compensation, would be ideal. The next step would be to require that those that do not meet the rules sell up, which should put a bit of supply into the market and achieve some meaningful price movement. Another good step would be to finally bring in a decent capital gains tax, ideally charged annually on paper profits at whatever your marginal tax rate is, and with no family home exemptions. Ironically taxing the family home would, in this case, actually make them more affordable by exerting further pressure to move speculators out of the market.
- charlesdm 9y ago
  > A policy like Thailand's, where those found to be buying against the rules have their property taken off them without compensation, would be ideal. You can't do that in an open, globally connected economy though. As great and beautiful as Thailand is, it is still for the most part a corrupt developing country. You want to hold Australia or NZ, which should be open for business and wants to attract global investment by better protecting investor rights, to a much higher standard.
  - elyobo 9y ago
    I'm not proposing that we take on board the corruption, but of course you can have a law with appropriate penalties for violators of it in an open, globally connected country. We want people to invest; we don't want them to break our laws. Their rights (and the penalties that would apply to them) would be laid out under the law, so no problem at all.
  - flukus 9y ago
    We can't confiscate illegally obtained goods because we live in a open, globally connected economy?
  - indemnity 9y ago

xxgreg 9y ago

Agreed. Funny that everyone is focusing on that point, which probably won't have much affect. I expect other policies such as below, will likely have more affect. Encouraging more housing at the lower end of the market seems like a good idea. Rather than pushing low income earners into the exurbs. "LABOUR WILL PARTNER WITH THE PRIVATE SECTOR TO BUILD 100,000 AFFORDABLE HOMES KiwiBuild will deliver 100,000 affordable houses over ten years for first home buyers. Half of these will be built in Auckland. That is a ten-fold increase in the number of affordable houses being built in Auckland each year, from 500 to 5,000." http://www.labour.org.nz/kiwibuild http://www.labour.org.nz/kiwibuild

elyobo 9y ago
The main price driver is speculation, so I'm not confident that increasing supply in anything except for absolutely massive numbers (which 10k/year is not) would have much price impact.
- xxgreg 9y ago
  I think speculation is part of the equation, but not the only part. There is also lack of reasonably priced rentals and housing within a reasonable distance from transport infrastructure. Current build out is focused on the high end of the market, or green field sites in the middle of nowhere.

skybrian 9y ago

Also, it appears that residents of New Zealand (who may be foreigners) can buy existing homes [1]. So apparently it would still work if you can move there and establish residency, but not for buying a second home while living elsewhere. Seems pretty sensible? [1] "The country’s proposed ban on foreign buyers, which would only apply to non-domiciles" https://www.theguardian.com/world/2017/oct/25/new-zealand-to-ban-foreign-buyers-existing-homes-jacinda-ardern https://www.theguardian.com/world/2017/oct/25/new-zealand-to...

raquo 9y ago
No, it seems toothless, with obvious loopholes. A sane housing market is way more important than allowing temporary residents to buy a home. They can rent until they either leave or become permanent residents. Just look at Vancouver where incomeless foreign students are buying supermansions.
- elyobo 9y ago
  Yeah, if they're planning on allowing those with only temporary residence rights to continue to buy then the policy is useless.
- msie 9y ago
  It doesn't matter who's buying supermansions. Most people aren't looking to buy supermansions.
  - raquo 9y ago
    Obviously they're buying other houses as well, and not only students but other foreigners as well. This example is just a good illustration of toothlessness. Also obvious is that increasing demand on one type of housing puts upwards pressure on the prices of other types of housing because they are (in part) substitute goods.
  - soperj 9y ago
    everything in vancouver is priced as a supermansion.
- deleted 9y ago
  [deleted]

dang 9y ago

We've added 'existing' above. Also changed the url from http://marginalrevolution.com/marginalrevolution/2017/10/seems-will-ban-foreigners-buying-homes-new-zealand.html http://marginalrevolution.com/marginalrevolution/2017/10/see....

elyobo 9y ago

Australia's is toothless though, in that enforcement is minimal and so are the penalties. NZ's may be equally crap or it may be quite effective, but I haven't seen details on the above and so it's hard to compare the policies at this point. A policy like Thailand's, where those found to be buying against the rules have their property taken off them without compensation, would be ideal. The next step would be to require that those that do not meet the rules sell up, which should put a bit of supply into the market and achieve some meaningful price movement. Another good step would be to finally bring in a decent capital gains tax, ideally charged annually on paper profits at whatever your marginal tax rate is, and with no family home exemptions. Ironically taxing the family home would, in this case, actually make them more affordable by exerting further pressure to move speculators out of the market.

charlesdm 9y ago
> A policy like Thailand's, where those found to be buying against the rules have their property taken off them without compensation, would be ideal. You can't do that in an open, globally connected economy though. As great and beautiful as Thailand is, it is still for the most part a corrupt developing country. You want to hold Australia or NZ, which should be open for business and wants to attract global investment by better protecting investor rights, to a much higher standard.
- elyobo 9y ago
  I'm not proposing that we take on board the corruption, but of course you can have a law with appropriate penalties for violators of it in an open, globally connected country. We want people to invest; we don't want them to break our laws. Their rights (and the penalties that would apply to them) would be laid out under the law, so no problem at all.
- flukus 9y ago
  We can't confiscate illegally obtained goods because we live in a open, globally connected economy?
- indemnity 9y ago