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New Zealand Passes Law to Crack Down on Foreign Home Buyers
- bovermyer 8y agoHousing was already expensive in 2000, well before the current "foreign invasion." Perhaps they should try reducing the red tape required to build new homes.
- mc32 8y agoThey are not placing all blame on foreign soeculative real estate investors, but are assigning some blame, which i think is fair. Many countries require some form of either citizenship or residence in order to qualify as a real estate buyer.
- bovermyer 8y agoI didn't mean to suggest that foreign speculation was without blame. I just wanted to make it clear that that isn't the only, or even biggest, culprit in the current housing crisis.
- thatjsguy 8y agoHow would you prevent new housing stock from being similarly bought up?
- seanmcdirmid 8y ago> Many countries require some form of either citizenship or residence in order to qualify as a real estate buyer. ...like China.
- zorked 8y agoOr Switzerland.
- woolvalley 8y agoAnd many south east asian countries!
- kylestlb 8y agoAre there any numbers from areas with expensive housing that detail foreign investment as a % of total housing purchases? Would be an illuminating stat.
- jgibson 8y agoThey have a graph in the article that showed foreign ownership (not necessary as investment) that showed it at around 3% for NZ over all, with between 5-10% in popular places (Queenstown and Auckland)
- user5994461 8y agoForeign investments only go to the biggest city. It's meaningless to look at anything besides that.
- sdinsn 8y agoAccording to the Case-Shiller U.S. Home Price Index, house prices are almost 2x as high as Jan 2000. Is that not a significant increase to you (inflation was 1.5x during this time)? And that is an average, as urban areas have experienced fast growth.
- Tiktaalik 8y agoSeems reasonable to me. Housing should be for housing people, not a speculative financial investment. It's reasonable for cities to ask that people show that they have some skin in the game, that they're living, working, paying taxes and contributing to and enhancing the community.
- briandear 8y agoIf they own a house, they are paying taxes, so they do have significant skin in the game. They pay property taxes despite not using the local schools or most other city services. As far as not allowing housing as a speculative financial investment, there are some significant unintended consequences there.
- pouetpouet 8y agoway less than poeple living there. Unless there is some sort of a unique land value tax
- VectorLock 8y agoLike property tax?
- seanmcdirmid 8y agoYa, property taxes should act against such behavior, but many places like Vancouver lack one. Not sure about NZ, but it seems like property taxes are more of an American thing. Edit: oops, Canada does have a property tax, and New Zealand has something like it. So it’s just Australia (on first residences) and the UK that don’t. Well, China also. I’ll take my downvotes gracefully.
- goodJobWalrus 8y agoWe pay property tax in Ontario.
- 8y ago
- kartan 8y ago1. It is banning non-residents. You can be a national from any other country and still buy a house if you live there. 2. Watered down by interest groups: https://www.reuters.com/article/us-newzealand-economy-housing/new-zealand-softens-ban-on-foreigners-home-ownership-in-amended-bill-idUSKBN1JF01F https://www.reuters.com/article/us-newzealand-economy-housin...
- Max_aaa 8y agoHave they removed the "Trust" loophole? This is where you setup a local trust, and purchase the property through that trust (and not a non-resident). People can also still purchase properties through local proxies.
- vorg 8y agoProxy purchases would be common via the informal financing system in places like Wenzhou. It's hard to imagine how the NZ government could possibly enforce such proxy purchases, especially since Australians and Singaporeans are exempt from the foreign buyer restrictions. Australia, New Zealand, and Singapore all have high immigration from China, and such immigrants can easily act as the proxies of anyone with an informal business relationship with a lender in Zhejiang.
- newshorts 8y agoI wish my government cared about its citizens this much...
- mabbo 8y agoSounds like a good time to start a NZ real estate company that takes investments from foreign buyers, buys the houses they tell me to buy, and then rents it out to them when they visit at very low prices.
- lawnchair_larry 8y agoGood move. More cities need to adopt this. There is a flood of foreign capital into major western cities that is hurting those economies. And a lot of denial that this is happening.
- isostatic 8y agoLocal owns house they bought 20 years ago for $50k Local sells to foreign buyer for $500k Local has lots of money
- preordained 8y agoForeign buyer has to sell for significantly higher to profit..or just squat on it...not so great for local people looking for a house...
- munificent 8y agoLocal still needs to live somewhere Local buys an equivalent house to the one they sold for $500k + transaction fees, which scale based on the price of the house Local has less money than when they started
- isostatic 8y agoNot when the local is downsizieng from a 4 bed house and garden to a 2 bed apartment for retirement, or they simply die and it's local's kids that sell it. There's a simple solution to avoiding buying in expensive locations though - buy in cheap locations.
- wepple 8y agoSo the local sells to a foreign buyer and downsizes. That’s great for them. But their kids are now priced out of the market, and will never own a home but rent from someone who lives 15h flight away.
- 8y ago
- antisthenes 8y agoSounds like pulling up the ladder after all the people who bought the houses already climbed it. What about all the people who have already purchased and are just holding onto an empty house for speculative reasons?
- pc86 8y agoAre you suggesting the government steal their property?
- antisthenes 8y agoI'm not suggesting anything. If you can't respond without libertarian insinuations that government be the bad agent here and simply repossess the property, please don't. Feel free to come up with constructive solutions though.
- pc86 8y agoSaying "what about" the people who have already lawfully purchased property certainly has the implicit assumption that something has to be "done" about them, doesn't it? I didn't insinuate anything.
- goodJobWalrus 8y agoNo, but it could implement hefty property tax on properties owned by non-residents.
- breitling 8y agoHope the Canadian government learns from this. We desperately need it. (ya, I know I know there will be trickle down impact of so much foreign money pulling out, but average home price of $1.36MM is unbelievable for the local salaries)
- gaius 8y agoDitto the South East of England. London property is the new Swiss bank account for overseas oligarchs. Commercial property is fine for investment purposes but residential property should obviously be priority for, umm, actually resident people...
- twothamendment 8y agoIf they do, maybe the USA will learn from Canada. In my area the Canadians are the ones buying stuff up. Other than property taxes, their contribution is to all show up on the same weekend and empty the grocery store shelves - and driving up prices.
- craftyguy 8y ago> maybe the USA will learn from Canada Has the US ever learned anything from Canada?
- erentz 8y agoEveryone is being too optimistic about this law in NZ. It’s too watered down. Note it only bans existing homes. Foreigners can still buy new homes. (Unless that was changed.) This may have some affect but new houses and existing houses are all in the same market. If foreign buyers all shift to buying in the new construction market they will drive up prices of new houses, force residents that might’ve been looking for a new house to buy an existing house, continuing to drive up prices of all houses. I think if we see house prices drop significantly in NZ it’ll be more to do with other economic changes than this rule. (Note: I am in favor of requiring buyers of all property to be residents of the country. I think this should be pretty standard in any country.)
- RestlessMind 8y agoI hope SFBA does the same - not against foreigners per se, but against non-residents. Maybe a few ballot initiatives would help?
- jonahhorowitz 8y agoCorporations are people. It would probably be trivial to get around in the US.
- woolvalley 8y agoCorporations are also owned by people. You get around this by making the law look at the entire ownership graph and seeing the total percentages from that.
- ebikelaw 8y agoWestern cities have only themselves to blame for turning housing into an appreciating asset. Housing is not supposed to appreciate and if it does not then nobody would speculate in it. In cities where they just build housing, like Vienna (typical rent ~1000 Euros/mo), they don’t have a need of these kinds of laws.
- davidw 8y agoDing ding ding, we have a winnner! Housing can't both be affordable and an 'investment' that always appreciates in value. Focusing on 'the foreigners' is not addressing the root cause of the problem.
- aero142 8y agoAnd what would address the root of the problem?
- Apocryphon 8y agoIn the long-term, building more housing. In the short-term, cracking on speculators seems sensible.
- dllthomas 8y agoWouldn't a credible commitment to rapidly building more housing itself crack down on speculators?
- ebikelaw 8y agoThe problem is that in many places it is quite unlawful to build housing. The legal regimes exist to protect incumbent land owners. That’s an open invitation to speculators.
- dllthomas 8y agoIn one sense that's not a problem - in most cases the same body passing these laws could make new construction entirely lawful. But it does point at a root problem - that there's a meaningful chunk of the population that more-or-less wants things overpriced.
- throwawaymanbot 8y agoThis should be passed in lots of places. for example, Oligarch money is flooding in, and if you take NYC as an example, its pricing people out of the city. After sanctions were put in against russia, the prices of housing/apts in NYC dropped slightly for the first time in a few years.
- wepple 8y agoTo add some context: NZ regularly rates in the top 10 least affordable cities to buy a house. The last stat I saw was that median house prices were 9.7x median salary. That’s absurd for a relatively small city of 1.4m people. It has further negative effects: everyone gets into property as their only real path to financial freedom, with 95% of new loans using family financial assistance. It’s stifling innovation and business that could be providing employment and international business.
- refurb 8y agoIt’s no different in Canada. Yes, foreigners are buying property, but Canadians are doing an awesome job over-extending themselves on real estate including getting help from “The bank of Mom” for down payments. All in the name of “real estate always goes up” and “if I don’t buy now I’ll never be able to”. I don’t think it’s going to end well.
- nvarsj 8y agoSame thing in London, people overextend themselves to get on the property ladder. Prices keep going up and up.
- sjg007 8y agoNZ is a country.. not a city.
- Taniwha 8y agoExactly - Auckland is currently a stupid place to try and live in, not somewhere one would move to, the rest of the country is OK
- indemnity 8y agoWe’re working on making the rest of NZ Auckland too ;)
- wepple 8y agoIf you dig deep, you may be able to uncover the intention of that sentence. NZ has some of the least affordable property in the world. A tiny nation of 4m with minimal job prospects should never be able to achieve that title.
- onetimemanytime 8y agoLogical. I wonder if it's possible to designate certain parts as investment property...leasehold for 99 years and sell to the rich and tax them more. You want it? Fine, it will cost more both in price and maintenance. Buying homes also is good for the econ...from the builder to the security company later.
- John_KZ 8y agoGood. Every country needs such laws. From NZ to London to Spain to Iceland. If you live in a place and earn your income there you should be able to buy or rent residential property. Otherwise you have no business exploiting the inflexibility of the market to adjust the available housing. Rent is becoming an indirect tax to the rich in many major metropolitan areas around the world. And it's massive, often up to 50% of the median wage.