New Zealand Clamps Down On Foreign Property Buyers

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Expats in New Zealand may be netted in a property crackdown aimed at foreign investors.

Prime Minister Jacinda Arden wants to cool house price inflation and blames foreign investors for cashing in and making a short supply of homes even worse.

Many of the overseas buyers come from Australia and China.

Arden pledged to introduce an Overseas Investment Act that will stop so much investment from overseas with a register of foreign-owned property and a ban on anyone who does not have permanent residence from buying a New Zealand home.

“We have agreed on banning the purchase of existing homes by foreign buyers,” said Arden.

Shortage of homes

Expats must have held a resident visa for 24 months before applying for permanent residence in New Zealand and shown a commitment to live permanently in the country.

Commitment can be shown in several ways – by the amount of time spent in the country, investing in New Zealand, having tax residence or starting a business, for example.

Home prices rose an average 3.9% across the country in the year to the end of September.

But data from the Real Estate Institute of New Zealand shows patchy rises and falls.

Capital city Auckland has an average home price of NZ$850,000 –  a 3.2% drop across the year and the sharpest drop since September 2010.

The only other place to experience a price fall was Nelson, where prices were down 6.8%, which was the largest fall for the area since April 2012.

Rubber stamping

Other areas saw prices up as high as 14.4% in Otago, 11.5% in Manawatu Wanganui and 9.9% in Waikato.

Bindi Norwell, CEO at REINZ said: “As we’ve seen for some months now, prices across the country have continued to increase, albeit at a slower rate than the increases we’ve seen in some regions for the last couple of years.”

The government is also tightening up rules on selling forests and farmland to overseas buyers.

A directive orders that any sale of more than five hectares should be referred to the Overseas Investment Office for rubber stamping.

Finance Minister David Parker said: “The only reason that a New Zealand seller sells to a foreign buyer is that they are willing to pay more.”

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