Published: Wed, November 01, 2017
Global Media | By Garry Long

New Zealand brands property 'sensitive' to freeze out foreigners

New Zealand brands property 'sensitive' to freeze out foreigners

The biggest proportion of foreign buyers are registered in China.

September data from the Real Institute of New Zealand (REINZ) showed the country's largest city of Auckland had a median home price of $845,000 New Zealand dollars ($582,000).

Over the past decade, housing prices have increased 50 percent across the nation. It is the fourth least affordable housing market in the world, after Hong Kong, Sydney, and Vancouver.

New Zealand's new Labour government will define the country's two million residential properties as "sensitive" assets in order to prevent foreigners from buying them. Our weekly newsletter delivers the news and analysis you need on Canada's housing market.

Nevertheless, Labour's reforms are a huge improvement on the former National Government's do-nothing approach, which used New Zealand's FTAs as a convenient excuse to not change New Zealand's foreign ownership regulations.

"This is a policy that's created to solve a political problem, " said Steven Joyce, the National Party's finance spokesman.

Her government will introduce an amendment to the Overseas Investment Act to classify residential housing as "sensitive", which means that only residents will be able to buy existing residential dwellings.

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"The effect of this will be that non residents or non citizens can not purchase existing residential dwellings in New Zealand - with the exception of Australian Citizens", she said. The 11 TPP members had set a goal of reaching broad agreement on the pact on the sidelines of the Asia-Pacific Economic Cooperation meeting in Vietnam next week.

The ban is created to overcome a politically sensitive housing crunch that has priced many New Zealanders out of the market, with prices up more than 50 percent nationally in the last decade.

The new rules on foreign purchases won't apply to land, or to properties that haven't been built yet.

"The reality is there is going to be a change and a clear signal sent internationally that New Zealand is no longer for sale in the way it has been". The domestic law change on foreigners buying homes provides Ms Ardern with a work-around.

Ardern said the proposed change would not impact on any existing trade deals except the Singapore Closer Economic Partnership, but the government was working with Singapore on the options.

She later said she had accepted Ms Ardern's explanation and both parties had moved on.

She wants to introduce the legislation before Christmas and pass it early next year, before the TPP is ratified.

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