The Real Estate Institute of New Zealand (REINZ) has been left disappointed by the passing of the Overseas Investment Amendment Bill, which it says will not have any significant impact on improving the affordability of the property market.
According to REINZ CEO Bindi Norwell, there is little evidence that a foreign buyer ban has had a positive impact where it has been introduced in other overseas territories, and a stronger focus on housebuilding initiatives would go a much longer way in addressing New Zealand’s affordability crisis.
“We’ve always maintained that the ban is not going to have a significant impact but the government was quite adamant to get Bill through parliament, so we’re not surprised that it’s passed the final reading,” Norwell told NZ Adviser.
“Nonetheless, if we look at other countries that have implemented similar policies, we can see that it’s had a very minimal impact. Australia currently has a similar policy in place, and it was announced only recently as being the least affordable country in the world. Looking at other cases across the globe, there is very little evidence that this kind of policy actually impacts well on affordability.”
To the government’s credit, Norwell says the amendments made to the Bill made as a result of market feedback will ensure that foreign investment is not completely cut off from new developments. Foreign buyers will still be able to purchase property so long as it is for non-residential purposes, or to support a business.
“The issue we had was that a lot of new developments rely on foreign ownership to help get them off the ground,” said Norwell. “The original policy didn’t allow that, so a lot of these projects would have fallen through at a time when we’re desperate for new houses. That has now been amended so foreign buyers can buy new builds, but they can’t live in them – they can only be used for investment. That at least is a positive, and it shows that the government has listened to feedback from the industry.”
“The focus should now be on building new houses,” she stated. “Initiatives such as KiwiBuild are great, but the question now is whether or not it will be enough. If they can put some energy around removing the red tape and making sure the consent process works effectively, then that will make a huge difference.”
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