The Overseas Investment Amendment Bill came into effect this Labour Day, officially barring buyers without New Zealand residency or citizenship from the country’s property market.
The passing of the Bill aims to address chronic housing shortages and affordability issues, with the government hoping that more housing will now open up to New Zealanders looking to purchase property. The ban is restricted to single, standalone homes intended for residency, though foreign investors will still be able to purchase developments for the purpose of selling.
The ban has seen a flurry of overseas investors, most notably from China, rushing to ‘get in the door’ before it officially closed yesterday. Real estate data showed that buyer enquiries from China rose by 59% in the third quarter, though there are no current statistics on actual purchases.
“The data clearly shows buyers from China have been anxious to complete their transactions in advance of the rules,” said Carrie Law, CEO of Chinese real estate platform Juwai.com.
“In the long run, rules for work visas and permanent residency are more important for Chinese buying in New Zealand than are foreign buyer restrictions. Most Chinese buyers here are purchasing for their own use while living in New Zealand.”
The Real Estate Institute of New Zealand (REINZ) has been vocal about its disappointment of the Bill’s passing, saying that it will do very little to improve affordability given the relatively low numbers of foreign buyers within the market. Statistics New Zealand figures showed the proportion of foreign buyers fell from 3.3% in the March 2018 quarter to 2.8% in the June 2018 quarter, with the two ‘regions of concern’ - Auckland and Queenstown - also recording decreases. REINZ says that attention should be focused on increasing supply, reducing LVR restrictions and simplifying the home buying process.
“if we look at other countries that have implemented similar policies, we can see that it’s had a very minimal impact.” said REINZ CEO Bindi Norwell.
“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.”