Westpac: Foreign buyer ban poses negative effect

The foreign buyer ban will take effect in the coming weeks and will have the biggest impact on Auckland and Queenstown house prices, according to Westpac.

In its latest Home Truth report, Westpac said the impact on the housing market will clearly be negative but hard to say how negative.

Westpac chief economist Dominick Stephens compared the situation to Toronto’s stamp duty on foreign buyers, which was so high that it functioned like a ban.

He said, “Toronto house prices fell around 5% soon afterward. But New Zealand’s foreign buyer ban has been watered down, and is probably weaker than Toronto’s stamp duty.”

Stephens explained Australians and Singaporeans will still be able to buy houses in New Zealand and that foreign buyers will be able to purchase 60% of apartment complexes (units in new property developments of 20 units or more).

“The foreign buyer ban will have a negative effect on prices, but if there are enough new apartments to satisfy a good portion of the foreign demand for New Zealand property, the price impact will be a lot smaller than it would have been under a blanket ban,” he added.