New Zealand's Parliament has passed legislation which bans most non-resident foreigners from buying existing homes, fulfilling an election pledge from Jacinda Ardern's Labour Government.
“This is a significant milestone and demonstrates this government’s commitment to making the dream of home ownership a reality for more New Zealanders,” said David Parker, Associate Finance Minister.
Parker previously told The Guardian that the new legislation would increase supply.
“We think the market for New Zealand homes and farms should be set by New Zealand buyers, not overseas buyers,” Parker said.
New Zealand Bans Home Sales To Most Foreigners: 'It's Not A Right, It's A Privilege' https://t.co/4779atN1Ll
— NPR (@NPR) August 15, 2018
“That is to benefit New Zealanders who have their shoulder to the wheel of the New Zealand economy, pay tax here, have families here. We don’t think they should be outbid by wealthier people from overseas.”
On 15 August, he told parliament: “We should not be tenants in our own land.”
Australians and Singaporeans are exempt from the ban due to pre-existing trade agreements.
Legislation passed in response to New Zealand’s housing crunch
In 2016, a survey by The Economist found New Zealand had the most unaffordable housing in the world. Home ownership among New Zealanders has declined markedly over the last 30 years; only a quarter of adults in the country own their own home, half the percentage that owned a home in 1991.
Public opinion has turned against foreign ownership in recent years as housing affordability has worsened. Average prices in the country’s largest city, Auckland, almost doubled over the last ten years.
New Zealand's parliament has put a stop to the latest craze among the super-rich: building themselves self-sufficient hideaways in case there's an… apocalypse https://t.co/h4VG6MGVlo
— Financial Times (@FinancialTimes) August 15, 2018
The idyllic country had even become a favoured destination for billionaires to set up ‘bolt-holes’, secluded pastoral strongholds they can flee to if an apocalyptic disaster occurs.
During the past year, house price growth has slowed after the central bank imposed restrictions on lending in response to the overheated market.
— TicToc by Bloomberg (@tictoc) August 15, 2018
Criticisms of New Zealand’s foreign ownership ban
Directors of the International Monetary Fund advised New Zealand against the ban in June of this year, saying it was unlikely to improve housing affordability.
Statistics suggest foreign ownership of homes in New Zealand is already relatively low with 3% of transfers involving a foreign buyer, though this rises significantly in major cities. Auckland, for instance, has a foreign ownership rate of 22%.
Opposition member Judith Collins said the legislation was unnecessary.
“We oppose the bill because we don’t believe that it actually fixes any problem,” she said. “It is, in fact, nothing more than an attempt to justify some of the policies of the incoming government.”