New Zealand’s new Labour prime minister elect has banned non-resident foreigners from buying existing homes anywhere in the country in a bid to address a shortage of affordable housing.
PM-elect Jacinda Ardern, who is coming to office thanks to a coalition led by the Labour party she leads, says her country is “no longer for sale” adding “We have agreed on banning the purchase of existing homes by foreign buyers.”
In an interesting parallel with the current complexion of the British Labour leadership, Ardern has in the past gone on the record as saying the capitalist system was a "blatant failure" in the provision of homes.
Foreign ownership and the housing shortage in some New Zealand cities were key issues in the campaign ahead of the September 23 election; in the past month a coalition has been formed between Labour, the Green Party and a party called New Zealand First.
Knight Frank’s summary of global house price rises found the annual increase in NZ was 10.4 per cent; the Real Estate Institute of New Zealand reports that prices in the capital city, Wellington, have risen 18.1 per cent in the past year.
Property consultancies have given stark warnings of how the new government’s policies may impact on the housing market.
On New Zealand news website Stuff the economist Nick Tuffley says the Labour pledge to stop the off-setting of rental property losses against their other income, and to increase the liability of capital gains tax on investment property resales, could hurt the market.
"There's a degree of uncertainty largely for property investors, they're facing the potential for tax changes that come through to make property investment less attractive. What that suggests is, in the short-term at least, property investors will remain cautious" he says.
The research head of consultancy CoreLogic, Nick Goodall, says prices may be stagnant for six to 12 months as investors assess whether to stay in or leave the housing market.
In Britain, measures ranging from higher taxation to an outright ban on overseas buyers have been advocated in the past from a range of groups including right-wing think tank Civitas; a study commissioned by London Mayor Sadiq Khan found that overseas buy to let investors bought 3,600 new build homes in the capital between 2014 and 2016, many appropriate for first time buyers.
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This is no different from import duties, quotas and bans, it’s a restriction on free trade, protectionism is a failed strategy and a typical one adopted by socialist governments bent on proving two plus two equals five
Hi we are far from a free market in terms of housing. We have ultra low interst rates, QE, funding for lending, tax relief for land lords and help to buy. The anti free markets steps to lower the strength of the £ and reduce lending costs have given an unfair advantage to foreign investors to buy a large amount of the housing cost pricing out locals.
When we have teachers, nurses, police priced out of London and yet all the newbuild properties are marketed to the South East Asian market we have a problem. Homes should be built for shelter (a basic need) not as an investment opportunity for foriegn investors. So yes I am happy for foriegn investors to be banned from the UK property market. However I have no issues with foriegners buying properties here if they come here to work and add to our economy.
Sorry Brit, I accept the problem but not the cause and not the solution, there is no way foreign investors are pricing out local buyers, the opposite, they have caused more property to be built and helped control rents through expanded supply, you can’t end a drought by turning off the taps, we need a bigger reservoir
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