Banning overseas buyers
Its been 2 years in the making and on October 22nd 2018 the new Overseas Investment Amendment Bill became law, restricting overseas buyers from buying existing housing in New Zealand.
Let’s look at what this means and who this affects.
The government wants to slow down the property prices in New Zealand and make it more affordable for kiwis to purchase a home. Even though international buyers only count for around 3% of national house transfers (Stats NZ) the government still feels this bill is protecting sensitive land. The Government wants this law to work alongside KiwiBuild, other social housing and the Urban Growth Agenda.
Existing homes will remain off limits to non-residents but people from Australia and Singapore will be exempt from the ban due to free-trade rules but must be screened by the Overseas Investment office.
For those holding a resident visa, that has been living here for at least a year including at least 183 days in the past year, will still be able to purchase a home.
The new bill does not affect those foreign buyers who already own property in New Zealand, but will do if they wish to purchase another property.
Where overseas buyers can purchase are new apartments in large developments and multi-story blocks bought off plans. This is strange considering if you want to purchase a new apartment you compete against foreign buyers, this will still push prices up.
The Government needs to look at lifting LVR restrictions for home buyers and speeding up councils red tape which will increase supply. Right now, the market has completely softened and will do so for a number of years until the next boom. But the challenge is the cost of labour, materials and construction is so high that the cost of building a home will continue to increase no matter who buys them.