The New Zealand government has announced a ban on the selling of houses to foreigners. The move came as a shock to some, assuming that it was a total ban. But the government was quick to clarify, stating that it only applies to foreigners that are not official residents. Foreigners who have residency will still be permitted to purchase and own homes.
But why has the ban been applied? The answer is a simple; there is a housing crisis in New Zealand, with the price of owning a house having been driven so high that many cannot afford to buy a home at all. The ban, very specifically, is aimed at lowering the prices of housing over time. If all goes according to plan, home ownership will soon become an affordable reality for many New Zealand residents who were previously not able to purchase their own abode.
As it stands, the only way many New Zealand residents would be able to own a home would be if they hit the jackpot while playing casino games. But how has the situation reached a crisis point, and could it have been avoided?
According to the New Zealand government, it’s a simple case of limited stock. Which is to say; there are simply not enough houses to go around. This is partly due to the massive influx of immigrants into the country, as well as houses being bought up by non-residential foreigners. While immigration figures for New Zealand have not been confirmed as yet, one only has to look at the 70% increase in immigrants in the USA since Trump came in to power to see how big the crisis could possibly be. And New Zealand is far smaller than the USA.
Many are saying that the ban on foreign house ownership should have been put in place long ago, which would have helped prevent the crisis from ever having occurred in the first place. This may be true, but with the ban now in place, hopes are that house prices will soon stabilise and decrease.
Who Does The Ban Apply To?
As already said, the ban does not apply to immigrants who have obtained residency in the country. Likewise, non-residential Australians and Singaporeans will also still be allowed to purchase houses. The ban applies to all other non-residents.
In a statement made by David Parker, the New Zealand Trade and Economic Development Minister, the reason for the ban was made clearer. He stated that he believes New Zealanders have a right to own a home and should not be at the mercy of the wealthy living abroad. He also declared that the passing of the bill was a significant milestone.
Critics Raise Eyebrows
On the other hand, critics were quick to suggest that the passing of the bill was nothing more than posturing by the ruling political party. During the run-up to the most recent elections, the cost of owning a home was a hotly debated issue. The ban, it has been suggested, is nothing more than a ploy to convince residents that the situation is under control.
A closer look at statistics suggests that this might indeed be the case. In June only 3% of all home sales went to those living abroad, which indeed raises the question as to how much difference the new bill will make. 83% of sales were by New Zealand residents over the same period, which once again paints a clearer picture of the situation. It simply seems to be a case of too many immigrants.
As it stands, the average price of a home in the country has risen around 60% over the last 10 years, well ahead of expected inflation. As to whether the new bill helps to curb the massive upward slant in prices remains to be seen, but predictions are that the difference will be minimal at best.