News ID: 219887
Published: 0328 GMT August 15, 2018

New Zealand passes ban on foreign homebuyers into law

New Zealand passes ban on foreign homebuyers into law
Residential houses are seen in Wellington, New Zealand, on July 1, 2017.

New Zealand’s parliament passed a law on Wednesday to ban many non-resident foreigners from buying existing homes, completing the Labour-led government’s election campaign pledge.

Jacinda Ardern, New Zealand’s popular 38-year-old prime minister, campaigned before September’s election on a promise to clamp down on house price growth and reduce high rates of homelessness, in part by banning foreign buyers, Reuters reported.

“This is a significant milestone and demonstrates this government’s commitment to making the dream of home ownership a reality for more New Zealanders,” Associate Finance Minister David Parker said.

Foreign ownership has attracted criticism in recent years as New Zealand grapples with a housing crunch that has seen average prices in the largest city, Auckland, almost double in the past decade and rise more than 60 percent nationwide.

House price growth has tapered off in the past year in part due to restrictions imposed on lending by the central bank, which was becoming alarmed at the potential financial stability risk of an overheated market.

Figures released by the Real Estate Institute of New Zealand on Wednesday showed median house prices had slipped 1.8 percent to NZ$550,000 ($360,140) in July from the previous month, although they were still 6.2 percent higher than the same time the previous year.

The government slightly relaxed the proposed ban in June so that non-residents could still own up to 60 percent of units in large, newly built apartment buildings but would no longer be able to buy existing homes.

The International Monetary Fund called on the government in July to reconsider the ban, warning the move could discourage foreign direct investment necessary to build new homes.

Official figures suggest that the overall level of foreign home buying was relatively low — about three percent of property transfers nationwide.

However, the data did not capture property bought through trusts and also showed property transfers involving foreigners was highly concentrated in certain areas, such as downtown Auckland and the southern scenic hot spot of Queenstown.

The majority of overseas buyers were from China and neighboring Australia, according to Statistics New Zealand.

“Is the ban wise or useful? We think it’s neither,” said the spokesman of Chinese real estate portal, Dave Platter.

“Foreign buying ... tends to be focused on new development, making clear again that foreign investment leads to the creation of new dwellings. That’s vital in a market with a housing shortage, like Auckland,” he said.

The government has said the ban would not apply to Australians and has been negotiating with Singapore, whose free trade agreement with New Zealand allows foreign ownership, on whether to grant an exemption.


Teachers’ strike


On the same day, New Zealand school teachers went on strike for the first time in more than 20 years, challenging the Labour government’s plans to balance promised fiscal responsibility against growing demands to increase public sector salaries.

Almost 30,000 primary school teachers did not turn up to work and held protests across the country, leaving parents of roughly 400,000 children aged five to 13 at public schools scrambling to find childcare.

“Teachers and principals voted for a full day send a strong message to the government that the current collective agreement offers from the Ministry of Education would not fix the crisis in teaching,” said Louise Green, the lead negotiator at NZEI, the union that represents teachers, in a statement.

The standoff with its traditional union support base comes nine months after Labour formed a coalition government, promising to pour money into social services and rein in inequality, which has increased despite years of strong growth.

NZEI said it has asked for a 16-percent pay rise for teachers over two years, whereas the government has offered between 6.1 percent and 14.7 percent, depending on experience, over three years.

The action comes in the wake of a one-day nationwide nurses’ strike in July and a series of smaller actions by government workers, challenging New Zealand’s Prime Minister Jacinda Ardern’s center-left government.

Arden made a surprise appearance outside parliament on Wednesday with a group of ministers to welcome the more than 1,000 protesting teachers.

“There is no you and us, there is only us,” she said on Television New Zealand footage, to applause from the crowd.

“The only point we would make is unfortunately sometimes radical change takes time. So I’m here today to ask you to work with us as we try and move forward.”

Wage growth has remained sluggish in the island nation for years, despite soaring housing costs, which labor groups and economists say has left workers struggling despite robust growth.

Labor has put raising workers’ wages at the heart of its policies, lifting the minimum hourly wage by 5 percent to NZ$16.50 in April, with further plans to hike it to NZ$20 by 2021, as well as rolling back restrictions on union bargaining power.



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