Foreign buyer pressure in property hot spots highlights need for law change

New figures showing a high level of overseas house buying in New Zealand’s least affordable areas vindicates the Government’s move to ban foreign buyers of existing homes, Associate Finance Minister David Parker says.

Stats NZ data for the March 2018 quarter show 3.3 per cent of homes transferred went to overseas people, but that rose to 18.7 per cent in central Auckland and almost 10 per cent in the Queenstown-Lakes area.

“That shows the concentration of buying is in the areas of worst affordability and where price rises have been the highest,” David Parker said.

“Kiwis were right to be concerned, and that is why we are passing the foreign buyers law.”

He said the data measured the flow of properties into overseas hands, not the proportion of the stock that was held by overseas owners, and with more foreign buyers than sellers the number of homes in foreign hands was increasing.

“We want the prices of New Zealand homes, whether it be a lake-side station, the best houses in the Bay of Islands or the most modest homes in our towns and cities, to be set by local buyers not on the international market.”

David Parker said it was not just about the raw numbers of houses being sold overseas.

“It’s also a matter of values. We believe New Zealand homes should not be traded on an international market and New Zealanders should not be outbid by wealthier foreign buyers.”

In the March quarter nearly 10 per cent of home transfers were to corporate entities, and information on the ownership of those is not currently available.

The Overseas Investment Amendment Bill is on track to become law next month.