By Alex Tarrant
The Labour-led government says it has found a way to block non-resident foreigners from buying existing houses which will not clash with the vast majority of New Zealand’s free trade agreements (FTAs).
Residential housing will be classed as “sensitive” under the Overseas Investment Act. “This means non-residents or non-citizens cannot purchase existing residential dwellings. Australians will be exempt as New Zealanders are in Australia,” Prime Minister Jacinda Ardern said. The one FTA the move will clash with is Singapore's, which Ardern said was up for renegotiation soon.
Speaking to media after the announcement, Ardern clarified that non-citizens who were resident in New Zealand would be allowed to purchase existing houses. Ardern said if someone classified as a permanent resident or held a resident-class visa, then they would be allowed to purchase an existing dwelling: “If you have the right to live here long term, then you should have the right to buy here.”
Non-resident foreigners would also still be allowed to buy vacant residential land if they were to build a dwelling then on-sell it, Ardern said. Labour welcomed this type of investment if foreigners increased the housing stock, she said. Labour would also look more in detail at the issue of land-banking further down the track.
Asked to confirm whether a non-resident foreigner would be able to buy residential land without an existing house on and put a house on it, she said: “Our position has always been that, if you are adding to supply, for on-sale of that new dwelling, then you will be able to build, if it is provided to be sold on.”
There would still be a test around that land being classified as residential land, in order for that dwelling to be built on it, Ardern said. “But also, then the test becomes whether or not a home will be built to be on-sold.”
Legislation to amend the Overseas Investment Act to reclassify residential housing as sensitive is expected to be introduced before Christmas. Ardern said it should be passed in early 2018. The important thing timing wise was that the legislation came into force before TPP came into force, she said.
Apartments and policing
Asked whether non-resident foreigners would be able to buy off-plan, Ardern said that was a detail the government was working through. “It’s been raised with us that, particularly when it comes to apartment dwellings, that this is potentially an issue.
“We’re working through some of the detail on it. But our intent is to stop existing homes from being purchased, and for new dwellings – it must be adding to additional supply. We want to increase the supply of housing available in New Zealand, whilst of course reducing down the demand for existing dwellings.”
She also said that the amendment would not be retrospective.
Asked how the policy would be policed, Ardern noted that every transfer of title required a conveyancer or lawyer. These people would be familiar with the fact that this law would exist. “There will be a role for them to play at the point of sale and the point of transfer of title.”
David Parker added that someone who purchased a property in breach of the law would be entering into an illegal transaction, and exposed to remedies under the Overseas Investment Act.
Prices & sales effects
The two were also asked about the numbers – whether they had an estimate on how many sales might be affected. Ardern noted Labour’s frustration with Land Information NZ’s figures on purchases made by non-tax resident foreigners which indicated they accounted for 3% of sales – they didn’t cover any sales made to companies or trusts.
Parker added that the property market was hot and foreign money flows were seeking out property investment, there would have been a larger number of sales to non-resident foreigners than seen today. “Those things can happen again in the future, and so we need to be able to protect New Zealand for now and the future.
“If this is not done before TPP concludes, if it does, then we effectively lose the right to impose that control forever. Not just under TPP, but under earlier trade agreements because TPP effects would flow through to those earlier agreements under most-favoured nation clauses,” he said.
Meanwhile, asked whether she expected any impact on house prices, Ardern said the focus for Labour was to make sure the flow of foreign capital into the existing housing stock was halted. “We would expect that to have some effect,” she said.
While there was speculation that the Auckland property market had plateaued already, “there’s no doubt that there’s been an issue around demand and our lack of supply, and this is one of the many ways that we can address that…it’s one of many – it’s not the only tool.”
Labour were hoping the policy would take some of the heat out of the housing market, “particularly in Auckland.”
Parker said the answer would depend on the price cycle. “When things were really running hot, when the price bubble was being inflated and there were large flows of capital into New Zealand, it would have had a larger price effect making this change then than it will now. But it’s very important that we reserve these rights for New Zealand through time, into the future.”
Read the press release from Labour below:
Foreign speculators will no longer be able to buy houses in New Zealand from early next year, says Prime Minister Jacinda Ardern.
“We are determined to make it easier for Kiwis to buy their first home so we are stopping foreign speculators buying houses and driving up prices. Kiwis should not be outbid like this.
“That is why we are introducing an amendment to the Overseas Investment Act to classify residential housing as “sensitive”. This means non-residents or non-citizens cannot purchase existing residential dwellings. Australians will be exempt as New Zealanders are in Australia.
“We expect legislation to be introduced before Christmas and take effect immediately once passed early in 2018. This will fulfil one of our key 100 Day Plan pledges.
“The previous National government chose to put foreign speculators ahead of Kiwi families, but we have chosen to protect Kiwi families and New Zealand’s best interests.
“That government claimed this could not done without breaching other free trade agreements and that a stamp duty would be the only effective tool.
“The advice we have had from officials is that we can give effect to the ban by a simple amendment to the Overseas Investment Act without breaching any agreement except the Singapore Closer Economic Partnership. The options with Singapore will be worked through.
“The proposed change means we can move our focus away from land issues at the negotiating table at APEC when negotiations on the TPP reach their final stages, and focus on Investor State Dispute Settlement clauses.
“We are concerned by ISDS clauses in the proposed agreement. These confer greater rights on multi-national companies investing in New Zealand than a New Zealand company has.
“We remain determined to do our utmost to amend the ISDS provisions of TPP. In addition, Cabinet has today instructed trade negotiation officials to oppose ISDS in any future free trade agreements.
“The change we have announced today are supported by all parties to the government.
“New Zealanders should be assured that the government I lead will have their best interests at heart when negotiating any free trade agreements.”
National finance spokesman Steven Joyce issued the following response:
The Labour Government’s jury-rigged “ban” on selling houses to foreign buyers in a very strange announcement that raises many more questions than it answers, National Party Finance spokesperson Steven Joyce says.
“The first and strangest thing about Labour’s announcement is that it isn’t an actual ban. Putting houses through a sensitive land purchase criteria is definitely bureaucratic but does not constitute a ban on such sales,” Mr Joyce says.
“There are also all sorts of definitional questions. Is an apartment on the fourth floor of a building ‘sensitive land’? Is a two hectare property with two houses on it that’s being sold for development able to be sold to an international investor?
“This proposal would also be a massive compliance cost for house buyers of all types. For example, will somebody with a foreign sounding name have to prove their citizenship to the real estate agent?
“The whole announcement was very strange,” Mr Joyce says. “There has been no paperwork released and the Prime Minister indicated many of the detailed decisions remain to be made.
“This smacks very much as a ‘bright idea’ with absolutely no detail or evidence base behind it. The Prime Minister even spoke as if the Auckland property market was still rapidly appreciating whereas in actual fact it’s been flat to falling for the last year.
“Finally, if the idea gets over all the hurdles, would it actually work in terms of satisfying the concerns of our trading partners? It appears on the face of it that it would treat investors from other countries less favourably than New Zealand investors.
“This is a policy that’s designed to solve a political problem. Evidence in both Australia and here in New Zealand is that overseas buyers don’t have a significant impact on the housing market.”
250 Comments
Great news Jacinda allowing only new builds but please don’t allow sections to be purchased by foreigners as this ties up valuable NZ home sites
You must make the foreigners only purchase turn key new property only like Australia
Let foreigners build the new homes not buy the existing homes
Will the foreign investors bother putting up capital for the Government projects to boost housing supply? I imagine they will step back for 6 months or a year meaning the supply side gets even worse.
Let's see what happens but I sense rents will have to go up in near term.
If Action Jacin removes the student scam that puts a "student" in nearly every petrol station in NZ then will there be so much supply side squealing?
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
There will be job losses in the industry but it was they that created the Ponzi in mickey mouse education. They will find work in suddenly vacant petrol stations.
I suspect clamping down on corruption and exploitation in the PTE sector will dent numbers there reasonably significantly. I know quite a few people who have been through it, and the stories are just ridiculous. As are the experiences of some of them being exploited in the hospitality sector in Auckland.
If eliminating illegal and exploitative serves to reduce overall numbers, how is this a bad thing? The only thing it would show is that we were tacitly allowing such exploitation to take place in order to prop up the numbers.
NorthernLights, I thought you were okay with exploiting people. Just the other day you wrote:
When living in TX we nearly always used MX carpenters who were allowed to work because they did a fantastic job at a fraction of the price. Trump is all bull He has over 1000H1B visa foreign workers in his businesses. Americans would love to get a job but are bypassed for the easily manipulated migrant workers
How come it's okay for you to have made money in property in NZ and then go to another country and underpay third world workers at the expense of locals? What makes you any better than people like DGZ and me?
For NZ tax purposes you must either reside there or own property there
I think you’ll find this normal elsewhere
Heck in the USA children of US citizens must file with the IRS even if they were never born in the US and are not citizens of the US
Of course many don’t but they are breaking US law
So overseas kiwis... living and working overseas, not paying a dime of tax in NZ, who, if born and raised in NZ consumed their parents generations tax in the form of 13 years of schooling, years of subsidized uni, and years of medical etc, but return home for medical/dental, and plan to retire here on the pension. At what point do they cease to be eligible any further benefits is the have never put tax back into the system?
Would include a lot of kiwi's working in Australia that has not secured Aussie citizenship. Needs debate.
Exactly, net effect will be almost zero, it will just create a work-around industry for lawyers and accountants 'paper' local owners and true foreign owners with contractual arrangements outside of NZ. Just as already happens to a significant degree in Chinese community.
Perhaps, but you can hardly blame the new Government for failing to find a golden bullet in the first week. It may take a little time to sort out the current issues which National failed to address. Adding any friction and/or potential repercussion to the process is a good start.
All they need is to slightly block the market, like LVRs and brightline. All these little impediments will all add up. Throw in future interest rate increases, and we will have either drop in house prices or very small growth in house prices, which will also scare overseas investors. Whats the point if they cant make a profit.
They can go somewhere else.
A good first move, but extra scrutiny is also required on the requirements for permanent residency. The Peter Theil case was an example of inappropriate political largesse notwithstanding the scam nonsense of the Investor Resident Visa process.
Borrow nz$1 million, pretend it's yours to invest here for 4 years and the parent Retirement Visa option might be possible. Borrow a bit more - nz$3 million, pretend it's yours and the Investor 2 Resident Visa option invites. Buy a house or 10 in Auckland.
https://www.immigration.govt.nz/new-zealand-visas/options/live-permanen…
Great idea, let’s stop foreign investment into NZ,
Let’s stop foreigners coming into NZ as they may want to spend money in OUR country!
Maybe this is the STOP everything government rather than a government that wants things to grow?
Can someone please advise what are the ideas or policies that they have got that will GROW the country, as ai haven’t seen any apart from growing trees!
PocketAces
Nationals unofficial policy was to grow NZs top end Euro car fleet all done on lease to wealthy immigrants who rather lease to defer against paying tax into NZs coffers
Likewise Nationals “Let foreign speculators buy kiwi homes for tax free profits” unofficial foreign exchange “Growth policy”
Spruikers go on about how safe property is compared with equities because you can look at it and touch it. Now they are seeing that a government can intervene in all markets including the housing market and there is nothing the man on the street can do about it. All markets are the same. They have their good days and their bad days. Today the property market had a bad day and it is just the start as Labour will not say it but they are determined to drop housing prices in Auckland and that is going to have an effect on all of New Zealand.
When you both come off your interest only loans your properties will be worth half price. Or maybe cut your losses now and sell now and join the line of other houses about to go on the market, and pay the bank there money for breaking your mortgage contract. Either way you spin this it is fair to say you toke a kick in the balls today. But I don't believe you actually own a shred of property anywhere . I think you just lost your R.E job .
It's like no one really reads my comments or understands my theory. Foreigners don't buy property in NZ primarily for capital gain. They can still buy new properties and land under this regime anyway. A lot of people want to become residents of NZ in order to be part of the Western-Globalist lifestyle. I don't see how this changes much.
Restricting foreign speculators, reducing the number of poor student migrants, improving NZ employment conditions and so on will only make NZ more desirable.
Zachary, I read and understand your comments. And I agree with them to an extent. I think NZ has increased in desirability as a country to live in. Various factors have influenced that, good PR, the NZ film industry, global instability/conflict and the promise of safety and isolation. I am also not principally anti-immigration. However, there seems to be a backlash in NZ now, which has found political traction because the immigration has been handled very, very poorly. Too high level of immigration, against too low infrastructure investment, against too little government action as the related social problems have escalated.
So it might not be that NZ will become less desirable, but that NZ natives will vote against high immigration and globalisation and therefore desirability will be a weaker factor than the local political sentiment. Brexit is probably the clearest example of this. Immigration is now reducing rapidly in the UK and Brexit hasn't even happened yet.
NZ-ers voted with enough clout to pressure the issue of migration in NZ. And unless that is acted upon, the pressure will likely mount.
john wheeler, I just don't understand this kind of comment. You don't know either of us but you make up your mind on what we have and what we don't. You also seem intent on taking pleasure that today's decision could hurt us... Why ? What's in it for you ? It seems like you make yourself feel better by hoping others are hurting
Yvil, an optimistic response to changing times come challenging times. Remember to keep that wine cellar stocked up to appease the nervous Bank Manager. As a Labour voter, I am pleased there is little tolerance for speculators. Once prolonged house price drops shake out the speculators, homeownership rates will hopefully increase helping to close the dangerous wealth divide. This can only be good - right?
skudiv - if you reside in the "houses are a one way bet and this time its different" camp, feel free to donate to the National Party Fighting Fund! http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11939072
i think you have that backwards, it was rising house prices, the debt creation and the lending practices. ie loaning to those with little ability to pay to create more loans to sell as CDO's
Underlying Causes. The financial crisis was primarily caused by deregulation in the financial industry. That permitted banks to engage in hedge fund trading with derivatives. Banks then demanded more mortgages to support the profitable sale of these derivatives.
https://www.economist.com/news/schoolsbrief/21584534-effects-financial-…
if anything it has not changed much and maybe decreasing the house prices is better than GFC2
GFC was the creation of dodgy bankers who took every one who invested in them, or bought their synthetic or otherwise products for a long ride and cleaned out even many pension funds by such investments, all aided and abetted by slack regulators and unethical rating agencies. It was a huge scam on the world by educated villains masquerading as bankers and finance professionals, during that period.
Skudiv
Wallst banking creation of ponzi derivatives which were filled with defaulting debt
All so they could make 500% profits per trade
Now tell me it was falling house prices that caused GFC ? Falling house prices merely provided the CATALYST
The GFC collapse could have been triggered by another financial instrument
Thanks for your concern R-P, I am not a speculator, I don't "flick" houses, I have been an investor since 1994 and yes, it's a good thing if more Kiwis can afford their own home. Yes, my loans are I O but I have repaid $360k in mortgages in the last 2 years as I saw the market getting peaky. I have several loans, all 1 year term with staggered renewal dates because I like the flexibility it provides me to repay what I want when I want.
@TheMan "let’s stop foreign investment into NZ". That is absolutely laughable - how can you honestly sleep at night in the belief that allowing our houses and land to be sold to off shore foreign nationals is a positive????
This rort has gone on long enough and I applaud Labour for bringing in policy that not only limits this but also doesn't impact existing trade agreements. National were either asleep at the wheel or complicit...
#thegreedisreal
Cmon Mac, National's foreign investment brought us a lot of things - $2 shops and ethnic takeaways every 100m for example. Not so much on anything that brought jobs to kiwis except of course for the crazy building industry Ponzi that will one day have its pound of flesh.
Literally ONE click on Labour's website to read their policies.
Stop throwing your toys out of your pram, go away and do some FACT checking rather than spouting Hosking-isms. You're embarrassing yourself.
Pray tell us exactly how your "profession" of landlording helps "GROW the country", all you do is extract existing wealth from others, and if you have any tenants who are on benefits then you are in actual fact a drain on the NZ economy.
Fritz. I wouldn’t place too much weight on Stuff comments trends, given the ‘moderation’ that occurs on that site. But I do suspect this will be a popular move and reckon it’s worth trying. The argument can be credibly made to treaty partners that the AKL undersupply problem places housing in the ‘sensitive’ category.
Given offshore investment has already all but dried up it won’t have much immediate effect although it will provide a tool for when Chinese capital controls are next relaxed.
But the coalitions plans to make RE agents, brokers and lawyers accountable for identifying the ‘true’ ownership status is naive. What do they envisage these intermediaries can do beyond asking for proof of citizenship or residency? And what about trusts and the other multiple artifices currently being used to keep foreign ownership ‘below 3 %’ ? Are convenyancers and the RE BMW and bubbly set going to become trust busters now ? Can you really imagine lawyers accepting this liability for one of the least profitable segments of their practises?
A populist idea that will settle the natives but is short on practical working detail.
Conveyancing lawyers will be more than happy to do the required checks as the additional information on proof of citizenship or permanent residency for all beneficiaries to the trust (or owners of the entity) would need to be provided by the person signing the contract on behalf of the trust. It's all an increase in billable time - asking for that, cross-checking it with the companies/trust register, receiving it and photocopying it for the legal file.
We’ll see. Conveyancing is a cut throat game. While some are still done on a billable hours basis, that is changing as set price and on line services take an increasing market share. My belief from close association with the process is that selection based on perceived risk will occur, raising the cost to legitimate trusts.
Verifying the immigration status of trust beneficiaries within the timeframes and to the standard of proof that it appears will be required is not as straightforward as you suggest. And many properties are acquired on behalf of trusts. Not that I disagree with giving this a go - my concern is that the ramifications haven’t been properly thought through.
We have already seen an example where a landlord had to reimburse rent paid by a tenant because the property was not up to warranty standard. Thus I suggest that if renters suspect that their abode is owned by an overseas investor they look very very carefully for warranty omissions. I would also hope that our courts will expect a high degree of compliance from overseas investors. NZ will become a better place if we develop a strong culture that finds ways to deter all exploiters.
In fairness I post this link that shows a full rental return to those living in unconsented rentals is now in doubt.
https://www.stuff.co.nz/business/property/98434811/tenancy-ruling-quest…
An intentional lack of data collection the last several years by National to hide their sneaky "growth" by erosion of sovereignty, doesn't help. There might be some surprises when the new Government gets to spring cleaning and finds out what Key and Bill slid down the back of the sofa. May not be pretty. There is a census in 2018.
Sharetrader -has Labour actually done it yet ? Or are you actually saying that of course not, they havent had time, but you think they will do it because you automatically don’t believe National on anything they say - in other words a nothing rant posting that contributes nothing ?
we may have been conditioned to nine years of the government saying they will do something then doing nothing. telling porkies when ever they could and MSM not hitting them up for it and disciples letting them off
but this government has already shown they will do something.
and if they dont they wont last long in power
in case you missed it, it was part of the deal with NZF first which they are already moving on the below points
Some key points from the NZF deal:
- $1b per annum Regional Development Fund,
- Re-establish the New Zealand Forestry Service
- Review and reform of the Reserve Bank Act
- Progressively increase the Minimum Wage to $20 per hour by 2020
- Comprehensive register of foreign-owned land and housing
- Free doctors' visits for all under 14s
- Free driver training for all secondary students
- A new generation SuperGold smartcard containing entitlements and concessions
- A royalty on exports of bottled water
- Commit to re-entry to Pike River
New Zealand First and Labour agreed to ban foreigners from buying existing homes, strengthen the Overseas Investment Act and set-up a comprehensive register of foreign-owned land and housing.
Winston Peters said: "I got pretty close" to the measures wanted by NZ First.
"The reality is there is going to be a change and a clear signal set internationally that New Zealand is no longer for sale in the way that it has been. And we are happy with that."
However, foreign buyers would be restricted from purchasing New Zealand farmland "to give New Zealanders a fair chance to get in and own".
Cabinet minister Damien O'Connor two days ago
"The door will be open for applications but the criteria will be very, very high," O'Connor said. "We've always relied on and valued foreign investment but it has to be in areas that add clear value to New Zealand."
The number of farms owned by non-resident foreigners was unknown and a register would be established
the news is out in the world
https://www.cnbc.com/2017/10/25/new-zealand-property-ban-to-take-effect…
New Zealand is banning foreigners from buying property
•The ban applies to non-resident foreigners
•New Zealand's housing shortage estimated as growing by 40 homes per day
•The country has been a favorite spot for Chinese investors
Exactly what I was thinking, there will be quite a few folk who don't want their ownership of assets known about for various reasons. This might have an even bigger effect on the property market than banning foreign speculators, it will also prove the lies that National has told about the percentage of overseas buyers.
Still waiting from you Lefties what The coalitions policies are for growing the country apart from STOPPING things and introducing extra taxes like a SUGAR TAX!
I reiterate for the average working class citizen of this country is going to be far worse off in 3years if they last that long.
We are not in capable hands but obviously many of the bloggers on this site who did not prosper under a National government will disagree.
Let’s just monitor things over the coming months and you will realise that “The Man” knows what he is on about unlike most others on here!
Growing the country to WHAT??!! The problem with this "growth" thing as an economic policy is that it has no full stop, it has to assume you can just keep growing and growing and growing, when in fact, we are staring down the barrel of a time when growth is no longer desirable as we need to stop wrecking this place.
None of which alters the fact that you can't keep doing it. I guess we have to start thinking about different ways of doing things, so we can actually survive. If the human race decides that recessions and such and not having one, are more important than the planet we live on then I guess we deserve whatever we get from that.
At the end of the day, the only real growth is population growth, and we are living in a finite world. We think we are so smart but if we breed ourselves to destruction, knowing all the while that is what we are doing, and thinking that sort of constructed idea of an economy is more important than our world, then we are actually utterly stupid.
That refrain been around for centuries and will be for a few yet - mankind adapts rather than throws in the towel to improving its quality of life. And one day the resources required will come from further afield that this planet. The big picture is a lot bigger than youre suggesting.
You are ignoring the cost of energy in retrieving materials. Plus ignoring that some items we take for granted like air and to an extend water are in effect very cheap as they are here in abundance. The problem then like we are finding with oil in deep water etc is the cost to extract is too high for an economy to pay.
"adapt" If you look at past civilisations they failed to adapt they collapsed into a far lower state.
Your ignorance of engineering, science and history is frankly outstanding, talk about a castle built on quicksand.
The consequences of eliminating the 'stuff more people into the same size sack' model of growth may be very good indeed, for example it might incentivise investment in things that increase productivity.
It is unsurprising that people wish there was a way to achieve structural change without anyone's ox being gored, but that is at best naive and at worst the false promise of a demagogue. Growth at the expense of sane policies, on immigration, on investment, etc. is growth that can't disappear fast enough.
So which are you, dilettante or demagogue?
I think you have it wrong here, it isnt a "want" it is acknowledging a limit you cannot get around and working with it. When you reach a limit to growth (and I believe we have) you cant grow any more without a) using smoke a mirrors and/or allowing some sectors to grow at the expense of others.
Be that as it may all major parties are wedded to continual growth on a finite planet, sorry cant work.
Lets take an easy mathematical example, China wants an economic growth rate of 7~10% per annum that means its economy doubles every 7 ~ 10 years. (lets just say 7% == 10 years doubling)
So every 10 years (lets keep it easy numbers) china's output has to be sold to someone and it has to take in raw materials to do so. So today its 1, in a decade its 2, in another decade its 4 in another decade its 8. So just where in 30 years is china going to be selling 8 times its output today? Where does the oil and raw materials come from to do it? Even if it can do 8 in another 10 years its x16 or todays output.
Now look at Peak oil, today we are at maximum oil output, so where its the oil as transport or chemical feedstock going to come from? simple it isnt.
You know this is simple math, someone as otherwise intelligent as you should be able to see this expotential function's consequences.
"quote me examples of successful long-term no growth" indeed and that is a profound Q that no politician / party is publically looking at/discussing.
So the only way for 30 years we have actually grown I suspect is where a growing smaller % is taking more and more off the rest. I kind of suspect you think you are in that % and that you are safe from the growing numbers unhappy with this situation. In history than a few ppl have thought that also and it didnt end well fro them btw.
The agreement between Labour and NZF is public, you can read it yourself
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11936177
regional development fund, railway investment, forestry, shifting auckland port somewhere more sensible, redirecting the RBNZ to increase employment, higher minimum wage, strengthen kiwibank, targeting higher R&D spend, work towards making housing more affordable, more police, more funding for DOC, better targeted immigration, and to top it off a referendum on marijuana for the Greens.
Sounds like enough to be getting on with for their first term, plenty of stuff in there to improve the country. I've done very nicely under National, but sometimes life isn't all about me.
Mfd. Any chance of you posting the addendum to this agreement while you are at it please? Wait, sorry. Silly question. It’s still secret isn’t it. For a moment there I had a temporary delusional thought that this was a democracy where the new leader had promised transparency.
I don't know, and I have no idea if there's anything interesting in there. All I can find is
"The document was a briefing to government ministers, laying out specific rules and processes over how they should address issues like accountability and media strategy while working as a cohesive government."
doesn't sound like there'll be any policy detail in there - why would it be interesting? Presumably it's stuff along the lines of which party can say what, who needs to speak to who first, not to bad-mouth coalition parties, etc.
If so innocuous, why the secrecy then? The public has a right to know what Labour has conceded and how much this will cost but is being denied both pieces of information. We’ve already seen the grotesque over representation of minnow party functionaries in positions of influence within the coalition and the regional pork barrelling lolly scrambles, so are justified in being concerned about other expensive compromises that may have been the price of ascent to power.
We want scalable gobal businesses, bio tech, high skilled engineering, software, IT hardware, ecommerce businesses. We want industries supporting these businesses.
Businesses that take high skilled individuals that can be scaled to billion dollar companies. Not low wage economy that import low skilled people, not a country that makes money by increasing the debt of all the citizens, through higher property prices. All your doing is making a few rich and a lot poor.
I second your thoughts "The Man" and totally agree with what you said,
there will be some pain coming up and most suffering from it are the very hopeful butterflies following the flame.
This STOPPING is a PR stance designed by the back office employed to save face of impractical policies ... these same Foreigners have stopped buying since March... We think that we are the only smarties around and assume that these buyers/investors are stupids with lots of money to burn ...lol
Wonder what would the PR sound like around March next year when average house prices have gone up by 2-3+% From TODAY and sales volumes are the lowest than any summer season while foreign buyers were Axed off, Brightline extended to 5 years, and LVRs still in place? .... All would be steps in the right direction ....
THEMAN2 growth in home ownership! the under 40's will be able to buy homes, this will then create a wealth affect and this will boost the economy. The asset wealthy can afford to lose some of their paper money, they just don't want to. But it's in the countries interest that they do.
Also, Labour want to grow investment in the regions, and give wealth opportunity to those outside of Auckland.
Also Labour want to grow opportunity for the younger generation, so that they are aren't so crippled with uni and mortgage debt, and so they might actually want to stay in NZ and bring their ideas, productivity and energy to the growth of NZ into the future.
Because in case you hadn't noticed, excessive wealth hoarding, just makes a few people wealthy and prevents wealth and productivity across a wider spectrum of society.
Possibly not a cure all.
If foreign speculators are an important driver for increasing house prices, then why should foreign speculators not be a driver for inflated residential land prices due to a buy and hold basis. After all we hear of limited residential land supply in Auckland and limited supply will make it attractive to speculators.
New legislation must incorporate a time limit for foreign investors to build. But how can this be enacted? Forfeit the land to the Government not likely.
I don't know whether to laugh or cry. Why on earth didn't they make all land 'sensitive'. What is the time limit on the requirement to on-sell (upon death)? What is to stop anyone overseas setting up a trust which can continue to own the property for 100 years? This is going to push up the cost of building for NZers as we will all have to compete with cashed up non-citizens who will now have their sites narrowed down on building. If the government can sort out these issues, then well done. So a half well done from me.
That's excellent news and glad to see that we have a strong Prime Minister who is able to stand for the rights of her people.
I liked the way Labour tactfully explained that National made no attempt to fully look in to this matter. I would have been brutally honest and explained to the press how lazy National were for 9 years and they're only concerned with creating a false economy to allow foreign investors to asset strip NZ to give the impression of a prosperous economy.
The thing is that false economies are unsustainable. Now at least we have a chance to development our real economic backbone.
A thought experiment (the safest kind):
- A new company is set up, with NZ principals and shares all registered to NZ citizens
- Shares are paid for with loans issued to shareholders from an overseas entity
- Company purchases residential properties by the truckload with the capital thus available
- Company enters into 40-year leases for all such properties with (quelle surprise) relatives, cronies or distant acquaintances of the overseas entity's owners
- Rents are paid to the NZ company, and after various ticket-clippings, remitted to the overseas lenders on normal commercial loan terms
- After a period of residence in these leaseholds, the - er - Residents gratefully accept PR status and the path to citizenship.
- At which point, they legally purchase the property, the proceeds of which (after more tickets are clipped) extinguish the original loan and the lease
Now this is just a TE (see above) and I'm no Legal Eagle.
But perhaps common taters can say what, in this imaginary configuration, would violate the letter of the law? After all, shorting a share is just a matter of borrowing one, hoping its price will fall? And in the time period of said borrowing, who Owns it? Why, the person on the share register....
But as Full Employment is to become an RBNZ Thang, this will certainly ensure full employment for accounting, legal and associated professions. And, quelle horreur, they aren't even Unionised.....
The point is that govt is trying to quell speculation. They don't need to do a lot to achieve that - shutting down just a small portion of future buyers will do plenty. I think you'll find a small decrease in this influential margin will be quite prominent.
Also it's been over a decade since you could achieve residency just by being here somehow. You can work to residence but that particular visa is not easy to get and needs to be approved first, not retrospectively.
Clever thought experiment, but check out s 43 of the Overseas Investment Act. My guess is that if the transaction serves no legitimate purpose other than to get around the act, then it would be seen as an offence. A bit like surgeons or forestry owners and paying tax.
One needs to look through all the righteous indignation about foreigners ........ they are really not the elephant in the room .
The availability of cheap money has spurred speculation in all asset classes and asset prices prices and the prices of those assets have moved significantly away from the fundamentals .
When the cost of accommodation explodes as it has done , it makes many people poorer , and we are blaming foreigners for this , when we have done it to ourselves
Rubbish.
The available cheap money you are talking about is the money printed by central banks all around the world. Especially China.
Then they bring their money here and inflate the value of our houses. They have done it in many countries arou9nd the world.
Only pity is, this change should have been made about 5 years ago.
I recall in the early 80s, a UK-based buyer purchased a beachfront property down the road from us - they purchased (we were told) based on photographs and it was intended as a holiday home. It was before the day of internet listings. Word got out about the price (probably was more than three times the then market price) and nothing on that beachfront sold for a number of years thereafter, as we all lifted our own price expectations accordingly based on this one-off overseas buyer fluke.
I recall a REA telling me about an empty section listed shortly thereafter and the price that was requested by the seller. She told the seller he might have to wait until her grandchildren were old enough to buy :-) and walked away from the listing. Sure enough another agent went for it, and it sat and sat for years on the market until the existing owner decided to build on it themselves.
I'll repeat some information that I have posted in the past. I had nine rentals in Whanganui before the market went stupid. At about the time it was going stupid, (early to mid 2000s) a Real Estate friend of mine told me of a German woman who came to town for a week, bought 10 properties and went home. A month later is was a group of Aussies, some time after that it was numerous asians. About three years ago one of the asians cam back to him and told him it was time to sell his portfolio (27 properties), but the agent convinced him not to put all on the market at once. Before all this happened he told me that 90% to all his sales were to locals, towards the end less than 30% of his sales were to locals.
Boatman, I agree to an extent, but some countries have had worse asset bubbles than others.
NZ has amongst the most unaffordable housing (using several measures) in the world and NZ hasn't even got the cheapest debt available! However, NZ does have some of the loosest regulation on foreign ownership, property speculation and inbound migration. NZ doesn't even keep a tally on foreign ownership, that's how loose it has been!
So I agree that all the QE has created the froth on all the asset markets, but equally, why does NZ have one of the frothiest housing markets?
Labour's solution is a Clayton's solution.
It's enormously risky in terms of compromising our trade prospects - and the gains from international trade. More brick walls will be hit shortly, as it hasn't been thought through properly.
At best, it would have a tiny impact on house prices - but at a gigantic cost in terms of trade opportunities foregone.
Any minute Pointmade, will pop up, under ToThePoint's comment and congratulate him on how very awesome he is, and how everything he ever says is a pearl of wisdom. And strangely, Pointmade, will use the exact same unusual and extremely formal comment structure that TTP does.
If non residents can still buy a new build off the plans then this will change nothing and Jacinda said that they could lease the property not necessarily have to on-sell, I have a nasty feeling about this, I hope it doesn't backfire and drive up the cost of building. Sorry for being a party pooper. If they had banned the purchase of all land I would be cracking open the champagne.
You are right, this obviously looks like a manicured version and could be the most they can do at the moment without breaking any agreements or frightening the horses ... The Devil is always in the details .... PR is the art of deception ....certainly Looking Good is worth more than the actual effects of the policy ...
Yes when you first look at this it looks wonderful (well from my perspective) but when you really think about it as it stands now hardly anything will change, it may make matters worse. Sitting on the fence and trying to make all sides happy only ends in sorrow. They need to put some tough rules in place regarding buying/developing new builds (ie. build and immediately on-sell for maybe a financial gain), or really what was the point. A vast number of Chinese buy the new houses in subdivisions. IMO the competition for new builds will increase pushing the prices up and then existing houses will follow (though I am no expert but the two seem to go hand in hand)
There is already a huge demand for housing which we cannot keep up with, it will not bring the cost of housing down, it may even inflate it further. I thought the whole idea was to make housing affordable which in turn would increase the ability of people to spend in other areas of the economy not just the housing ponzi.
There is a wider context here. For all we know, there are more than enough existing houses to meet the demand. Houses are literally being hoarded. You have a group of asset rich people who own multiple properties at the expense of another group who didn't have that lucky timing and don't own a single house. And also, houses that would suit them, aren't being built, because construction is looking for maximum profit, so further skewing the problem in favour of the asset rich.
If the property speculation is less attractive, and if foreign buyers also decide to cut their losses, then there could be a lot of property released back to potential FHB's. In addition, government can use Kiwibuild to create competition against the corporate construction sector and use economies of sale, to help produce more FHB suitable houses (instead of stupid McMansions that are used as wealth storage and not helping anyone but the already wealthy).
It's not just one policy that can solve this housing crisis. There must be many battles on many fronts.
I just watched the video. How did it go, the market should be ok because national said that foreign ownership was only 3% anyway and we are making this ban for the future and shouldn’t have any change to the market because it’s the end of a cycle anyway . And this ban is late but for the future, the market is toast
thegic. Yeah labour are covering there butt alright . Shame they need too. That 3% lie of national is coming back to bite them on the butt already. Haha . O my how could the market change by banning foreign ownership of only 3% . And the cycles over anyway. O my o well . Haha labour just told us all if the market crashes because of that ban national lied . Now that’s funny . How’d that go again. Let’s make a point here, hahahahaha that says so very very much just what labour are expecting
they have kept their election promise, which can be a show that they seriously beleived in this policy and not dis so to gain votes. However, i sincerely hope they had a good look at it. If foreign buyers have been banned from buying existing houses, i can only assume there were a lot of foreign buyers doing just that-buying existing houses and therefore kept prices high. Can they release what percentage of buyers were/are foreign so their policy has some desired effect and not lead to unintended consequences. Tempering with market can be dangerous in the best of times.
Unintended consequences of foreign buyers, like being tenants in our own country. Foreign buyers are like a drug addiction, better to go cold turkey and get the future benefits of being CLEAN.
Foreign Buyers only accounted for 3% thats what National said and that what labour has said because National cant of been lying. This is for the future NZers to be able to afford houses.
Bloomberg have also picked up on this news: New Zealand Bans Foreign Home Buyers After Price Surge
https://www.bloomberg.com/news/articles/2017-10-31/new-zealand-to-slap-…
Not sure where they get the price serge from since the property market has been in decline for most of this year?
From you Bloomberg article above:
“Foreign buyers of existing homes have become the target of governments globally with increased taxation and buying restrictions,” said Sophie Chick, head of residential research at Savills Australia. “This though hasn’t really put the brakes on foreign investors who often prefer to buy off-the-plan anyway.”
Please note the last sentence - if Labour want to truly make a difference then they need to address the purchase of new builds, otherwise nothing will change.
It's highly likely that Labour will bring in an 'empty property' tax to encourage land bankers to free up empty homes. This needs to be done and they're already mentioned that they're looking in to as part of their home provision measures.
Most Western countries have already taken steps to in this direction to help their resident populations and to discourage Speculators.
Bill English will be along soon, he sold the candy machine to some nice business people from overseas. Said it would enable more efficient running of the machine, and he had no choice cos of market rules. The new owners sell most of the candy overseas now as they get a better price for it, and the kids in the street only have the rejected miss-shapen jet planes left to eat which nobody else wants.
Just amazing what labour got done here in a week. National could have but didn’t want too. And just what influence did they have on the RB as well. All you people out there that have a hard time financially in the future because you played nationals stupid little game , remember who created this problem. And you can NOT blame the locals (FHBers) to be able to hold house prices up for you. They just can’t do it. Sorry
Lets think this through logically - considered two sections for sale.
Today: Developer buys a section - builds a house - sells to foreigner - buys a second section builds another sells to local. NB: Foreign buyers are just ~ 6-7 % of market.
Tomorrow: Developer buys a section - sells to local. Foreigner buys a section - builds for himself.
Net effect is the situation is unchanged with a local and a foreigner now owning two new houses - and that will be the net effect of these constraints. Zero !
Alternatively, poor quality houses are cleared off sites prior to sale, thereby enabling the sale to all market participants. Or a property is advertised as literally “vacant possession” where the owner is prepared to demolish/move the house prior to sale, if required.
More like Kiwi on kiwi income can now afford a first home/do up- AND -. Foreigner does build or buy new build. Win Win situation.
Leads to a two stage price in the market just like Brisbane (difference is quite significant) where born and bred kiwi tax payer is not forced into rent enslavement by overseas money. Probably what most averageman tax payers voted for.
Not for some, for all. Foreign money means more for kiwis, you talk about how we can’t make money selling houses to each other, but you can certainly make money by selling to money from overseas...as for morally richer, pray tell me in what way am I morally inferior to your ever brightening righteousness?
It's an incredibly short-term approach, unfortunately. Selling off NZ's land to foreign ownership will mean NZers do not have a country, but become renters and sharecroppers in their own land. Even John Key said he wouldn't want to see NZ become like that.
Selling things you make to foreigners, now that makes long-term economic sense. No surprise that countries that are doing much better economically focus on this...whereas it's left to the basketcases such as Greece to rely on selling off their country to get money.
It's surprising to see voters who ostensibly like "sound fiscal management" so keen on relying on the basketcase route of attracting foreign money, rather than the productive method of attracting foreign money.
Wrong about making and selling products being a better route to economic success than selling off productive land? Got some evidence and sources?
Let's take Germany, for example - how much of their GDP comes from producing for export rather than selling off their land into foreign ownership?
And...care to explain how China has massive foreign investment despite not allowing foreigners to buy land? Surely they should have failed because of this, given it's apparently necessary for them to sell off their land in order to have economic success.
Your argument that it's better to sell off your assets than to use them to be productive and sell the produce seems to run against capitalism.
We should be able to sell what ever we have to whom ever we choose. In Germany foreigners can buy property as is the case of most OECD countries. I have a confession. I can’t spend the next three years arguing with you all as wont be good for my mojo. So I have been thinking about it for a while and will retire from commenting. Cheers and good luck ;-)
Funny you should say that as I’ve been thinking the same thing. There are a few leftie posters I enjoy reading e.g. Rick, Kate, Gingerninja, but it’s largely unmoderated and some of the posts are just plain offensive e.g. Fluid36 calling a number of us “bum chums”.
David Chaston, please delete my account/login.
"closed socialist economies the world over are not flourishing"
the trouble is neither are open capitalist economies. They are all insolvent (ie loading up the credit card for the brighter future..). You might (who knows..?) find this series interesting ...
http://energyskeptic.com/2015/dmitry-orlov-how-russians-survived-collap…
"the basic and obvious conclusion is that the United States is worse prepared for economic collapse than Russia was, and will have a harder time than Russia had,"
We dont have a closed socialist country whatever your alternative reality is telling you.
Also, pardon me but where is any economic model flourishing right now?
capitalist?
USA? nope...
EU? nope....
Japan? nope....
China? nope.... (its mercantilisic not communist)
anywhere in Africa?
anywhere?
Well...if according to the Nat whiners nothing will change,then relax,shut up and move on...but if deep down you no 3% was a lie...then shut up as well,wait 3 years and see how it goes.
More than anything this is about sending a message,NZ isn't available to be raped & pillaged....it will continue to change the sentiment in the market.
And for all those going on about people getting off there a**es and working...it might be that RE's & property speculators have to...especially as they were the biggest beneficiaries of Govt handouts,ie accom supplements,working for families...most of which was ending up in speccies pockets and they have the cheek to go on about people not working hard like them lol...
Property investors do get off their butts and are providing a necessary service that the Government does not do very well.
The state houses are an absolute disgrace in this country.
As a private landlord, we ensure that our properties are looked after both inside and outside by our tenants.
The state houses are poorly maintained both inside and outside as their standards are very low.
As I have said previously most experienced investor landlords will be fine nut some of the speculators will struggle abit.
Property investors are needed in this country a damn sight more than unemployed beneficiaries!!!
Have you ever considered that by cornering the market and pushing up prices and rents, investors have taken money out of the real economy and made more people unemployed? Paying 50%+ of household income in rent is not helping those people or the country as a whole, only the Australian banks and a the investment property holding minority.
why play politics to an important issue of attracting foreign investment. let them come in, as national sensibly allowed them to do so, for the good of this country. u could say, they (nats) could clearly see the wood from the trees and were not short sighted, despite being short sighted could have kept them in power. we should produce as much housing as they want with a beefier version of the current AUP, but only grant them residence if they quailfy, character wise, etc etc. We are a souverign state and can always address issues by taxing these foreigners with a separate tax bracket or whatever else like stamp duty etc etc. Please do not stop the foreign buyers as my granny wants to sell after a long hard slog and wants to meet a buyer with a heap of cash and open her house to as wide an investor base as possible. The other alt. is to be restricted to some buyers only who will keep grizzling about the price and short change my granny....i bet that same buyer, once in possession of my grannys home will want a fat price when he/she onsells like the purchasers of ex state houses when they onsold after buying from the state. help my granny.
Kiwimm, what part of investors don’t push up prices don’t you get?
We always buy under market value, won’t go into that on here though.
Investors not speculators will normally buy well so their returns are positive!
Yes Gordon, I know, you will say Chch prices are dropping, earthquakes, cold etc, but market value is not always what someone has actually paid for something, but then you will know differently!
TM2...give it a rest...investor (capital gains seeker) has had an advantage over occupier buyer for ages due to ability to subsidise mortgage repayments via rents,tax breaks etc,so when you do your sums vs family guy,1 income,2 kids who has to pay all the out goings out of his wages,when push comes to shove the "investor" in AKL will always outbid the occupier,even more so if he is going to flip it.
And yes,we know you and a couple of others are different,never pay over,not overly leveraged and most of all doing all the poor people a favour by supplying warm,dry,cheap accommodation whilst they save for a house for themselves....it nice to know we have our own version of Mother Theresa in NZ...you folks do wonderful work.
No Mother Theresa is,leading the Labour Party at the moment!
Yes property investors are doing the country a favour as the government should not be responsible for providing housing, as they do a lousy job at it!
I think you will find that people who are going to occupy a house pay more for a house than investors do!
It's partly correct that property investors are providing alternative accommodation instead of the central govt. But a good proportion of them are also property speculators and wouldn't give a shxt about their tenants if the time is right to flog off their properties.
I have a couple of working mates who are now in panic mode about their properties now that the selling price is trending downward.,
Even if so (probably), a) all of a "sudden" sneaking into NZ with a suitcase of cash gets officially noticed, not what some ppl will want. b) it will now take weeks of not months to happen and I assume considerable cost, its just going to be easier to buy in some other country.
Just a thought....perhaps?.... If Oversea's Investors were only 2-4% of Property Buyers, why did so many NZ Real Estate Companies set up offices in Asia at what would have been a huge cost not to mention the direct (non commission based ) cost of advertising.
I suspect 2-4% was more like 4-8% funding the other 20-25% plus of Migrant buyers through family loans & connections....Just a thought.
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