According to Housing Minister Nick Smith, a comprehensive investigation into the foreign ownership of New Zealand homes would be a blind alley.
On the political level, that may be an understandable sentiment. Rising house prices are set to be an election issue, and the Government wants to steer clear of potentially embarrassing disclosures.
On any other level, however, Dr Smith's statement verges on the irresponsible. We need to establish the level of foreign ownership. Only by collecting evidence and no longer relying on anecdote will we know if there is a problem, and the need for a solution.
Dr Smith's position is all the odder given that figures he released last week appeared to confirm that ownership by non-resident foreign investors is far less substantial than opposition parties have suggested.
Inland Revenue records show that only 11 per cent of landlords are overseas. That number includes a significant number of expatriate New Zealanders. A Treasury briefing last year to the Finance Minister concluded that the level of foreign ownership of New Zealand housing remains relatively low. If Dr Smith has confidence in such consistent advice from officials, he should have no reason to oppose a more comprehensive investigation. Indeed, the outcome stands to help the Government by confirming that action is unnecessary.
The Treasury report had a caveat, however. It noted that the limitations of the data mean that it is difficult to assess the extent to which foreign ownership rates are changing over time.
That proviso, in itself, suggests more definitive work is required. As much is re-emphasised by the doubts surrounding another widely quoted figure, obtained from a survey of agents by the BNZ and the Real Estate Institute, that non-residents account for 8 per cent of sales. Self-interest is a potential problem here, with agents under-reporting the proportion of sales to foreign buyers. Additionally, many overseas purchasers may have someone in their family resident here.
In such a situation, unimpeachable data is a necessity. Supposition based on, say, the number of Asians attending auctions is not sufficient. An investigation would not smack of xenophobia or racism, as critics would doubtless claim.
Facts are required to establish whether the level of overseas ownership is so high that it is having a substantial impact on the housing market, especially in squeezing out first-home buyers. The country or region that is the source of that investment is immaterial. Further, Asian residents in this country and immigrants from elsewhere are as likely as anybody to be concerned if foreign buyers are driving up prices.
The Government says also that the data on overseas ownership is too difficult to collect. This is an astounding position. If countries such as Turkey and Thailand and Indonesia can keep public records, it is surely not beyond New Zealand. It has not been done previously because there was no perception of a problem. But to not do it now raises the implication that the Government does not want accurate data for fear of what may be revealed.
Labour, the Greens and New Zealand First want to restrict sales to overseas buyers because they believe it is, indeed, contributing to high house prices, especially in Auckland. Options could include the 15 per cent tax on house sales to non-residents that has been imposed in Hong Kong, or the rule in Australia that forbids non-residents buying existing houses. But whatever they plan, they should not act until information gathered in a scientific manner confirms the extent of foreign ownership. To do so would be as ill-advised as the Housing Ministers disinclination to gather that data.
Debate on this article is now closed.