Editorial: U-turn restores hope for Kiwis

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At last the Government appears poised to address the influence of foreign investment on the property market - particularly in Auckland.

In a dramatic shift in position, John Key is indicating he may apply a land tax to foreign-based house buyers if there is evidence they are pushing up New Zealand house prices - and it could apply to Kiwis abroad.

A land tax to dampen demand by foreign-based buyers would be a complete flip in the Government's insistence that overseas speculation has not been a problem in the heated property market, and a switch from its focus on increasing supply.

He is waiting on data on the number of foreign buyers that has been absent from the debate on over-heated house prices, data which will be available in two to three weeks.

From October 1, foreign-based buyers have had to supply their IRD number from where they are a tax resident.

The overheated property market has been a prime concern of the Reserve Bank.

Last year, Reserve Bank deputy governor Grant Spence expressed a heightened degree of alarm at the level of house-price inflation, which he said, meant "an eventual correction is likely to be disruptive to financial stability and the economy".

The Reserve Bank has taken its own steps to address the issue by introducing loan-to-value restrictions but there is a view that these restrictions have made it even harder for first-home buyers already struggling to get on the property ladder.

I welcome the Government's change of stance on this issue. If the data on the number of foreign buyers does show they are making it more and more difficult for Kiwis to buy their first home then something needs to be done to level the playing field.

In my view, policymakers have an obligation to ensure that New Zealanders are not disadvantaged by outside influences. Home ownership is becoming a fading dream for many as house prices continue to rise. If foreign investment is found to be contributing to this trend then measures need to be introduced, not just to help first-home buyers but for the stability of the wider economy.