Mr Shearer first needs to show that foreign-domiciled buyers are a significant force in the housing market. Photo / Janna Dixon
Opinion
Is it time to bar foreign investment in residential property? When BNZ economist Tony Alexander made this suggestion three weeks ago, it was suggested here the measure would hardly be worth the effort. Some of the effort would be political; the Government would need to answer accusations of racism since
the most visible "foreign" investors at Auckland house auctions are Asian.
That part of the effort now becomes easier with Labour leader David Shearer's adoption of the idea. Parties of the left are less vulnerable than the right to accusations of racism, if only because left-leaning parties make the accusation more fiercely. National calls this policy "xenophobic" but it is a charge Mr Shearer wears with ease.
He urgently needs a popular policy to call his own and this one will do him no harm. It sounds simple, carries no public expense and he argues it does no more than reciprocate restrictions on residential property ownership in places such as China. That is a seductive argument, though tit-for-tat is never a good reason to restrict any investment.
To have his policy taken seriously, Mr Shearer first needs to show that foreign-domiciled buyers are a significant force in the housing market. The only available figures, obtained from a survey of agents by the BNZ and the Real Estate Institute, suggests non-residents account for around 9 per cent of sales. The agents say the largest number are Australians, who would be exempt from Labour's ban.
The survey result is generally disbelieved. The agents may have under-reported the proportion of sales to overseas buyers, or many foreign buyers may have someone in their family resident here for at least part of the year. That suggests a residency rule would not be as simple as it sounds. A permanent resident could become a trustee owner for many foreign investors.
