By BusinessDesk and NZ Herald staff
The Government has hit back at International Monetary Fund claims that New Zealand's foreign buyer ban is "discriminatory" and says Kiwi homes should not be traded on the global market.
IMF officials, in New Zealand this week, called the Overseas Investment Amendment Bill "discriminatory" and hinted that banning foreign investment in housing was an over-reaction to a problem that might not even exist.
"Foreign buyers seem to have played a minor role in New Zealand's residential real estate market recently," IMF division chief for Asia and Pacific Thomas Helbling said on Tuesday. He added that there were other ways for the Government to respond if large volumes of unwanted foreign money suddenly flowed into New Zealand's property market.
Any such measures should be "temporary and targeted", Helbling said, whereas the buyer ban is a "very definitive measure" and could send a negative signal to foreign investors more broadly.
Associate Finance Minister David Parker said the Government disagreed with the IMF.
"It's a matter of values," he said yesterday. "We believe New Zealand homes should not be traded on an international market."
The OIAB, a cornerstone government initiative, is designed to stop foreign speculators buying houses which would otherwise be available for New Zealanders.
Foreign buyers seem to have played a minor role in New Zealand's residential real estate market recently.
But most of the more than 200 submitters to the parliamentary select committee considering the bill are worried the legislation is far more likely to do the opposite to what is intended.
Land and property developer Alastair Porter, one of the submitters to the committee hearings, welcomed the IMF's stance, saying the foreign buyer ban is just bad law.
"The political problem is that what they are suggesting sounds like a good idea. If you stop selling houses overseas somehow there will be more for New Zealanders. But as 95 per cent of submissions [to the committee] said, actually it will have the reverse effect — it will aggravate the shortage of affordable housing."
The Real Estate Institute of New Zealand was also cheered by the IMF's statement. Reinz has consistently argued there is no data to suggest foreign buyers are taking the nation's houses. In fact, a survey of real estate agents last year found less than 4 per cent of buyers are from overseas.
Reinz chief executive Bindi Norwell says the problem is with supply not overseas demand.
"We need to focus on increasing levels of housing supply — and measures such as KiwiBuild and decreasing red tape will help solve that, not banning a small number of people from buying properties."