Call to limit foreigners' right to purchase houses

Choon-ok Lee talks with her son Peter Bae after they successfully bid for a home in Swanson which they will rent out. Photo / NZ Herald

BNZ economist says NZ should follow the approach adopted by Australia where non-citizens are allowed to buy only new dwellings to ease the market pressure on existing homes

New Zealand should adopt Australia's more restrictive approach to foreigners buying houses, warns an economist.

Foreigners can build only new homes across the Ditch, not buy existing ones, says Tony Alexander of BNZ.

When it comes to a multi-unit complex like an apartment block, they can buy only 50 per cent.

New Zealand should mimic the system so new house supply rises while foreigners are deterred from driving up prices in already overheated places like Auckland, Mr Alexander says.

He has had strong feedback on the BNZ-REINZ survey that found Australians outstripped Chinese as the biggest foreign buyers in New Zealand.

"I have yet to find a single person in New Zealand who agrees with the survey results," he said.

"Everyone believes that the true level of Chinese house buying in Auckland in particular is much higher than my survey suggests. The issue is rarely mentioned with regard to any other part of New Zealand."

Mr Alexander said he was worried about an anti-foreign backlash.

"The social media has been ablaze over the issue of perceived massive house buying by Asians in Auckland."

But he noted how no one had professed an ability to distinguish Kiwi-Asians from true foreigners let alone one Asian type from another.

"Nonetheless, there is growing societal discord at the perception that mainland Chinese in particular are outbidding hard-working Kiwis in the Auckland housing market."

Fears appeared not to be based on facts, Mr Alexander said.

"Although I believe the level of Chinese house buying in New Zealand is not as high as the anecdotes suggest, the issue is causing societal discord and has potential to worsen in coming years and threaten the very good trade relationship between New Zealand and China.

"I advocate that the Government move quickly to introduce legislation influencing foreign house buying in New Zealand with that legislation applying equally to all foreigners."

Real information about Chinese buyers eludes and frustrates him.

"I do not know why Chinese buy houses. In fact, throughout the Western World there is very little information on what Chinese think about anything and getting Chinese people to make public statements is near impossible."

He said he had struggled to get any Chinese input into his monthly publication Growing With China, and had noted the lack of Chinese faces in his paper Sources of Western Apprehension About China.

Land Information Minister Maurice Williamson has no plans to establish a database or a register of foreign buyers. Those buying sensitive land or spending more than $100 million go before the Overseas Investment Office for approval.

But house purchases are not dealt with by the OIO because the land involved is usually too small.

Mr Alexander doesn't see his suggested law change being adopted.

"The Government has made no policy pronouncement regarding foreign house purchasing and I am not aware of any work being undertaken on development of any particular policy," he said.

"There is zero chance that if a policy were developed regarding foreign house buying in New Zealand that it would be targeted towards Chinese.

"It would apply equally to all groups, though may exclude Australians just as New Zealanders may freely purchase property in Australia to the best of my knowledge."

The Green Party has also called for anti-foreign-buying measures to be introduced.

"Continued speculation in the New Zealand property market by offshore buyers will help fuel another destructive housing bubble," said co-leader Russel Norman.

"New Zealand needs to follow the lead of Hong Kong and place restrictions on overseas buyers' ability to purchase real estate here."

The Campaign Against Foreign Control of Aotearoa, which has its headquarters in Christchurch, has long campaigned against foreigners buying businesses and property here.

They claim it is against our national interest and is doing damage to the economy.