Editorial: Solid data on buyers only place to start

The distinction between residents and non-residents is not always clear-cut for the purpose of house-buying rights. Photo / Jason Dorday

Opinion

Both an open door and tight controls on foreign home ownership have dangers, but with no figures we can't have a debate.

Predictably, the debate over foreign interest in New Zealand houses has been muddied by accusations of racism against the Labour Party for its methodology. It concentrated on Chinese buyers because those were the names it could associate with ethnicity, or so it believes, and they made a disproportionate number of house purchases in Auckland sales data that the party has seen.

Labour's housing spokesman, Phil Twyford, believes this can be explained only by a large number of overseas buyers.

That is not the only possible conclusion. The fact that people with Chinese names appear to be buying proportionately far more houses than their proportion of the Auckland population could mean they are migrants in the investment category and each is buying a portfolio of residential property.

But Mr Twyford's explanation cannot be ruled out. He may have obtained his data surreptitiously from a single Auckland-wide agency, a demographic analysis based on surnames may be dubious, the political benefits of raising a hot-button issue may be obvious, but the figures he has obtained are of legitimate public interest.

It is possible for too much of a country's land and housing to be owned by overseas investors, leaving it a nation of tenants.

But, equally, it is possible for a country to be too protective of residential property, closing itself to a great deal of international investment, migration, travel and trade.

The distinction between residents and non-residents is not always clear-cut for the purpose of house-buying rights. What about New Zealanders living overseas indefinitely? What about students with temporary residence? What about people granted the status of permanent residents who do not stay for long?

Those are the sorts of definition problems that have caused the Government to resist calls for a register of foreign homeowners, and to suspect that the proportion of buyers with no residential connection to this country is probably so small it would not be worth the trouble and expense of a register. But the Government has slowly come around.

From October, all non-residents buying or selling houses here will need to have a New Zealand bank account and Inland Revenue number, along with a tax identification in their home country.

This will serve a number of purposes besides showing how much foreign interest there is in the market and where it comes from. It should help catch or prevent this country being used for tax evasion or money laundering suspected in China.

It will also enable the taxing of capital gains on houses bought and sold within two years, which might do no more than a register to slow the rate of house-price inflation.

But a register will be welcome. Mr Twyford's suspicion that its figures will not be made public cannot be right. The Government would face more outrage than it will if published figures are higher than it suspects.

A register cannot come soon enough for New Zealanders of all ethnicities. Without one, no migrant communities can know whether non-residents in their home country are competing for houses here.

The sooner we have solid figures to discuss, the sooner we can debate how protected or insular New Zealand should be.