Just two weeks after bank bosses aired their concerns about foreign cash pushing up house prices in New Zealand, a report from Transparency International says London house prices are going up by between 15 and 20 per cent as a direct result of foreign money-laundering operations.
On February 25, KPMG's annual Financial Institutions survey said New Zealand bank executives it surveyed were concerned about foreign buyers paying above market rates for property. Bankers claim to see truckloads of cash entering the country to buy houses, commercial property and businesses -- without needing a bank loan. I believe foreign cash entering the market is distorting the home-buying landscape.
Now we see that Transparency International has been watching something similar happen in London, and claims it is because of massive money laundering operations.
The report -- Corruption on your Doorstep: How corrupt capital is used to buy property in the UK -- is based on data from the UK's Land Registry and Metropolitan Police. It shows 36,342 London properties are held by hidden companies registered in offshore havens.
"There is growing evidence that the UK property market has become a safe haven for corrupt capital stolen from around the world," says Dr Robert Barrington, executive director of Transparency International UK.
To curb the problem, he suggests the UK Government adopts a land registry that shows who owns the companies that own property in the country.
The Australian Government is looking at charging fees to foreign investors of homes and commercial property. The fees, which start at AU$5000 ($5330), aren't meant as a deterrent, but will likely help fund the system to register all foreign purchases.
New Zealand's Government says it sees no reason to be concerned about foreign buyers competing with locals. Prime Minister John Key says keeping track of foreign buyers is too complex.
Perhaps it's time to consider that some of these foreign buyers may be laundering cash, and that could fall under a whole different set of international laws and rules.
Read the money laundering report at ukunmaskthecorrupt.org/
Property buyers and sellers in Auckland will not be surprised by the latest data from QV.co.nz, which shows that values continue to soar. Waitakere City is one such area where values have begun to accelerate again, rising 6 per cent over the past three months.
Auckland City Islands values rose 9 per cent over the past three months; Auckland City South was also up 5.7 per cent; Auckland City East rose 4.9 per cent and Auckland City Central values rose by 4.5 per cent over the same period.