New Zealand is imposing a ban on foreign buyers from purchasing existing homes in an attempt to reduce demand and ease affordability issues created by the country's surging house prices.
The restrictions were announced by prime minister-designate Jacinda Ardern in a press conference in Wellington earlier this week. The ban will not apply to Australians.
Earlier this year, Auckland ranked fourth in the world’s least affordable housing markets, behind Sydney, Hong Kong and Vancouver, linking median house prices to median household income. The average house value in Auckland is now nearly AUD$900,000.
New Zealand has gained a reputation as a bolthole for the world’s wealthy who view it as a safe haven -- a place where wealthy survivalists or "doomsday preppers" can seek an escape from political upheaval in a stable western democracy far from potential conflict zones. In a New Yorker article published in January, the island nation was identified as a favoured refuge for Silicon Valley's elite:
Reid Hoffman, the co-founder of LinkedIn and a prominent investor, recalls telling a friend that he was thinking of visiting New Zealand. “Oh, are you going to get apocalypse insurance?” the friend asked. “I’m, like, Huh?” Hoffman told me. New Zealand, he discovered, is a favoured refuge in the event of a cataclysm. Hoffman said, “Saying you’re ‘buying a house in New Zealand’ is kind of a wink, wink, say no more. Once you’ve done the Masonic handshake, they’ll be, like, ‘Oh, you know, I have a broker who sells old ICBM silos, and they’re nuclear-hardened, and they kind of look like they would be interesting to live in.’ ”
The Labour Party of Jacinda Ardern had affordable home ownership as one of their campaign platforms ahead of September’s election.
“Foreign speculators will no longer be able to buy houses in New Zealand from early next year. [We] are determined to make it easier for Kiwis to buy their first home, so we are stopping foreign speculators buying houses and driving up prices. Kiwis should not be outbid like this," Ardern said.
Ardern’s government will introduce an amendment to the Overseas Investment Act to classify residential housing as “sensitive.” This means that non-residents or non-citizens won’t be able to purchase existing residential dwellings.
The legislation is expected to be introduced by Christmas and passed early in 2018.