12:19 GMT +318 July 2019
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    Pivot to Asia

    Why is New Zealand Banning the Sale of Houses to Foreigners?

    Pivot to Asia
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    John Harrison
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    The New Zealand government has banned the sale of existing homes to foreign buyers, saying New Zealanders are sick of being ‘tenants in our own land’. This is a strong move by the New Zealand government under Jacinda Ardern, and one likely to be watched closely around the world. Why is this ban being introduced and will it work?

    Tate Ulsaker, an environmentalist living in the Nelson area in New Zealand joins the program.

    Tate starts off by describing the background to the present situation. "People are unable to get homes, the pressure is being felt by all segments of society in New Zealand….New Zealand is vulnerable, it's small, a desirable place to invest in, and there are a lot people nearby who have a lot of money, and for them, throwing a million or two or ten or a hundred is not a problem. They have been coming to New Zealand and pushing the prices of not only housing, but other things up as well, and when they come they generally don't leave their money, they buy and then expatriate the profit…"

    "Auckland is out of reach for most New Zealanders now, prices have hit a multiple of one to ten of average incomes in Auckland, and the gap is widening….Canada is number one foreign investor into real estate, and China is number two. I know a developer who has a real estate agent who described one of her trips to Auckland which included taking a Chinese businessman around and in one day he snapped up 61 residential properties without looking at the properties himself. He looked at the prospectuses, and bang bang, bought them all. These sorts of things do happen, and there is a reason for New Zealanders to want to do something. They are too vulnerable, and too many people desire to be here, and that's fine if they come here under circumstances that help the country, but in many cases that is not case."

    As in any country, the banks are happy with high house prices. "A lot of banks' balances sheets are dependent on house prices," Tate says. "But these paper increases can't be realised by most house owners, because although the price of their house goes up, they can sell and they can get a lot of money; they have to live abroad if they want to sell it, otherwise they are back to square 1."

    The new law already seems to be having an effect with the percentage of foreigners buying residential properties in central Auckland coming down to just over 3% from 20% last quarter.

    This new legislation could be seen as a restriction on ‘freedom.' Tate comments: "I suppose it does, but freedom for who? Most people have children or at least someone on their family has children, and when you look at the younger generation coming up, you have to consider how somebody can go and work for NZ$20 a hour, which is a decent rate — how is this person going to buy a house which costs half a million dollars, which is the price of property at the bottom of the market?"

    Under the new regulations, foreigners are still able to buy apartments in large-scale block developments. Surely this means that prices will be boosted artificially by foreigners, just in a different way? Tate answers: "There is always a way around legislation if you have money. This is not about stopping the river cold, it is maybe diverting it a bit, it'll have a shakeout effect and probably take some time between the politicians taking decisions and then policies getting implanted, tweaking the results and then there will be court cases that scare people that try to bend this rule, it'll take some time to be implemented, but at least the process has started, and the people are happy about that."

    Wealthy foreigners buy property in New Zealand for various reasons. "We've got Fukushima, we've got war, we've got currency collapse, New Zealand is abundant in water in arable land and its far away from these zones, so people have bunkers, they have large estates but they also have secluded estates, that can be defended….Is New Zealand going to be a place which only looks after the very rich, where locals can only hope to serve people who own huge estates?, or is New Zealand going to be a place which looks after its own?, and gives foreigners a great experience whilst ensuring that things can't go too far….In simple terms, if I am in a sub division, and I consider the sub division to be a country, imagine the dynamics if someone comes in and buys 30% of the sub division, makes a Theme Park out of it and keeps that Theme Park only to themselves. Prices go up and nothing comes back into the sub division. I'm wondering, what have they really added?, it's walled off, I can't use it, the prices have gone up but there is no income coming out of it because it's their own place, it's very nice to look at but that's about all you can do is look at it with a drone… or is it best to leave it as it is now for everyone to enjoy."

    This new legislation seems to be specifically suited for New Zealand, and may not necessarily catch on anywhere else. Tate says: "New Zealand is a small country, people are waking up to what is going on perhaps faster than the average larger country." The new policies could be said to be restoring the faith of New Zealanders in their government: "Yes, the sentiment on average with people who have an interest in their future is that they believe that this new government is taking an interest in them much more than the last government. And I'm talking about people on both sides of the political spectrum…"

    Clearly New Zealand is showing that liberal policies can coexist with more central and left wing policies. Tate comments: "I try not to identify with terms, because you get a lot of terms thrown at you — conservative, liberal, and so on. I'm on every side of the spectrum, I may even be communist or right wing in some cases. This is just a realistic situation where you have an attractive country with very limited space, and lots of big people in big countries that have destroyed their own countries and they want to come down here, which is fair enough but the questions is — how do they come down here?, that has to be decided by people who are here… otherwise it doesn't make much sense for a government to exist if it just wants to accept handouts from foreigners and sell out their country, and then we all go to work as servants to the new masters."

    We'd love to get your feedback at radio@sputniknews.com

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