New Zealand ban on foreign buyers

SUBHEAD: The International Monetary Fund says banning foreigner home sales discriminatory (against super rich people).

By Matthew Brockett on 16 April 2018 in Bloomberg Markets -

Image above: "Threatened: The super-rich fear their comfortable lifestyles in the west could be destroyed by terrorism or civil unrest, so they have started buying up 'boltholes' in New Zealand, like this award-winning five bedroom house, just a five minute drive from Queenstown". From

[IB Publisher's note: After a lifetime of stripping the continents of resources and burning all the fossil fuel that could be found what is a retiring "player" from the IMF, "Wall Street" or "The City" to do on retirement if they cannot buy a thousand hectare ranch in New Zealand with a private jet runway and armed guards to ride out the apocalypse. Here on Kauai we had fears of such an invasion, but the super rich are not that interested in a place that is a major military target of our "enemies" and has been compromised by generations of plantation farming and, now, GMO and pesticide experimentation. The truly rich will let the "middle-class" professionals and their service people "Californicate" Hawaii.]

The International Monetary Fund has criticized New Zealand’s “discriminatory” ban on home sales to foreigners, saying it’s unlikely to improve housing affordability.

“Foreign buyers seem to have played a minor role in New Zealand’s residential real estate market recently,” the IMF said in a statement Tuesday, after concluding its annual Article IV mission to New Zealand.

If the government’s broader housing policy agenda is fully implemented, that “would address most of the potential problems associated with foreign buyers on a less discriminatory basis,” it said.

The new Labour-led government has pledged to fix the nation’s housing crisis with a raft of measures, including a ban on foreign speculators buying residential property, removal of tax distortions and an ambitious building program.

House prices have surged more than 60 percent in the past decade amid record immigration and a construction shortfall, shutting many out of the housing market.

However, data suggest non-residents buy only a tiny percentage of homes sold, and critics of the law change say it will have the unintended consequence of worsening housing supply by turning overseas investors away.

Proposed changes to the Overseas Investment Act, which the government says will bring New Zealand into line with neighboring Australia, will classify residential land as “sensitive,” meaning non-residents or non-citizens can’t purchase existing dwellings without the consent of the Overseas Investment Office.

While non-resident foreigners will be allowed to invest in new construction, they will be forced to sell once the homes are built.

IMF Mission Chief Thomas Helbling said a ban is a “very definitive measure” and could send a negative signal to foreign investors more broadly.

“Foreign direct investment, trade, commerce abroad involves various dimensions, including employee housing,” he told a media briefing in Wellington. “I find it difficult to assess that signal, but that’s one thing perhaps to worry about.”

The IMF’s report is otherwise broadly positive:
  • Economic growth to remain around 3% in the near term, risks broadly balanced.
  • Soft landing in housing market should continue.
  • Monetary policy appropriate; the IMF warns against precautionary further easing or premature tightening.
  • With household debt still elevated, RBNZ shouldn’t relax mortgage lending restrictions any further.
  • The country’s fiscal position is “strong” and there is no need for faster debt reduction beyond what the government has already outlined.

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