New Zealand to allow some wealthy foreign investors onto property market
WELLINGTON, New Zealand (AP) — New Zealand will relax a ban on foreigners buying homes in the country to allow some wealthy overseas business investors to buy a single high-value residential property, Prime Minister Christopher Luxon said Monday.
The move partially reverses a ban introduced in 2018 by previous government to cool a runaway housing market fueled by property speculation. Holders of a residency “golden visa” reintroduced by Luxon’s government in April will now be able to buy one home worth at least 5 million New Zealand dollars ($3 million).
Luxon said the move balanced a desire to attract wealthy investors to the country with allaying house price fears. The change stops well short of a full reversal of the policy and would apply only to a small number of wealthy foreigners and a limited number of houses, he added.
The visas, which were intended to draw overseas investors to the country’s businesses, give residency to people investing a minimum NZ $5 million in New Zealand businesses over three years, or NZ $10 million over five years if the money is deposited in less risky investments.
Some visa holders had been ineligible to buy property because they didn’t live in New Zealand for at least six months of the year. That requirement will now be waived.
Luxon’s opponents decried the policy reversal Monday, saying it focused on attracting wealthy foreigners instead of solving domestic problems.
“Many Kiwis are already struggling to buy a home, and he has just made it worse,” opposition Labour housing spokesperson Kieran McAnulty said. “Homelessness is up, unemployment is up, and people cannot afford the basics at the supermarket.”
Push to attract wealthy foreign investors
The government hopes reversing the ban for some will boost economic growth by luring wealthy foreigners to the country during a period of recession.
“We’re a safe haven in a very volatile and uncertain world,” Luxon told reporters in Auckland on Monday, of his government’s pitch to investors abroad. Those investors would create jobs, he said.
Luxon denied the move would lift house prices which have fallen from a 2022 peak. He said applications so far for the residency visa that would allow a home purchase could result in up to NZ $1.8 billion in investment.
Officials have received just over 300 applications for the visas, representing about 1,000 people, government figures showed. Almost 40% of applicants were from the United States.
Luxon said the rule that houses must be worth a minimum amount meant that fewer than 1% of New Zealand’s houses -– about 10,000 homes -– would be eligible for foreign investors to buy. The majority of those home (about 80%) are in the largest city, Auckland, with around 10% in the popular skiing and tourism destination of Queenstown, on the South Island, where wealthy foreigners have snapped up bolt holes before.
The average cost of a home in July was NZ $767,250, according to figures from the Real Estate Institute of New Zealand. In Auckland, the average cost was NZ $975,000.
Housing crisis
The ban on allowing foreigners to buy property, which was introduced during a housing affordability crisis, prompted debate about the extent to which foreigners had contributed to ballooning prices and shut out domestic first-time buyers. Figures at the time showed about 3% of New Zealand homes were being sold to foreigners, although the number rose to 22% in Auckland.
Exceptions to the ban were made for Australians and Singaporeans under trade agreements.
Support for the ban was bolstered by anecdotal tales, never well-substantiated, of wealthy foreigners building doomsday-style bunkers in the scenic Queenstown region.
New Zealand, located in a remote part of the South Pacific, is a popular destination for migrants seeking distance from global tumult and applications to move there often increase during moments of turbulence, according to years of official data.
Luxon’s center-right party campaigned in the 2023 election on a pledge to reverse the ban. His negotiations as part of a coalition governing deal with other political parties, however, forced him to compromise on only a partial rollback.
By CHARLOTTE GRAHAM-McLAY
Associated Press
