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Clamp down on foreign buyers: Alexander

Foreign buyers should be restricted from buying existing houses in New Zealand, says BNZ chief economist Tony Alexander.

Thursday, March 7th 2013, 12:00AM 3 Comments

by The Landlord

He says New Zealand should look at following Australia’s lead, where foreigners can only build new houses. This reduces competition for second-hand homes but also improves the country’s housing supply.

Alexander says: “In the context of a housing shortage in New Zealand that would seem like a good idea.”

He said such a restriction would be more effective than introducing loan-to-value restrictions, as the Reserve Bank is considering.

But he acknowledged house prices were a tricky issue for the Government to navigate. It is under pressure from the opposition parties over housing unaffordability, but it risks alienating homeowners if it reduces the value of property.

“There are a lot more people who want house prices to rise than there are wanting them to fall. Or to put it another way, governments probably don’t want to go into an election having taken measures which make people feel poorer.”

He said proposals to free up land would not bring down house prices. In regions outside Auckland there is  no shortage of land, but yet prices still rise.

Construction costs are often fingered as partly to blame for rising house prices.

But Alexander said construction costs were rising because of increasing building standards and regulations. “There is no magic wand which one can wave to make prices of 4 by 2 or gib go lower. In fact construction costs will only rise in the next few years due to labour shortages across the construction field.”

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Comments from our readers

On 12 March 2013 at 2:59 pm Denise Dalbeth said:
Totally agree - a fantastic idea!! Its taken 6mnths to find a property that Asian buyers do not want to throw completely ridiculous amounts of money at -forcing the average Kiwis out of this market- the only way for Kiwis is to buy a property out of the school zones the Asians are buying in. Forcing us to buy further away from the city with longer commuting times
Regards Denise
On 16 March 2013 at 6:40 am David said:
Absolutely a good idea. The high cost of new housing in NZ is also partly the fault of greedy councils, profit gouging building material oligopolies and some unnecessary building code compliance requirements. I welcome increased foreign investment involvement in the new home area with higher LVR requirements. Other nations do it to use so whats the issue?
On 19 March 2013 at 3:35 pm paulie said:
Well, so much for my plans to move to NZ. We were just about to file for our visa's too. Maybe you need immigration controls on people from certain country's. Not all of us are rich Asians. I'm from the US and my wife is from Russia. Our govt's wish to keep us apart for no particular reason so we need an English speaking country to start a business and perhaps flip houses to start over in. Too bad really, my 5 year old, she would have liked growing up a Kiwi. Its funny, my Grand parents had the same problem 80 years ago and the only country that would take them was the US. I guess things never really change do they. Also, if you think the govt messing about with the fair market value of RE is a good thing then you haven't been paying attention to the track record of govt, any govt.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

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