Is New Zealand Back On The Market For Wealthy Overseas Homebuyers?

A 2018 ban on foreign property buyers in New Zealand may be coming to an end. (PQ PROPERTY INTELLIGENCE)

When New Zealand’s National Party fiercely campaigned to win the general election in October 2023, it promised that, if victorious, it would repeal the foreign buyer ban. 

The Labor government put the controversial buyer ban in place in 2018, claiming that overseas buyers had made home prices unaffordable for locals. The law—still in effect today—prohibits non-resident foreigners, with the exception of Australian and Singaporean nationals, from purchasing existing homes in New Zealand.

National Party leader Christopher Luxon pledged during the campaign to allow foreigners to purchase homes valued at more than NZ $2 million (about US $1.2 million) as long as they pay a hefty 15% purchase tax. For context, New Zealand locals don’t have to pay stamp duty when they purchase residential property in the country. 

Foreign buyers previously made up 3% of the market, with the majority purchasing high-end luxury homes like this Wellington estate, says Morsinkhof. (PQ PROPERTY INTELLIGENCE)

The National Party said the ban’s repeal would help raise an estimated NZ $740 million (about US $490 million) annually. That promised revenue—which critics were quick to question—could then be used to offset the cost of other tax cuts the party promised. 

But when National won the election and Luxon became prime minister, talk of a potential repeal dissipated. Winston Peters, New Zealand’s deputy prime minister, is said to have forced National to abandon the repeal effort as part of a coalition government agreement. 

Now, it appears that a proposal to lift the ban on foreign buyers may be back on the table, with a higher threshold. 

Anthony Morsinkhof, managing director at New Zealand’s PQ Property Intelligence.

In a recent news conference, Peters said he is open to allowing foreigners back into the market as long as they invest in the country. When asked if he would support the repeal if the minimum spend was more than NZ $2 million, the deputy prime minister said the reporter “was extracting what might be an inevitable conclusion.” 

To better understand the situation and potential impact of the repeal, we sat down with Anthony Morsinkhof, managing director at New Zealand’s PQ Property Intelligence.

What would be the impact if foreigners were allowed back into the NZ market?

It would benefit New Zealand greatly. There’s a big interest in foreigners and investors who want to come and live here. Right now, I get calls two to three times a week from people who are serious about coming here and have investments lined up, but they legally cannot purchase a home. I’m working with an investor from Switzerland who’s invested tens of millions of dollars, but he’s not allowed to buy a residence and live in the country unless he’s invested here for four years. It’s off-putting for people—it contradicts everything. If the ban were to be reversed, it could pave the way for more investment in the country.

It would also increase the number of new builds in New Zealand, which have fallen substantially in recent years. So if foreign buyers were to come and build new houses, they’d be providing work for builders, increasing the housing supply in New Zealand and doing something positive for the economy. 

What’s the consensus in New Zealand? Did the foreign buyer ban work as intended? 

I don’t believe it has. Prior to the ban, only 3% of buyers were foreigners. Most of those foreign buyers bought high-end properties where there isn’t really an affordability issue. If the ban were to protect the lower end of the market, then I understand. But there’s a very limited internal market for high-end property in New Zealand. So to achieve the best possible prices here, it would only be fair to those owners that they get what their houses are worth and can then reinvest that wealth in the country. 

The number of new builds has fallen substantially in recent years. (PQ PROPERTY INTELLIGENCE)

What do you say to people who argue that letting foreigners in could reignite the property bubble?

If you look at when the previous government came in and enacted the ban, they cut out foreign buyers and property prices still went up. So I don’t think it’s got substance. I think we need to look at it and say, “What did those foreign buyers bring?”

If you consider Hollywood director James Cameron, he came to New Zealand and bought quite a lot of property. He’s also invested a lot into the country. (In addition to hiring more than 1,500 people to film the blockbuster Avatar in New Zealand in 2012, Cameron has snapped up several working farms in the country.) We should be opening our arms to these sorts of buyers and ensuring they can buy whatever they want to buy. 

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