Labour plan to bar foreigners from buying homes
Labour is promising to bar non-residents, other than Australians, from buying existing residential houses in a move it says will stop foreign speculators from pushing up prices.
Leader David Shearer said the move was part of a package of measures he would introduce in government to help new buyers.
They included the party's policies to introduce a capital gains tax, excluding the family home, and build 100,000 affordable houses over 10 years to be on-sold to first time buyers.
"I will restore the Kiwi dream of home ownership that has slipped out of reach for tens of thousands of Kiwis. I don't want to see our kids become a generation of renters," Shearer said.
"House prices in Auckland have risen by 28 per cent since June 2009. The problem is clear - there are just not enough affordable homes. And overseas speculators are adding to the problem. That's why the next Labour government will introduce restrictions so that non-residents will not be allowed to buy any existing house, flat or apartment."
He said New Zealanders were "muggins" to allow overseas speculators to buy in our market. The policy was in line with the one operating in Australia.
"Many other countries, including Australia, China, Singapore, the UK and Switzerland target overseas speculation in housing. New Zealand's lack of regulation leaves the door wide open for international speculators."
Australians would be excluded from the bar because of reciprocal arrangements between it and New Zealand. There would also be no ban on overseas investors building new houses here.
He said Inland Revenue records showed more than 11,000 overseas investors own properties that they do not live in. An estimated 2600 homes were bought last year by overseas property speculators that had no intention of living here.
"That's a big chunk, given that just 4700 new homes were built in Auckland last year."
He said the policy would reduce demand and help take some of the heat out of the market.
"By itself this is not a silver bullet for housing affordability - but it is part of the solution."
Speaking in Seoul, Prime Minister John Key said Labour's policy would capture only a tiny portion of home buyers, because many of those believed to be "foreign" buyers were actually either citizens, permanent residents, or could find someone to align the property to.
"The limited discussions we've had... is the group of people who fit within that category at the moment is very small. So the reality is that not that many people come in and buy properties that either aren't permanent residents, or aren't going to take up permanent residency, or couldn't align it to someone. There's also ways of potentially going around that system."
Key said the policy may mean that people like Canadian rock star Shania Twain, who bought a large high country station near Wanaka, may be caught out. Although after making the claim he immediately admitted he didn't know whether Twain had built property as part of the purchase.
"She probably did."
However there would be loopholes.
"There are always complications with that, but its unlikely to be the big determining factor in terms of what's happening with housing.
"He [Shearer] is trying to respond to what some people think are the issue, but I think it's really important to understand that there are a variety of buyers, as one of the surveys pointed out from the BNZ recently, a lot of the [foreign] buyers were out of actually Australia.
"Some people see buyers from certain ethnicities at auctions for instance, and assume that they're foreigners; that's a very heroic assumption on their front, it almost certainly won't be correct. They'll almost certainly either be permanent residents, or citizens.
Key said the major way to address the housing market was to increase the level of supply.
"The number of people who live overseas, who are not going to be permanent residents, who are not going to be citizens, who aren't going to have a student they could align that to, or whatever, who want to buy a property, I would have thought its relatively small, compared to the other issues.
Key disputed the claim that foreign buyers represented 10 per cent of foreign purchasers.
"The detail to this stuff is very weak. When we've gone to look through Linz [Land Information New Zealand] to see foreigner that own land, in fact the numbers we saw there were very, very small on the rural side.
"So I think you'll find the number of people, who live in mainland China, or some other part of the world, to be buying a $500,000 or $600,000 house in Pakuranga, you could probably count on your right hand."
Green co-leader Russel Norman welcomed the move as sensible and said Labour was "getting on board with another Green Party solution" on affordable housing.
"Housing shouldn't be a place for speculators it is a place where people live."
Political commentator Bryce Edwards said the Labour policy move was also part of Shearer's "last throw of the dice" as leader and he expected it to give the party a lift in the polls.