Labour's housing policy data queried
Labour leader David Shearer has thrown down a challenge to his political opponents to say why his policy on foreign house buyers is bad for New Zealanders.
Labour on Sunday said it would bar non-residents, other than Australians, from buying existing homes.
"So what's the downside of this? That we stop foreign speculators coming in and pushing prices up? Where's the downside in that? We give first home buyers a better chance," Shearer said.
Critics have said the plan is xenophobic, would potentially breach provisions on free trade deals and would be impractical. They have also argued it would not have the planned impact on house prices, because there are few foreign buyers of property that would be caught by the plan.
Housing Minister Nick Smith said the policy was a gimmick and would not work.
"The proportion of homes that are purchased by overseas persons is just tiny. We need to focus on the real issues like land supply, like the cost of building materials, productivity in the sector, the compliance costs, the infrastructure costs."
Those were the things that would make a real difference for Kiwi families, Smith said.
"I just don't think there is a credible case that shows that overseas buyers are having any substantive impact on New Zealand house prices."
He said it was "the oldest trick in the book" to blame foreigners for unemployment, crime or house prices.
Shearer said there were estimates about 9 per cent of houses were being bought and sold by overseas speculators, but that was likely to be understated because data was being gathered by real estate agents.
"I'm fed up with John Key talking the big talk but no work. There is absolutely nothing there he is putting up to help those young couples."
He said the policy would not prevent New Zealanders living overseas from buying property here.
The onus would be on the purchasing solicitor to check if a buyer was barred under the policy.
He said the exemption for Australians did not breach the most favoured nation status in the China free trade deal.
Labour had been working on the policy for about four months and it had been put up by Labour list MP Raymond Huo who said it was an issue being faced in Hong Kong.
Smith said that on a recent trip to Australia officials had told him that a similar policy there was difficult to implement because it was hard to tell which buyers were overseas entities.
"They had no confidence that their provisions were actually making any difference in terms of being able to prevent overseas persons who are not moving to Australia to purchase homes," Smith said.
Labour's housing plan is one of several tools it would introduce to make houses more affordable, along with a capital gains tax and increasing housing stock.
The policy has emphasised how little information is available on who is buying houses in New Zealand.
Labour used Inland Revenue Department figures to claim 11,000 homes are owned by foreigners who don't live here, although an IRD spokesman said this number included expats and commercial property owners and excluded others that weren't making a profit and didn't have to pay tax.
BNZ chief economist Tony Alexander, who supports restrictions on foreign buyers, is perhaps the only person to provide evidence of the issue so far.
According to his BNZ-REINZ residential market survey in March, 9 per cent of dwellings were sold to people offshore.
Of those, 18 per cent were in Britain (foreigners and expats), 15 per cent were in China, and 14 per cent in Australia. Australians are exempt from the restrictions.
Only 3.2 per cent were sold to people who were planning to stay away.
Claire Matthews, of Massey University's Centre for Banking Studies, said not enough was known about the number of homes sold to non-residents.
"There is simply not adequate information to really make an informed view in terms of what impact it's going to have."
To make good policy, it was necessary to know who was buying the properties, where and in what price range, she said.
None of Statistics New Zealand, the Overseas Investment Office, Inland Revenue or Land Information New Zealand collect that information.
A spokesman for Land Information Minister Maurice Williamson said there were no plans to collect it.
Labour housing spokesman David Parker admitted there was little data available but said the move would have an impact - along with the party's other proposals.
"There's no one step that you can take that cures these problems of ridiculously overpriced houses, especially in Auckland, and everything that you can do that reduces the marginal price helps."
That would reduce the number of people competing for houses, he said.
"We're not into fortress New Zealand, we actually do want to have an open economy that trades with the rest of the world, but we want to do it on terms where it's in New Zealand's interest, and where we think that there is an adverse effect on New Zealand we are willing to act."
New Zealand's policy was based on Australia's, he said, while other countries such as Switzerland and Hong Kong had similar restrictions.
Real Estate Institute of New Zealand chief executive Helen O'Sullivan said the lack of data made generating informed policy difficult.
Overseas examples provided little evidence of whether the policy worked.
"We have places which don't restrict foreign ownership and they've got price deflation - and we have places where you have policies that do restrict foreign ownership and they have experienced price inflation as well."
Harcourts New Zealand chief executive Hayden Duncan said aside from a shortage in supply, there was not enough understanding around what the problems are. Anecdotal evidence suggested the sale of properties to foreigners for investment purposes were minimal.
"It just simply isn't happening."