Foreign buyer policy 'a sham'

LAURA BASHAM AND VERNON SMALL
Last updated 13:00 29/07/2013
Nick Smith
MARK TAYLOR/Fairfax NZ
HOUSING MINISTER: Nick Smith.

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Overseas migrants will be welcome in Nelson but not to speculate in buying up houses, says Nelson-based Labour list MP Maryan Street.

Labour is pledging to bar non-residents, other than Australians, from buying existing homes in a move to curb the impact of foreign speculators on house prices.

Labour leader David Shearer said the move was part of a package of measures including a capital gains tax, excluding the family home, and a plan to build and on-sell 10,000 affordable houses a year 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.

However, Nelson MP and Housing Minister Nick Smith said this morning the plan was desperate and would not work.

It was the oldest trick in the political book to blame problems, whether crime, employment or housing prices, on foreigners.

Shearer said the next Labour government would ban non-residents from buying any existing house, flat or apartment. New Zealanders were "muggins" to allow overseas speculators to buy in our market.

According to a Bank of New Zealand/Real Estate Institute of New Zealand survey in March, about 9 per cent of buyers in the Nelson/Marlborough/West Coast were from overseas.

Of these, about a third were from Australia, which would be exempt from the new rules, about a quarter were from the United Kingdom, with the rest from a mix of other European countries and Asia.

QV registered valuer Geoff Butterworth said the Nelson market was strong for homes up to $350,000 but that was not the bracket overseas buyers were usually interested in. Instead, most bought $600,000-plus properties because they tended to have more money.

Street said housing affordability was an issue in Nelson, and the policy made sense because supply was the critical issue.

"If people who are not New Zealand residents are buying land on which they intend to build and settle that's fine because it's adding to supply but if they're buying up residential properties because there's no capital gains tax, stamp duty and it's easy to do that's compounding pressure on the housing market here.

"The purpose is clear, it's to allow New Zealanders to have first dibs on properties in New Zealand.

"In Nelson we have a particularly strong community of people who are not New Zealanders who have come here to live and nobody is going to take away properties from them. It's a sensible measure to help first-home buyers."

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Smith said there was no evidence to show overseas buyers were having a significant impact on housing prices, and the plan was shown to be a sham when Labour said it would exclude Australian buyers, the biggest group of overseas buyers.

More than half of overseas buyers were either residents, or intending to become residents, and many anecdotes of auction prices being driven up by foreigners were untrue. In one case he had looked into, a supposed foreign buyer was revealed to be a fifth generation New Zealander.

The housing market's real problems were to do with land supply, building materials costs, infrastructure costs, labour costs and compliance costs, and bills going through Parliament would address those, he said.

Shearer said his plan was in line with the one operating in Australia. Australians would be exempt from the rule, under reciprocal arrangements in place, and foreigners would be exempt if they were building new homes, because that added to the existing housing stock.

Shearer said house prices in Auckland had risen by 28 per cent since June 2009. Many other countries, including Australia, China, Singapore, the UK and Switzerland targeted overseas speculation in housing. New Zealand's lack of regulation left the door wide open to international speculators.

He said Inland Revenue records showed more than 11,000 overseas investors own properties they do not live in. An estimated 2600 homes were bought last year by overseas property speculators with no intention of living here.

NZ First leader Winston Peters upped the ante, calling for an immediate freeze on property sales to foreigners. He said Labour had only belatedly come to realise there was a problem with foreigners buying up houses in Auckland.

His party had repeatedly called for restrictions on property sales to foreign interests and written a draft law to set up a register of all foreign-owned land.

Speaking from Seoul, Prime Minister John Key said Labour's policy would capture only a tiny portion of homebuyers.

"The limited discussions we've had... is the group of people who fit within that category at the moment is very small."

Many of those believed to be "foreign" buyers were actually citizens, permanent residents, or buyers who could find someone to align the property to.

- The Nelson Mail

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