Foreign house buying ban passes first hurdle

The law banning overseas buyers from purchasing existing homes has passed its first hurdle in Parliament.

Associate Finance Minister David Parker welcomed the first reading of the Overseas Investment Amendment Bill which has been referred to the Finance and Expenditure select committee.

“This law recognises and reaffirms that it is not a right for an overseas buyer to purchase a house here,” Mr Parker said.

“Our objective is to ensure that the New Zealand housing market is shaped by New Zealanders.”

The change is achieved by bringing residential land within the category of sensitive land in the Overseas Investment Act.

Under the law only New Zealand and Australian Citizens, and permanent residents of both countries, would be able to buy an existing home in New Zealand without going through screening from the Overseas Investment Office.

The Government continues to welcome foreign investment that brings benefits to New Zealand, including our businesses and communities. 

“We want to encourage foreign investment where it adds to our economy. But investment in existing homes by those who have no right to reside here, and no intention to live here, does not achieve that objective unless they add to housing supply.”

He said the law was another example of an active government acting on its promises.

“National said we could not do this but we did. They said we had to choose between trade agreements and controlling our housing market and we have shown that was wrong. They were either being incompetent or disingenuous - probably both.”

Mr Parker said he did not expect the change to have a huge impact on prices at this stage in the property cycle, but it would have a greater impact at other times, for example if and when overseas buyer interest surges again.

This change has to be made before the CPTPP comes into effect, which is why the select committee process has to be shortened.