Foreigners and our Auckland houses Part II
Posted by Iain on March 13, 2015, 11:01 p.m. in New Zealand Economy
Last week’s blog asked the question whether non-New Zealand residents or citizens should be able to buy residential real estate. It sparked off quite a discussion. As usual I received a number of private emails (I welcome and prefer public comment on the blog) accusing me of being either ‘right on’ or a complete racist...
It is worth following up on some of the points raised.
A number of people read the blog and concluded that the Government is about to cut (or has cut) migrant numbers. Nowhere in last week’s blog did I suggest that the Government has or is planning to cut resident visas it is issuing.
Every year the Government has a programme that sees it issue 45,000 (plus or minus 10%) Resident Visas. It has announced no plan to change that. I am aware of no plan to change that.
It did cut numbers three years ago and has maintained those cuts but shows no inclination to cut further.
I have no reason to believe that decision three years ago had anything to do with real estate prices but everything to do with rising unemployment between 2009 and 2011 and the politics of being perceived to be keeping jobs for locals...
On me and my fellow New Zealanders being complete racists I can simply say, grow up.
If you're a racist you are unlikely to last the 26 years I have as an immigration adviser.
I - along with 95% of other Kiwis - don’t give a monkey's who our neighbours are so long as they are clean and tidy and don’t play heavy metal music till 4am in the morning.
I am in the position of owning two houses and an office. It is my interest for those to be worth as much as possible because one day I will likely sell two of them and live in the third. If the buyer is a non-resident or citizen the richer (monetarily), my retirement will likely be. Turkeys don’t usually vote for an early Christmas.
I am however very prepared to forego some of that retirement ‘lolly’ if it means my children can afford to buy a home in their own city.
Does that make me a xenophobe?
If you were to migrate to New Zealand and bring skills we need to help the economy I also believe that you should have access to an affordable home to live in so you too can have the security of home ownership.
So when I speak of disincentives against non-resident visa holders or (dual) citizens buying residential property in Auckland, I am not referring to migrants who choose to live here. As I said last week in my view they have as much right as I do to access the local residential market.
In the past five years Auckland house values have increased by an eye watering 51%. Across the rest of New Zealand it is only about 4.5% so this phenomenon is very much an Auckland issue.
As an Auckland issue I could live with an Auckland solution which might include:
- Banning non-resident visa holders or (dual) NZ citizens from owning residential property in Auckland; and/or
- Only allowing non-resident visa holders to buy empty land and building a house (as they do in Australia in order to increase housing stock) and/or
- Requiring any local buying a second home to come up with a larger deposit (as they doing Hong Kong and Singapore)
- Adding a tax to non-residents buying residential property if they sell within a few years (as Singapore does)
All of this might slow down house price inflation in Auckland, reinforce the regional development aspect of the Government’s immigration policies by encouraging migrants to settle outside of Auckland and bring the price of homes into an affordable range over time for more locals and immigrants alike.
If I you think I am wrong, share your reasons why in the comments box below. If you agree, I am interested in knowing why.
Until next week
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Very well said!!!
Iian is completely spot on and any who disagrees is likely to have not spent much time pondering the subject or is myopic and/or greedy. Coming from Singapore, I can share that it took thw government way too long to introduce cooling measures to stabilize the housing market. Too little too late. Housing prices shot up tremendously (way past fair value) and have had a knock-on effect (inflation) on the cost of living. Having very lax rules regarding non-residents buying property is not sustainable. It leads to speculation, property bubbles and more importantly unhappiness amongst locals and residents who want to live and contribute to that country.
I hope to be one of those soon in NZ soon and would want affordable / reasonable house prices in Auckland, not insane prices inflated by cash-rich speculators who are not seeking to make NZ their permanent home and contribute to NZ. Peace!
I do believe that non-residents or citizens of New Zealand should be able to buy property but it should be governed. what we see here in South Africa (which is far worse to what's happening in New Zealand) is that people are getting away with purchasing housing and they almost don't even exist, on paper they seem legit. they buy property demolish it and leave the land open for people to squat on and almost all of them are illegals. things need to be controlled, I lived in New Zealand in 2002 and I loved the place and have been hoping to return with my wife and son someday. the last thing you want as a citizen or not is to have to pay for more than what a place is worth especially when you want to buy to live there and not buy to rent out.
As a recent immigrant to New Zealand from Singapore I was allowed to purchase a 5 acre property (freehold with no stamp duty) near Hamilton, fu?ly renovate it and build a fabulous stable block, sand arena and office/ mancave, all for the price of a 600sq ft 2 bedroom closet/apartment in Singapore. There in lies your pricing dilema. Price perspective on New Zealand property is no longer a local phenomenon but a foreigner driven one, regardless of volumes purchased and by whom. Controls must be put in place to prevent external valuation factors skewing actual local supply and demand but good luck with working out what those controls should be with such a huge actual price gap (not 'ratio of price to income measurement' which makes not a blind but of difference to a foreign buyer) between Auckland and its benchmarks cities of London, Shanghai, Singapore, Hong Kong, Sydney and Moscow. Auckland property is still as cheap as chips and prices outside Auckland are as cheap as the cardboard container the chips come in compared to the rest of the developed world.
Iain, I completely agree with and support your 4-point suggestions to control the ever-increasing house price. Just like Singapore, Malaysia also has its 'Property Gain Tax' to help curb the speculation.
Totally agree with the 4 solutions as suggested, particularly point 1 which exactly what is not happening or governed in my home country here. It is horrifying to know and as a matter of fact, my children can't afford to own a decent 800sqft apartment 10 years from now. It is already ridiculously expensive as we speak now. The control is necessary for the residents' future.
I believe NZ has the fairest rules and laws in place, having lived in the UK and Singapore. Where i am a citizen and PR respectively. I also believe there should be rules and processes in place to protect the local market conditions and citizens of that country. The rules in Singapore, as Iain mentioned are there to protect the already rich and local community and people from certain countries, just buying up property in countries to make money, is not good and should be blocked. Especially when they have no intention of ever living there or of actually, of ever having visited that country previously !!!!
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