New Zealand plans to bar foreigners from purchasing existing homes.
The ban is expected to become law this year. It aims to slow the rising housing prices and protect New Zealanders interested in buying a home.
The Labour Party government believes that foreign investors have pushed many possible first-time home buyers and families out of the housing market.
Last year, median housing prices across the country rose by 5.8 percent, to over $405,000.
Housing prices rose even more in New Zealand’s capital city, Wellington. Price there rose by more than 18 percent over a 12-month period that ended in June 2017.
The rising prices have pushed home ownership outside the reach of many possible buyers.
One home owner told VOA he feels sorry for the younger generation.
“I look at my children and my family and friends’ children, and I really, really feel for them because I just believe the market has made it impossible for them to get into the housing.”
Just 25 years ago, three out of every four New Zealanders lived in their own homes. Now the rate is 64 percent — and falling.
The plan to ban foreigners from buying existing homes has yet to be approved. But the measure, called the Overseas Investment Amendment Bill, passed its first reading in parliament in December.
Restricting foreign ownership of housing has been tried in other countries, including Switzerland, says Norman Gemmell. He is chair of public finance at Victoria University of Wellington.
“So, there is a sensible economic argument that says, if lots of foreign investors — because there is money slewing around in the world looking for a good home — if lots of these foreign investors are looking to put their cash into New Zealand, if it then forces up the price of property so that people cannot afford to live anymore, you should think about what is the right way to allocate your domestic housing stock.”
Critics say foreign investors have had only a small effect on the cost of housing. Low interest rates, limited supply and immigration have also driven up house prices.
New Zealand’s trade minister David Parker says the restrictions are not just about price, but fairness.
“I am not targeting any one individual. I’m trying to protect New Zealanders against some of the excesses of global capitalism.”
Chinese investors have been among the biggest foreign buyers of property in New Zealand.
Political commentator Bryce Edwards says the ban is a sign of both intolerance in the community and concerns about capitalism.
“There is much more focus on inequality, and so there has been a lot more focus on wealthy individuals as the problem. And there is an ethnic element to it as well that is perhaps xenophobic or even racist. You know, there has been a great increase in Asian wealth coming to New Zealand and, regardless of whether it is investing here or moving here to live, New Zealanders are a bit more suspicious of that.”
Housing prices continue to make solid gains across the country. And for many New Zealanders, the dream of owning a home is as distant as ever.
I’m Ashley Thompson.
Phil Mercer reported this story for VOANews. George Grow adapted his report for Learning English. Ashley Thompson was the editor.
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Words in This Story
median – n. the middle value in a series of numbers
slewing – v. to turn or slide in another direction very quickly
cash – n. money
afford – v. to be able to pay for
allocate – v. to divide and give out
intolerance – n. a refusal to accept the rights of other people
xenophobic – adj. someone who is fearful or what is foreign or foreigners