Foreign buyer ban to bite

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A Queenstown lawyer’s in no doubt the resort’s property market will be disproportionately affected by the Labour-led government’s foreign buyer ban.

The Overseas Investment Amendment Act, aimed at improving housing affordability for Kiwis, takes effect today.

From then onwards, only New Zealanders, Australians – as they have automatic residency – and Singaporeans will be allowed to buy houses or sections in this country.

Other nationalities’ only lifeline is if they can obtain, or commit to obtaining, NZ residency.

The one exception is for managed apartments or approved complexes of 20-plus units which some non-residents will be allowed to buy into, but not occupy.

Lawyer Elliot Goldman, who’s obtained many Overseas Investment Office consents for clients, says “we have a lot of different overseas buyers buying at different areas of the market”.

“Generally speaking, they’re buying more in the upper end, so you’re talking about your Americans, your Asians.

“Unless they’re wanting to come and live here, they basically don’t have any way of buying.”

Economic development Minister David Parker told Mountain Scene in August: “We think that the NZ housing market should be a NZ market and that it should not be set by international buyer pressure.”

Goldman notes less than three per cent of NZ’s residential property is owned by foreigners, though that would be higher in Queenstown.

He says the new law’s tough on existing foreign owners who in the past have been able to downsize here.

“They basically can’t do that because they won’t be able to buy back into the market so they’re not going to list their existing properties for sale.”

He wonders if there should be an exemption for these people.

He says it could be tough, too, for employers trying to hire skilled overseas staff like engineers and doctors on five-year work visas, for example.

“Unless they get residency, it’s almost like a human rights issue.

“You’re saying there are certain people who have committed to being here who do not have the same rights as NZers and not even the same rights as Australians and Singaporeans.”

Meanwhile, local developer and high-end builder Wayne Foley says there’s sure to be “a dampening down” of the market for luxury homes.

In the next 18 months to two years, he predicts there’ll also be a drop-off in high-end house construction, affecting architects and consultants, firstly, then builders. He dismisses Parker’s argument that high-end builders won’t flee because they’ll work on affordable homes instead.

“The guys that build at the premium end of the market are not going to simply wake up the following morning and start building ‘shit boxes’ or building basic ‘Jo’ houses.”

Foley also warns fewer luxury tourist lodges, which typically draw foreign capital, will be built.

“A lot of the land that is developed for lodges and other premium developments didn’t necessarily start as commercial land, and they’ve shut the door on residential land.”