If this sounds familiar, it should do. In the UK similar language is often used to discuss the residential property market and the apparent failure of the government to address an apparent crisis in young people being able to enter the market.
Whether or not this action taken by the New Zealand government will address the issue is up for debate. Currently the bill affects non-residents but also doesn’t affect Australians or Singaporeans due to free trade deals between the countries.
As quoted by the BBC, New Zealand’s Trade and Economic Development Minister David Parker said: “This government believes that New Zealanders should not be outbid by wealthier foreign buyers, whether it’s a beautiful lakeside or ocean-front estate, or a modest suburban house, this law ensures that the market for our homes is set in New Zealand, not on the international market.”
However critics were quick to rally against the moves, saying that the new legislation won’t address the root cause of the problem, which is a question of supply.
Foreign investors now won’t be able to purchase most types of property in the country but will still be permitted to buy and invest in new off-plan apartments in new developments, which has also been criticised as a half measure.
The move has been celebrated by some in Europe and the UK as a progressive move towards tighter regulation of the market and has led some to wonder whether such a move would be likely to be introduced here.
There are indications that there is support for similar types of legislation with rent controls and caps gaining widespread support in Scotland. With fresh data showing rent increases outstripping wage growth, pressure is growing on the Scottish government to introduce controls to stop renting becoming unaffordable.
Of course, the New Zealand government has taken the sensible step of continuing to allow foreign investment into off-plan property developments with this being a key area of the economy where foreign investment drives growth. Any action taken by a UK government under similar circumstances – and it still remains wholly unlikely that such a move would happen – would likely be under the same conditions.
In addition, the UK property market is barely comparable to that of New Zealand due to the sheer volume of capital that is invested into UK property which is seen as a strong growth market by investors around the world.
New Zealand remains fairly small fry in the world of foreign investment and, despite quickly rising prices, their economy is only a fraction of the UK. With that in mind it is highly unlikely that similar measures will be imposed in the UK.
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