PHOTO: Ray White chief economist Nerida Conisbee says opening up New Zealand’s housing market to overseas buyers could benefit the market if done right. Photo / Supplied
The National Party has announced its intention to implement a 15% foreign buyer tax on homes valued at over $2 million, with plans to overturn the existing foreign buyer ban for certain properties if it secures victory in the upcoming October election. This announcement was made as part of their tax policy release.
The foreign buyer ban was originally introduced by the Labour Party in 2018 to address concerns about international buyers outpacing local homebuyers in the market.
National’s proposal includes the introduction of a 15% foreign buyer tax on homes exceeding $2 million in value, projected to generate approximately $740 million annually in tax revenue. The ban would continue to apply to homes valued under $2 million. According to data analysis conducted by OneRoof and Velocity, only 5% of residential properties in New Zealand fall into the $2 million and above price range. Among local authorities, Queenstown-Lakes has the highest proportion of homes falling into this higher price category at 29%, while Auckland has the greatest number of properties exceeding $2 million, and the West Coast has the fewest, with just one property.
The research also reveals that, over the past two years, there have been relatively few sales of properties valued at $2 million or higher in New Zealand. Of the 133,170 completed sales since August 2021, only 5.3% (7,177) were in the $2 million-plus range, with Auckland accounting for most of these higher-value transactions.
Hamish Walker, director of Walker and Co Realty in Queenstown, and a former National MP, welcomed the tax policies, stating that they would likely lead to increased interest from overseas buyers in Queenstown’s high-end properties. He emphasized that foreign buyers generally operate in a different market segment and don’t compete with local buyers, citing examples of high-value properties that could have attracted American buyers if they were allowed.
Ross Hawkins, a high-end property specialist at Ray White, supported the announcement, noting that it addresses concerns about the impact of overturning the ban on first-time homebuyers and may help restore property values that were affected by the pandemic.
Economists and experts also weighed in, suggesting that allowing foreign buyers to purchase properties over $2 million could impact the upper end of the market but would likely have no significant effect on the general housing market. They believe that the majority of New Zealanders looking to buy homes are not operating in the $2 million-plus range.
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In summary, the National Party’s tax policy aims to introduce a foreign buyer tax on high-value homes while partially lifting the existing foreign buyer ban for specific properties, with the potential to impact the upper echelons of the housing market. Experts generally do not anticipate major repercussions for the broader housing market.
SOURCE: ONEROOF