New Zealand will ban foreigners from buying existing housing stock beginning in 2018, said newly elected Prime Minister Jacinda Ardern on Tuesday.
During her second meeting with the Cabinet of New Zealand, she and senior ministers of parliament agreed to restrict foreigners from buying homes as a way to curb speculation in the country’s real estate market and address the nation’s housing crisis, Ms. Ardern said in a statement Tuesday.
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The ban would not apply to Australians, as many New Zealanders live and work there and vice versa.
"During the campaign, we talked about our plan to fix the housing crisis. An important part of that plan is banning foreign speculators from buying existing homes here," Ms. Ardern said in a statement posted to her social media accounts on Tuesday.
"We believe housing is a right," she added. Legislation will be introduced by the end of the year as part of the country’s Overseas Investment Act and once approved could be amended or repealed in the future
New Zealand has seen property prices soar over the past decade. In Auckland, the median housing price has jumped nearly 70% in the past five years, to NZ$845,000 (US$578,563), according to data from the Real Estate Institute of New Zealand.
Recent quarters have seen some prices stabilize, but inventory in places like Auckland, New Zealand’s largest city, remain incredibly tight, according to a report last week by industry analysts Infometrics.
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"The Auckland market remains grossly undersupplied," said Gareth Kiernan, chief forecaster, in the report. "It will take many years for the region’s shortage of 42,000 dwellings to be addressed."
Some industry experts are not convinced the ban will make a meaningful difference. Several real estate agents told Radio New Zealand that foreigners are a small fraction of the market, with some suggesting its as low as 1%.