The Government has already announced a watering down of its proposed ban on foreign investors buying residential and investment property. Potential changes to the Overseas Investment Act would allow overseas buyers to buy new apartments off the plan or develop new homes, but they would, at this stage, still not be able to buy existing dwellings.
Parliament's Finance and Expenditure Select Committee recommended foreign buyers be allowed to buy into larger multi-unit housing developments, although there would still be equity restrictions on their ability to do so.
In new developments with a minimum of 20 units, overseas investors would be able to buy off the plan and retain them as an investment. However they would not be allowed to occupy them themselves and there would be restrictions on how many units in a new development could be sold to overseas buyers, likely about 60 percent.
These changes would make it easier for developers to secure development funding for new housing projects and increase their supply, as well as increasing the availability of rental housing.
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This is a notable shift, as Govt’s earlier announcements of tough restrictions quickly put a number of major developments into funding crisis situations as overseas buyers deserted the market. It appears Govt now holds a clearer view of the reactions to their proposed actions.
The proposed changes will still ensure that, for the present, the market for New Zealand homes is a domestic one, not an international one. Associate Finance Minister David Parker said, "We believe that from the most expensive seaside and lakefront properties to the most affordable homes in our towns and cities, New Zealanders should not be outbid by wealthier foreign buyers.”
Interestingly, the CER relationship between NZ and Australia removes most of these blockages and restrictions, something not widely reported.
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