David Hargreaves says the new Government may need to rethink its idea for a ban on offshore-based buyers of existing housing stock in New Zealand

David Hargreaves says the new Government may need to rethink its idea for a ban on offshore-based buyers of existing housing stock in New Zealand

By David Hargreaves

There is a cynical technique sometimes utilised by unscrupulous governments (though not in New Zealand, certainly not recently) that might be termed as "the achievable military objective" strategy.

In its simplest form this strategy involves picking a fight with a foreign nation and then having a 'limited' war that the aggressor government knows it can win and thus providing a nice boost to its popularity. Everybody loves winners.

The thinking behind this technique is simple enough and essentially just follows the principle of fighting a battle the government knows it can win.

Such thinking of course is not limited to military objectives.

'An early win'

If one were for example a new government in New Zealand seeking to get an 'early win' on a key policy, then clearly achieving something symbolic on the vexed issue of housing shortages would be a good look.

I really wonder though if the new Labour-led coalition is not biting off more than it can chew by attempting in its first 100 days to progress some sort of a ban on offshore-based buying of existing New Zealand housing stock.

In theory, banning offshore-based buyers of existing houses is a good idea. I have thought so, and said so, for a while.

Unfortunately we have complicated the picture for ourselves by getting into free trade agreements that make such a policy problematic. The new Government may well not be pleased that it is 'stuck' with the actions of the previous government - but stuck it is.

With the best will in the world, I find it difficult to imagine a full and satisfactory solution could be found within 100 days.

Big problems

If the new Government, as was suggested by Labour prior to the election, implemented a foreign buyer ban now, but excluded from it for now countries with whom we have free trade agreements that preclude such bans, it would likely cause big problems.

Could we really with a straight face turn to China for example, and say that its people are barred from buying existing New Zealand houses (if they don't live in the country), but Koreans can keep until such time as we renegotiate our trade deal with them?

The new Government will not appreciate me comparing them with the current US administration - but look what's happened there with the infamous travel ban, currently now in its third iteration since being hastily implemented because Donald Trump wanted to look like a tough guy.

Credibility risk

What's clear is that if a government chooses to implement a measure that stretches outside of its own borders there's a risk it will get push-back from other countries, with the resultant possibility that U-turns may be needed on the policy. And that can be embarrassing and severely affect the credibility of the government.

If our Government cannot say that it can genuinely implement an offshore buying ban - that covers all countries - within its first 100 days then it should not try.

A failure of an early policy initiative could do quite a lot of harm to a Government which, goodness knows, is fragile enough given its three-party foundations.

There would be other 'easy' wins that the Government could achieve in its first 100 days that build its confidence and the confidence of the New Zealand people in it. Some simple straight-forward announcements on housing policy within New Zealand - IE that don't affect other countries - could certainly be achieved. There will be a lot of goodwill toward the Government in the early stages. A honeymoon, if you will. Early announcements of planning for new housebuilding activity, for example, would be well received and supported.

There's no need to start trying to take on other countries to prove a point.

We still need to know who is buying

The other thing to note on the whole issue of offshore buyers is that there is STILL no convincing, credible information available as to what percentage of house purchases in this country involve offshore-based buyers. We really need this information so there's no temptation to go off the deep end again with such ill-starred brainstorms as the notorious 'people with Chinese names are buying houses' Labour public relations disaster.

Without credible information suggesting, right now, that offshore-based buyers are making up a significant percentage of total house purchases, any move to ban such buying now would be a symbolic rather than practical move to help the housing market. Why risk that a symbolic gesture could blow up in its face?

Look, by all means investigate a ban and just how feasible it would be. But don't promise it.

I seriously doubt whether such a ban could be implemented within the three year term of this Government.

Stamp duties

Increasingly I think the solution might be to look at stamp duties - as apparently the previous government had decided was feasible. Okay, that might be a bit unpalatable for this Government in two ways - one, it will be a 'tax' and we know how Labour was run ragged by Steven Joyce and the 'Woooo! Labour will tax you!' National scare tactics in the election campaign, while two, there may be some philosophical doubts about stamp duties simply because National thought of it first.

However, it does seem likely that this is a policy that could be applied without international complications. Next question: Would it actually put buyers off? Well, the Government could try more of a carrot and stick approach. How about applying truly momentous amounts of stamp duty to purchases of EXISTING homes by offshore buyers, but no duty on NEW houses. This could therefore have a similar effect to a ban - without having to go through all the complications of putting a ban in place.

When all is said and done, the biggest perceived problem with offshore buyers is that they throw money into the country to bid for a limited supply of existing housing stock, thus driving up the prices of that stock and making it increasingly difficult - certainly for first home buyers - to get on the housing 'ladder'.

'A win-win'

If however an offshore buyer builds a new house they are increasing the housing stock available - and providing employment in this country into the bargain. That's a win-win.

So, I hope cool heads prevail here and the Government backs down on this one. There are always more ways of achieving what you want than you think. It just needs time to work through the options sometimes.

This Government has set itself a lot to do. It doesn't need to get bogged down so early in the piece by trying to win battles it might not be able to win without a struggle. Achievable military objectives please.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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The government can do as it wishes.

The Venezuelan Govt is a good example of one doing exactly as it wished.


As is the Chinese government. As is the Singaporean government. As is the...insert government of choice, I guess.

North Korean

A shining example of what 50+ years of socialist policy can achieve.

Almost zero carbon emissions.

Socialism and out of control welfare sunk Venezuela, not prohibiting the purchase of their land to non residents.


BS, there is NO direct correlation between those things, the more likely one is USA interference to be frank

Yeah, bang on Pocket aces. The CIA interferes and destroys countries political outcomes. Feeds the worlds media with propaganda to the point that the irrational becomes rational and total nonsense becomes mainstream thinking.
NZ is so guilty of believing CIA drivel that we even now are helping fight the so called war on terror. Our military is shamefully involved in the USA's invasion and subjugation of 2 countries who's crimes were??? Oh bugger, we have known for over ten years now that their crimes were CIA fiction and fantasy, but we are still there. We are still pretending that we are the good guys on the good guys team.
We still allow our media to print CIA drivel without questioning it. We are so incredulous at how Nazi Germany's people were sucked in by Nazi propaganda and yet here we are 70 yrs later still believing a media that has a trail of lies death and destruction in its wake and now warms us up for justification for war with N Korea and Iran. As if these countries haven't suffered enough from the West already.

And what has all this death and destruction been for? To protect the hegemony of the US dollar remaining the worlds reserve currency of trade.

And massive corruption from oligarchical figures, likely. The number of folk who fleeced the country of its assets then fled is legend. https://www.theatlantic.com/international/archive/2017/05/maduro-venezue...

This is less socialism in the sense of the populous owning shares in companies managed by professionals, and more of gangsters plundering a country they happen to be in control of.

I concede but probably a mixture of both, the oligarchs/dictators stripping the country first and foremost then the need for unsustainable welfare (I can see a similarity developing here).


You'd wonder whose socialism would be worse in NZ's case, then - Labour's keenness to address the underlying housing crisis, or National's papering over of it by increasing Working for Families, Accommodation Supplements and the First Home Buyers' grant - all things that ultimately supplement companies' low wage bills and serve to prop up housing further.

The worst kind of socialism is the one that woos you, traps you, then dictates your life to you, it comes in the form of huge corporations, think about it.

In my mind National's socialism (and it is disguised socialism in its worst form) as it is dishonest and ultimately serves to, what's the word, "disempower" the general population into believing that servitude of large corporations and taking on large amounts of debt is in fact being successful whilst keeping the truly "financially enlightened" happy.

Surely Jacinda has to okay any change with Jinping first, whatever the agreements actually say?

Be innovative NZ. Be the first one to test out some new political systems among other Anglo countries, so that good policies can be agreed on and implemented to benefit NZ as a national and over the long run.

Is China in the TPP, it wasn't in the old one. The negotiators must have been consulting Labour in an election year, wouldn't they?

Or were National running under the radar so they could present to to Labour as a fait accompli?

Both USA and China are absent from TPP.

Japan is now assuming the leadership role in reviving the TPP.

I'd recommend NZ to not spend any more energy in it.

"I'd recommend NZ to not spend any more energy in it."

We'll put that one in the things no one was ever going to ask you file.


The China fta left us able to change the law over foreign ownership, however, when the Nats negotiated the South Korean one they did not (probably on purpose) and having done that, we had to offer the same to China. It is one of the reason I despised the John Key govt as much as I did. That was one of the most arrogant things they did, and they did a few.


The labour government will get this ban done and why and how could any other country complain when most do the same anyway. Its mostly stupid nz (national) that didn’t. Its China thats been the largest of nz foreign buyers and the China government itself is sick of it happened and nzers can’t buy in China so their shouldn’t be any problems their

Certainly no one would be inept enough to sign a treaty that doesn't require reciprocity, nevermind China's 'mercurial' (I'm being nice) behaviour re: treaties.

What, our bunch of sycophants, they couldn't organize a piss up in a brewery, too busy kowtowing. I never agreed to our nuclear stance, however that attitude of "we will not be bullied" is to be applauded instead we now have a bunch of money grabbing sell the family silver bunch of short sighted [add your preferred expletive].

So David, are you suggesting Labour got elected on a promise they cannot fulfill ?

Firstly , Labour never got "elected" , they instead got into bed with Peters and got ............ (deleted ) .

Secondly Labour made outrageous promises , that anyone with half a brain would have realized they could never keep .

100,000 Affordable houses in 120 months ............ Do me a Favour , shake the other one .

They have not even set up the structure that is going to undertake this massive construction project, let alone staff and fund the project . That alone could take 36 months , if it EVER happens .

It will take another 36 months of protracted negotiations to buy or secure an option on the first decent tract of land and another 36 months to get resource consent just to build the first 10 houses.

The whole thing is a fiasco


Firstly , Labour never got "elected" , they instead got into bed with Peters and got ............

Parties with significant policy alignment went into coalition. What an absolute shock!

They are there because of the existing fiasco, it won't be easy to fix, but they are going to have to put on their big boy pants and damned well fix it.

Goodness, it might take time to build a major project, let's all go home.

Boatman ,
a question to you( no sarcasm .. I really am curious ).
As an NZF voter , are you happy with coalition outcome ?
Would you have voted NZF again had you known what the outcome was going to be ?

But they would have got a higher numbers of vote,s due to particular polices they promised, and this one was a biggie. They shouldn't have promised something, if they couldn't fulfill it. They should have researched to make sure they would be able to fulfill it.

The refrain heard after every election. Once you become the government you get a better view of the big picture.

The biggest joke is Labour taking over as house builder. 100,000 houses in 10yrs.
With proposed immigration of 40,000 a year, the NZ taxpayer is building their houses at 4 people to a house.
We the taxpayer also provide the infrastructure and services for all these people.
Can someone remind me again why we need them?

Yes , but it is National's fault .

Correct it is National's fault.


IMO all non citizens should be banned from purchasing property both existing property AND bare land. What is to stop them from just land banking. I recently overheard a REA giving their opinion to someone at an open home that they think bare land will become extremely inflated as every man and his dog from overseas will be trying to purchase it. If there is no possibility of an out and out ban then yes, put a stamp duty on ALL land for non citizens, but something in the region of 500%, that should help to even out the playing field, if non citizens cannot afford that and want to send their children here to study then rent just like most of the population here have to do. There is already enough of a backlog in house construction to keep builders busy for many years.

What is more important to current Labour Government : credibility in front of people of NZ who voted them (As they campaigned for ban on foreign buyers) or credibility with foreigners but am sure can act and maintain the balance though many with vested interest will try to argue otherwise but one should remember that with Labour is Winston Peter and he understand how so called experts and media try to influence.

Without the campaign on ban on foreign buyer - Have doubts if Labour would have won that many seats so they have no choice but to go for ban or face the tune also from people who voted for them (As it is 44% national supporters are after them along with powerful media).


I agree with you and I voted for the change. I fully intend to hold some feet to the fire over this, and the importation of way, way too many people.

That 44% of national supporters will probably be chopped in half if labour finds a good way to permanently stop foreign ownership stopping housing ever from going wild again. And the media are starting to look quite stupid with some of there dum questions. Then there’s if national losses English. Then there the National lies coming out. Na national are over for at least 9 years. Jacinda has a great vision and in 3 years she’ll be even more popular for sure. Even if she makes a few mistakes

I've been burbling on about the stamp duty thing for yonks, obviously too simple and does not make a return for the right people.

A recurring theme seems to be emerging...

I don't know about these ideas.
They are good ideas...
I'm just a little scared...
Somebody hold my hand? Jacinda?

This hand wringing about international agreements being breached seems like bumf to me. All Labour are trying to do is replicate the Australian model already in place. Whilst I would argue there are probably better ways to skin the cat, there will be hardly much concern from the Chinese at least, who are imposing controls on capital outflows, and expressly prohibiting investment in foreign housing.

Well, you'd think, but I am damned sure I wouldn't be putting the house on it.

Stamp duty of 100% of the higher of purchase price or government-ordered valuation should do the trick as a stopgap measure till the Government has renegotiated the South Korea FTA. As it would apply only to noncitizens it wouldn't break any promises of no new taxes.

Why the exemption for foreign buyers of new houses? Makes no sense to me, but then maybe there is an upside to lots of empty new apartments quietly ageing away. Has it helped in Aussie???

Surely the exemption just means that section prices will be higher, surely this is an own goal?

I thoroughly agree, if they buy more than one, they will likely be landlords and the number of foreign landlords we require is precisely zero, less than that if handouts from the govt purse are involved.

Exactly, crazy - that is what I have been harping on about. As far as I can see it will only mean that the cost of land will increase exponentially thus defeating any gain made, maybe it is political correctness gone mad

Actually, I maybe better off not to build (as the costs are sky rocketing) and sell my land six months down the line to frustrated off shore buyers, could someone please explain how that is good for NZ.

The theory is that; at least if foreign buyers purchase new dwellings, they are contributing to new supply (as opposed to buying an existing house).
The way that new apartment prices are tanking in Aus, perhaps it does have some positive effect

And nz landlords don’t add to supply, nz landlords are bidding against owner occupiers for the interest of tenants, but it’s like for like, same money same town, if everything’s fear and balanced all’s good

It is not as though Ardern and Twyford were not warned their rash undertaking would be unworkable without major dislocation. They dismissed this advice, insisting they knew better. Media articles aimed at conditioning us for an inevitable watering down of their position don’t alter the reality that the first backdown on a significant coalition policy plank is now likely.

They will do that at their peril

It’s Nationals fault. Only country in the OECD not to have any restrictions. Most expensive houses on the planet according to the economist article. Top 90th percentile income earners can’t afford a house in Auckland. What did National do? Nothing, apart from crank up the propaganda machine! National’s inaction has guaranteed considerable action by the new government.

Looking forward to it. Ardern says she is confident she will achieve a ban on foreign sales without jeopardising trade agreements. Sounds like the Asian Tigers will be pussycats and just roll over. Winstons is going to solve the Korean crisis. It’s all good then, eh !

Not so sure pocket aces. The honeymoon is still going just luuverly. Fawning media adulation for the coalition leader continues. Be an ideal time to quietly place a few not negotiable bottom lines on the shelf.

The number of absentee foreign buyers of residential homes is so minute you would need a microscope to see them.
This policy is a feel good one and is bound to fail one way or the other.

According to LINZ, wasn't it 3% nationwide, but 5% in AKL and greater than 10% in Queenstown?

So in AKL for B&T alone, that's around 700 properties they sold to offshore owner purchasers in the 2016 year;


Discussing section 54 of the Public Works Act on the news to break up banked land. Interesting times coming.

Yes, same report that said the SHAs would be canned.

That point came from nowhere. Can't see any references anywhere else to canning SHAs

I think existing house purchase can be limited to the Citizens only. All new comers and/or foreign investors can potentially be involved to purchase new houses. Additionally, foreign investors or non-owner occupiers can be allowed to purchase only high quartile houses. Kiwibank has policy not to lend any person if not having infinite in their residence visa status. Similar rule can be applied, if there is no passport or citizenship ID holders. You want to save the country people, please manage the rule for them so that they can survive and not the same rule for those already flying high. Constitution in a democratic country should be for the people and to protect from any potential exploitation. I know my comments are already smelling like racists.

Just slap on a stamp duty...as everyone else has done....why try and re-invent the wheel. Why waste tax payers money when the ready made solution is starring you in the eyes. Common sense politics required.

Any dilution of the promised and agreed to policies will undermine the credibility of the new government, so early into its start. I hope they think several times before issuing statements and intentions which are already confusing many. Action speaks better than just words. Over exposure is dangerous, without delivery. Remember 'under promise and over deliver' is the key to winning hearts and minds.

The crown has exercised exclusive right to issue (and transfer) land title since the Treaty of Waitangi was signed. To give up that exclusive right would be a breach of the partnership agreed to with Maori.

The real question should be: WTF were National doing signing into a free trade deal that we have to always allow Korean citizens the right to buy property here. If free trade deals are going to seriously impact our ability to make our own laws and govern ourselves, then these deals are not in the best interest of the NZ people.

Jamin. OK, why not now develop your point a little further and tell us which initiatives you’d cut from the governments spending program, as a result of NZ earning billions of dollars less from not being in these trade deals? Or do you really believe Arderns line that she can pull off these deals without the foreign investment clauses that have been a component before she burst onto the world stage?

The new Government is already hitting brick walls.

It's naivety and inexperience is starting to cause embarrassment.

Expect some policy U-turns in the very near future.......

Although exactly what those policies are is impossible to tell while Ardern refuses to release the secret addendum to the compromise deal Labour did with NZF. She used to talk about transparency. We used to have media that asked hard questions. Ah, the good old days !

Again, I note the reference is to "offshore buyers" - no mention of whether onshore foreign buyers are still allowed to buy. The vast majority of demand comes from foreign students buying houses paid for by their parents (in the expectation of future residency and parental visas, why else do you think their parents send them here?) and all those flooding into the country on work visas. If you dont stop the temporary residents, then any ban will be meaningless in practical terms.

Yes. And is why I’m intrigued at Twyfords confidence he will be able to develop (and implement by Christmas) measures that will identify the circumventions you describe. A destabilising collapse in immigration is likely if the pathway to residency avenue is cut, especially given inflows have already peaked.

I thought the Government was already gathering up the nationality of property buyers. I am sure I had to provide that information for the last property I purchased. I wonder why that information is not being published. I suspect it might come up with some uncomfortable data. What is the bet that foreigners from Europe and USA are a bigger factor than we like to admit. Do we really want the English buying our houses? Are they better or worse than Chinese and Korean buyers?

Tell you what, there's some interesting reading on Juwai and Hougarden sites, although they haven't yet caught all the way up with foreign buyer ban. I reckon what they are talking about is what is and has been happening.

I love this: write an opinion piece on how the government will have to rethink it's banning foreign buyers policy.........nek minute!