By Bernard Hickey
Finance Minister Bill English has denied demand from non-resident investors is a major cause of house price inflation, instead arguing that 'anti-sprawl' planning policies supported by the Green Party were more to blame than buying from China.
English was asked in Parliamentary question time by Green Party Co-Leader Russel Norman about a recent BNZ REINZ survey showing non-resident buying was responsible for up to 10% of purchases and that buying from China had risen to become 25% of non-resident buying.
"The BNZ survey I saw said it was about 6 houses in every 100 that are foreign purchased, and about a quarter of those are being purchased by Chinese, which means one and a half houses in every 100 may be being purchased by people that real estate agents think are residents of China," English said.
Norman asked at what proportion of sales the Government would consider foreign buying to be a problem.
"We don't have the same problem about them being foreign as the Greens do. What we have a problem with is the very high cost of housing in New Zealand to New Zealanders and all the analysis shows that the fundamental driver of the high cost of housing is not the Greens' friends from China, it is the Greens' friends in the planning departments of our City Councils who insist on blocking new development of new housing," English said.
"So the Greens are a much bigger enemy of affordability of housing in New Zealand than the Chinese have ever been," he said.
Norman then asked if increasing demand from foreign home buyers increased prices "or is this a special kind of market where a big increase in demand has no effect on prices?"
English said it was not clear there had been an increase in demand from foreign buyers.
"It's not obvious that there's a big increase in demand from offshore buyers. There's some anecdotal evidence that that is the case and I know it's certainly believed by some people, but it's yet to be established," English said.
"The fundamental driver of the increase in housing is the restrictive planning policy, which means that when there's more demand, whether it's foreign, or in this case New Zealanders who have stopped migrating and are staying home, and more people who are arriving in New Zealand as migrants, when those factors of demand are rising, the supply cannot react to it," he said.
"All around the world more restrictive planning mean higher prices and more volatile prices and the Greens back that kind of policy. They should be backing the Government on getting rid of that kind of policy if they're really concerned about locking low and middle income New Zealanders out of the housing market."
Norman then asked English if he agreed with Auckland real estate agent Adam Wang that "ambiguous laws" around capital gains taxes were helping drive an increase in foreign buying.
English said he couldn't understand why Green policies supported policies that "have the effect of driving the value of leafy suburbs at the expense of middle income and low income New Zealanders."