By Bernard Hickey
Prime Minister John Key has downplayed moves in Australia at the weekend to toughen its rules restricting foreign buyers of property and to impose a new 3% tax on foreign buyers in Victoria.
Key said the restrictions had not worked to slow house price inflation in Sydney and New Zealand could not adopt Victorian-style taxes because of its free trade agreements with some countries.
Key also downplayed news that the Hobsonville Point housing development had increased the prices of its Axis Series homes by $50,000 to $65,000 to as much as $550,000.
Key was asked at his weekly post-cabinet news conference about Victoria's announcement on Friday of a new 3% tax on foreign buyers of new homes and a 0.5% land tax on foreigners buying land from 2016. Also on Saturday, Australian Prime Minister Tony Abbott announced possible jail sentences and fines of up to US$500,000 for foreign investors who buy existing properties in breach of rules forcing foreign investors to buy new properties 'off the plan'.
Key said the changes announced by Abbott reflected an attempt to get better compliance with existing rules, rather than any new rules. He appeared not to have heard of the Victorian announcement.
"It hasn't worked terribly well in Australia. Sydney house prices have been rising as fast if not faster than in Auckland so having a restriction in that area hasn't really worked," Key said.
Key was then specifically asked about the Victorian announcement and whether New Zealand should move to adopt similar measures to avoid being the odd one out, given Singapore, Hong Kong and Canada have adopted a range of new taxes or restrictions on foreign buyers over the last year.
"Australia has had stamp duties withholding taxes and the like. Australia has had those for a very long period of time and it hasn't really changed the appetite," Key said.
"It doesn't mean you don't raise some revenues out of it, or at the margins you could do something, but at the moment there's not great evidence that it's stopped foreigners that are wanting to buy," he said.
"If New Zealand was to do that, it wouldn't be able to extend to Australians, Japanese nationals or Mexicans, because they're already covered under the FTAs that we have, so you'd have to look at other countries."
Hobsonville price hikes
Meanwhile, Key was reluctant to comment on news of the fresh price hikes at Hobsonville, which take the price of a 2/3 bedroom home right to the limit of the HomeStart grants for affordable housing.
3News reported the price of 2/3 bedroom homes would rising by $65,000 to the $550,000 maximum allowed under the Government's KiwiSaver HomeStart subsidy, which was revamped with a bigger subsidy for first home buyers to buy new homes on April 1.
"There are a lot of first home buyers and first home buyers buying property there," he said.
"The Government is doing everything it can to reduce those building costs and you've seen all sorts of steps taken around imported duties and the like that reflect that," he said.
"There really is a massive range there. I really wouldn't want to comment."
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