The controversial Overseas Investment Amendment Bill has passed its third reading with 65 votes for and 57 against and will become law in a matter of weeks

The Government’s bill banning foreigners from buying New Zealand homes is now set to become law in weeks after passing its third reading in the House on Wednesday.

The Overseas Investment Amendment Bill was passed with Labour, New Zealand First and the Greens’ 63 in favour and National and Act’s 57 in opposition.

Speaking in support of the Bill, Minister of Trade and Export Growth David Parker reiterated that owning a house in New Zealand is “a privilege, not a right.”

“We believe it’s the birth right for New Zealanders to buy homes in New Zealand in a market that is shaped by New Zealand buyers, not by international price pressures.”

He says there can be “no doubt” that international buyers are having an effect on the marginal price in the housing market.

“There can be a debate as to how much the effect is on price, there can be no doubt that there is an effect.”

Parker was also at pains to point out that the Coalition Government is “committed to being an outward looking trading nation".

National’s Judith Collins was not as optimistic about the new law as Parker.

“The National Party opposes the Bill because we don’t believe that it actually fixes any problems.”

She says it’s the sort of bill that a Labour-led Government a decade ago would have never done.

“This bill, in many ways, is like using a hammer to try and crush a tiny winy little nut because it is a about saying every residential house is now apparently sensitive land – that’s nonsense.”

The legislation has been one of the most controversial bills this Government has passed in its time in office so far.

It attracted hundreds of submissions, many in opposition.

It was originally Prime Minister Jacinda Ardern’s plan to have the Bill passed in early 2018 as it needed to be in place before the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect.

But once the timeframe for the CPTPP was extended, the Government extended the process of the OIA Bill so to allow for a longer process.

The Bill will officially become law once it receives the royal assent in a few weeks’ time.

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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174 Comments

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Congratulations COL

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39

So 'little ole NZ' politicians have had the strength of character to pass a bill that every other Western government should have done, but lacked the Kahunas to do...

The boss has only been back at work a week, god bless her... she's got bigger balls and more firepower than the cumulative offerings of the last administration..

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Excellent news. Well done to the government

Good to see that the Mainstream Media are keeping things very 'Hush Hush' and burying their coverage on this already. It's front page news on the BBC though even if the vested interests in NZ would prefer it to be swept under the carpet...Whatever you do, don't let the First Home buyers hear about this or they'll probably go on strike as well!

https://www.bbc.com/news/world-asia-45199034

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I really hope this has the desired effect. I'm heading overseas shortly because I just cant afford to live in NZ and own a house. If housing becomes more affordable I would love to return.

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This is exactly why we need this law. I hate to see our young people not able to afford housing in their country of birth. I hope you return and are able to give your children the things that you enjoyed as a youngster.

You mean suburb of birth. There are houses for less than $100,000 in Gore which is still the country of birth for everyone born in NZ

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Indeed. Perhaps all new student immigrants could be required to live there, or all investors be required to own five empty houses there...?

Brilliant idea

There are houses for less than $100,000 in Gore

You are lying.

People keep repeating these myths about how ridiculously cheap provincial NZ is. But their prices are all from 5+ years ago. There are houses for less than that in villages within commuting distance of the mighty city of Gore, but none within the metropolis itself on realestate.co.nz.

The housing bubble has affected EVERYWHERE.

Ngrrk

Have a good holiday and we'll see you at Christmas.

Haha, hopefully!!

There are still many hurdles to go. We're still handing out residency to fake students, chefs, taxi drivers, family members etc.
Land banking still tax free.
Covenants.
Subdivisions are still held up by RMA issues.
Building consents are slow, expensive and make and inflexible to on site changes.
Low quality building materials are sold at ripoff prices. With our re-invented standards enfored by sloths at the councils who can import anything. Because of all the compliance bullsh!t commodity materials (cement, polystyrene, steel) can be sold at extravagant prices under certified "engineered solutions" like Fletchers' RibRaft. This is supposed to make our houses less higher quality and lower the risk of defects - all it does it put more of our money on the line.
Every single story house still needs scaffolding, certified safety nets, safety consultants, temporary fencing, power tools tested every few months.
Your brand new house will probably come with crap infrastructure too. Expect to filter your own water and repair your car suspension after hitting pot holes.

Now with these costs of all this the home owner must involve all the useless FIRE people to manage the finance and extra risks associated with owning a $500k pile of timber and bricks. Banks, mortgage brokers, conveyancing lawyers, insurance.

Certainly needs to be comprehensive information to the consumer on all aspects of house construction and materials. The Act being passed is an attempt to DAM a river that has many branches to it and may prove nothing more than symbolic. Your points may be well be the problem and that the increase in population was also not well catered for by the last government. New Zealand was just not set up for an expansion of population of this multiple in such a short space of time. I doubt that labour will be able to do anything to streamline the economy and already are just telling people to wait for the next economic revolution that will be just around the corner once there new plan is implemented..... well shall see...

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If it doesn’t work then we can always try something else. At least it’ll only impact on less than 3% of all buyers in New Zealand so no real damage.

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If I ever run into you i'll buy you a beer Dan, i like your sense of humour :)

So do I... if you do run into each other, allow me to add a magnum of good Pinot from Martinborough to make sure that its a good evening.

If you’re ever in town, leave your contact details on one of those business card sized classifieds behind the checkout at Countdown. I’ll try to remember to keep an eye out whenever I’m getting groceries.

GOVERNMENT WARNING - An Immediate Government Warning has just been issued to all those businesses that pretended that they were businesses and took advantage of the tax system but actually aren't businesses because they were never 'busy' and actually didn't employ anyone!

https://www.bing.com/videos/search?q=emergency+exit+video&qpvt=emergency...

3% of house buyers being foreigners does not preclude 100% of foreign investors only investing if they can buy houses.

Even better!

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The new government is certainly getting things done. Unlike National who did nothing to stop housing inflation get out of hand in Auckland. Another term at least.

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I'm sure the pubs around Auckland must be quite full, all those that were speculating on massive price increases over the last couple of years will be hoping that today didn't happen

Governor Orr still seems to have their backs. He's willing to lower the cash rate and fire up the printing presses, he said so himself.

those powers are akin to a fart trying to battle a hurricane....................

That's untrue as finance is directly tied to house prices - like it or not, good or bad.

By Finance Zach, I presume you mean credit availability? That's drying up, so 'good or bad' that's the future and the foreign cash tap has just been turned off.

You don’t need to presume anything. He specifically said cash rate and fire up the printing presses“

the new MPT implemented by reserve bank now is attempting to control the market. We have advised all our property investors that it would be unwise to consider the residential housing market as price demand driven. The reason house prices have stalled is the RBNZ power to control housing loans at source. This came into effect long before labour took power. Please state facts and I see no facts on this forum just rubbish emotions.

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National and Act voted 57 in Opposition - clearly in their heart of hearts they believe there is no housing crisis. That's how it looks to the public anyway.

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they had to oppose it due to the amount of Chinese backing the party gets.

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Yeah I have a mate who went to a national party event recently in Auckland. He reckoned nearly half the attendees were of Chinese ethnicity.

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Hey Fritz, did you want to start singing Kenny Rogers to them They've been propping up Sky City profits whilst leveraging themselves in the Auckland housing market!

https://www.youtube.com/watch?v=kn481KcjvMo

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Taking a wrecking ball to Sky City would be a great step forward. Maybe that's the way to solve the housing crisis.

Am I alone in thinking casinos are a really, really bad idea? They attract all the wrong people, and encourage all the wrong habits, they are endlessly destructive institutions meticulously engineered to suck the life from all who enter in.

No, you're not alone. And much worse, we extended gambling's reach by way of pokie machines in nearly every neighbourhood in NZ and in doing so, specifically targeted our poorest areas.

When you have COL financial support for 'pretty horses' you know that there is no will to tackle this issue. In an ideal world we would do away with gaming altogether as I fail to see its positive side of it; that includes Lotto, pokies, casinos, sports betting, greyhounds and pretty horses.

Yes, if ever it was a case of opposing for opposing's sake.

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The Nats don’t give a toss about kiwis, beyond the top 10-20%

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There is no housing crisis.

John Key got 20 mill, and their mouth piece on TV the Hoss, got 9 mill. Happy days for them.

Let them eat cake to the masses.

Dying to know where Hosking's buyer is from

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That's why they are sitting in opposition. They are arrogant and failed to listen to NZ. Refusing to acknowledge housing crises and ban foreigners. One good thing this CoL did and only way it was going to be done was to get rid of national and their ACT monkey.
You really have to question whose interests were they looking after and whether there was some backhanders from foriegners.

I will be remembering these National MP's. Highly likely that I will not be voting National until all of this lot have been flushed out of the system.

When would we get to know the effective date?

from the herald article:

Some provisions critical to the operation of the new regime will start immediately following Royal assent, with the new screening requirements commencing within two months of Royal assent.

So about three months.

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Property prices are declining the world over because of the Chinese Govt clampdown on the Chinese buying foreign residential property. Of course, many are still managing to smuggle funds out of the country particularly since Australia and NZ (until recently) hadnt bothered to apply anti-money laundering rules to real estate. But better to have this law in place for when the Chinese Govt decide to allow Chinese citizens to start buying again.

Totally agree. But most other markets like Australia, Canada and Singapore have been much more sensible by increasing stamp duty on foreign buyers, not sending a very negative and non business focused message of a ban. A ban is the wrong message NZ should be sending to the world. The message should be we have a premium product and if you want a piece, you’ll need to pay and maintain it. Those tax earnings should go directly to infrastructure projects. Labour is short sighted and anti business.

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Housing is not a business.

A ban is exactly the sort of message we should be sending.

If housing is not a business, how do we get houses built? Are you proposing government builds all NZs houses?

We don't get them built by having foreigners with deep pockets buying up existing stock to flip. Second hand houses are a great first step for young people wanting to start out at home ownership, they shouldn't be outbid by speculators who want to buy low to maximize gain/yield.

The ban doesn't prevent foreign investors from building new houses. That's how houses will get built.

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No. Housing for everyday kiwis is not something that should be sold on the international stage. The ban is much needed and well overdue.

Absolutely agree. Actually probably better to do it now, seeing as prices have softened, the effect won't be as marked, but it should help if they loosen the strings as you said.

Big picture view probably a good thing to align us with most other countries will it make a difference probably not but time will tell.

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OIA Bill set to become law.

Well done,Labour.

NZ open for business,investment.But,not money-laundering ,unhealthy speculation .Housing is not a casino or bolthole for super rich with an eye for flipping properties

hip hip hooray

The speculators will hopefully run away

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So, ticked that one off the list... Next on the property agenda... Removal of Negative Gearing...

'Those is favour!'

Isn't that already locked in.. to be removed from next year

not yet, but Jacinda's government are wielding a very big stick .... so it'll happen and need to.

Bring in dti. Approx x5 would be a start and plan to wind back.

Thats not going to help FHBs.. need to do things that bring the cost of building/consenting down so FHB can actually buy something with a 5x DTI first.

Like Special Housing Areas?

Yep, they are a small start.. but I'd prefer that the govt grabbed the AUP and fed it into the shredder and then broke out a box of crayons and started fresh, along with a redo on the building standards and doing something about breaking the building materials lack of competitiveness.

Banks are already doing this from a self regulating point of view. For about 2 years now.
I can say from first hand rejected finance experience.

https://money.cnn.com/2018/08/15/investing/new-zealand-property-foreigne...

WP economist says prices may fall, while this morning they said it will rise

shows what an amateur he is, to contradict himself on the same day based on information that has been telegraphed for months is sad to say the least

He’s a clown.
And it’s bullshit that bank economists are ‘independent’.

Not sure how you can hold your job tomorrow when you are senior economist who is quoted in two completely different directions within 24 hours...... all it highlights is that the bank he represents cannot be trusted to act in their clients best interests, or are exposed nude when the tide goes out.. it's probably not his fault but it's so disingenuous that it just makes everything smell very fishy,

Well he needs to drum up confidence by talking up the market, even if it’s a complete lie. Talking down the market is just a public relations insurance policy.

“No no no....b-b-b-but you’ll see that on this day I said that the market was going downwards you’re just cherry picking quotes”.

Kiwis have always travelled overseas to see the world, gain experience and earn serious coin to be able to come back and afford to buy their first house.
The mass brain drain during Helen Clark’s first term saw hundreds of thousands of Gen Xers head to London. Many stayed and earned enough to return over the past 5 - 10 years and buy their first homes.
This brain drain reset surely was a driver for house price increase along with immigration of skilled people who want to come to NZ for a better life.
I just don’t get the focus on FHBs at the moment. No generation has had it easy for several decades. Most Gen Xers couldn’t buy their first house till their mid to late 30s.
Millennials these days seem set to stay in NZ and ask for govt handouts like subsidies and kiwibuild and are keen vote to block progress (ie immigration).
Definitely go overseas, get some awesome life experience, save some coin and return. Most previous generations have done the same thing.

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Previous generations also faced an environment where successive governments had focused on increasing supply, and increasing access to home ownership. That's a part of how NZ achieved its once high rate of home ownership. Check out the book https://www.bwb.co.nz/books/home-truths for some background.

It's simply not true that previous generations did it all on their own two feet, without any government effort to foster home ownership.

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What sacrilege Rick! I thought people buying in the 60s and 70s only did so because they worked two jobs and didn't eat avocado on toast at flash cafes

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Fritz.. Wash your mouth out young man.. Avocado on toast was only eaten when you got home from work at 4.30 after your wonderful wife had looked after the kids all day (at home), because that's what she chose to do because you'd only borrowed your salary to buy it at 2.5 times income rather than 7 times combined... bet the avocado tasted better at 4,30 rather than 6.30pm as well.. less time to go brown!

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It’s a laugh isn’t it. Today’s generation are expected to save for a deposit near enough the equivalent of what Baby Boomers could buy a house for in income terms. Why did Baby Boomers need to take out Housing Corp Loans (could they not save?) and why do they now look down their nose at the current generation?

I'm calling you out on that, avocados hadn't been invented in the 60s and 70s

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You obviously didn't go to the house parties I went to with 3 to 4 people dossing in the same room (good parties though), most worked as builders, teachers, drivers etc and blew there money on the van trip then came home and had kids. Only a rare few were lucky enough to earn big coin.

Handouts, that's a laugh, all they want is affordable vs income, not just them everyone. The prices are out of whack with income.

This sounds remarkably familiar to me. That first paragraph is exactly as I saw it.

The time to be in London was the nineties.

I wouldn't go into rebutting this comment, as other commentators seem to be doing a fine job.

The thing is, Millennials are going overseas, and they are chasing better careers, pay, and experiences. The difference is that this time, they might not be able to return in 5-10 years time. Not if the high housing prices, high livings costs, and low wages persist. So by the time they actually think about (or can afford to) come back, the tax base has been well and truly eroded. Noone will be around to pay for the essential services and Super that the Boomers and X'ers will be relying on.

'Watch, worry and wait',

Na, property prices 2 keep falling

I'll watch and wait - happy to leave the "worry" to those that should.

Watch, wait and applaud...

The Chief Censor is busy tonight on this thread. Hardly necessary, only some robust debate.

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I am quite surprised by the 57 votes against. Either they are just plain naive, or just plain stupid. These people are shaping the fate of many New Zealanders with little care for the consequences just to save their ***. MOST LIKELY THEY JUST DON'T WANT YOU TO KNOW THE TRUTH.....A recent article published by a US paper.

"According to a recent report by NAR, Chinese buyers have been the top foreign buyers of U.S. residential property for three straight years, hitting a record high. As a group, they surpass top buyers from Canada, the U.K., Mexico, and India. Between April 2016 and March 2017, Chinese buyers purchased more than 40,500 housing units, worth a total of $31.7 billion. That’s up from of 29,000 units and $27.3 billion the year before. Sixty-seven percent of those units were single-family homes, and 61 percent of all sales were made in suburban areas.

With housing prices on the rise, Chinese buyers are also looking beyond just California and New York, which have been popular thanks in part to the prominence of Chinese culture there. Texas, Virginia, Florida, and Indiana, for example, have become top destinations this year, according to NAR, as buyers expand their geographical reach in search of a better bang for their buck. And while Washington state didn’t make it to NAR’s top destinations (NAR analysis actually found investment there declined), data from Juwai suggest that the top market so far this year lies in the greater Seattle area. The area saw an influx of foreign interest last year after neighboring Vancouver (another hotspot for Chinese investors) imposed a 15 percent tax on foreign buyers."

Don't be surprised, it is not a conscience vote. Votes are cast as the party dictates.

even though national spoke against it and voted against, a lot of there speaking was sprinkled with reasons for it to be made stronger, if you read or listen to the speeches you become confused as to what they are arguing for.
eg
Rt Hon DAVID CARTER (National)
I'm sure the Hon David Parker himself knows of many, many properties, farm properties in particular, which have been sold to an overseas investor, they have gone through the process to get overseas investment approval, they have made all sorts of promises about developing the property, spending more money planting this and that, employing more New Zealanders, and from my local knowledge very infrequently do the purchasers comply.

I can quote one or two examples—I won't, because I think it's the Minister's job to know these examples

Statistics for New Zealand?

We want to trade globally , we want to buy goods and we want to sell goods. Imagine if the next step is for china to say.. We have enough milk production now, New Zealand milk supplies are banned.

Now thankfully that is not the case.

Imagine what would happen next.....

From what I see on the MSM media sites. Most comments seem to see "Foreign buyers" as non NZ Citizens. Oh how wrong they are.

I doubt this will have the impact everyone is hoping.

1. We haven't banned Non NZ Citizen buyers. We have only banned Foreign buyers generally residing overseas.

Section 7 amended (Who are overseas persons)
In section 7(1), replace “resident” with “ordinarily resident in New Zealand”.

2. Loopholes galore Sections 16E, 16F, 16G and Schedule 2.

Thanks Noncents. always good to have a supporter of the plan to help close the loopholes!

61C is a good one too. National wouldn't need to repeal the legislation, the appointed minister can just grant exemptions where they see fit.

61C Minister may grant individual exemptions

(1)
The Minister may exempt any transaction, person, interest, right, or assets from the requirement for consent or from the definition of overseas person or associate or associated land.

(2)
See sections 61D (criteria for all exemptions) and 61E (other provisions applying to all exemptions).

(3)
The Minister must publish each exemption granted under subsection (1) on an Internet site maintained by or for the regulator.

True, like a minister deciding to sell their parnell mansion at a ridiculous price while keep the tennis court to a foreigner.

Surely to be “ordinarily resident in New Zealand” would require a long term visa? The people washing their money here are not going to be bothered with doing that. They will just move along to the next easy target. This law doesn't have to be water tight, it just needs to make thing harder than other destinations.

I believe it can be as simple as declaring intent to be a resident for tax purposes.

or failing that they can sign there kid up as a student and let them buy the property on their behalf.

Also, once bought (lets assume Legitimately with a valid visa) I don't see anything that states they must sell if/when they no longer hold the visa. The law only covers the purchase, not the ongoing ownership.

See comment below, a student visa is not a residence class visa.

permanent resident visas and resident visas both entitle the holder to reside in New Zealand indefinitely

Yes, I have done some additional digging myself, and confirmed student visas are not allowed to buy.

Thank goodness!

So on to the next loophole.
- Buying on behalf. e.g. friend, family, associate.
- NZ Trust
- NZ Registered company
- National amend the law in their next stint in power, or even worse
- Jian Yang as immigration minister for next National Government. He can then just OK whoever/whenever.

and my personal favourite (because I know how much it happens already), the outright lie. Made secure in the knowledge that the checks and follow up are minimal to non-existent.

Refer to 41e of the legislation.

41E Regulator may issue notice requesting disposal of property
(1)
This section applies if the regulator has reasonable grounds to believe that a person (A) has, in relation to property,—
(a)
contravened this Act; or
(b)
committed an offence under this Act; or
(c)
failed to comply with a condition of a consent or of an exemption.

Aoteoroa or as most people know it - land of the long wet bus ticket.

I wouldn't hold my breath on actual enforcement and/or penalties. The word "May" is the giveaway.

Is a "Trust" considered a Qualifying Individual?

4 Who are qualifying individuals and key individuals

(1)This clause defines certain terms for the purposes of an overseas investment in sensitive land that is considered under the commitment to reside in New Zealand test.

(2)A person is a qualifying individual if the person—

(a)is a New Zealand citizen; or

(b)is ordinarily resident in New Zealand; or

(c)is an overseas person who holds a residence class visa granted under the Immigration Act 2009; or

(d)is an overseas person of a type that is specified in regulations made under section 61(1)(ic)

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David Parker - “He says there can be “no doubt” that international buyers are having an effect on the marginal price in the housing market.”

Hallelujah – sometimes I feel like a lone voice on the impact of the “marginal buyer” – the naysayers focusing on the 3% is just disingenuous and simplistic nonsense.

And speaking of disingenuous and simplistic nonsense – Hosking’s piece in the Herald this morning at best was worthless drivel, at worst a simpering National Party hack who’s run out of ideas and can’t abide the fact that they lost.

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Ignore him. He's an attention seeking idiot who is an expert in precisely nothing.
HIs garbage despoils the worthy Herald content from the likes of Wilson, Dann and O'Sullivan

Custard.. But more relevant is the removal of your 'marginal buyer'

I hope my illustration below is not too simple a representation of what I believe to be the impact of the removal of the marginal buyer..

'Mike had a plan, he was going to sell his house in Remuera for $9,000,000 and move to the countryside... it was all looking so good. Mr Chan would buy it and everything would be sun beds, all day cocktails and happy days for eternity....

He was going to buy Mrs Hawkseby's place for $5,000,000 in Hamilton and commute each day for work.. He was going also going to use the other $4,000,000 to buy a place in Queentown for $2,000,000 (before in got renamed Shong Kong) and two investment properties.

The owners of the house in Shong Kong, I mean Queenstown, were licking their lips raw at the prospect of $2,000,000 from Mike because they were going to buy in Wanaka for $1,000,000 and in Nelson for $500,000 along with a place in Welly for $500,000 to rent out for income..

Mrs Hawksby and her husband in Hamilton were also licking their lips at the prospect of $5,000,000 dollars from Mike... They'd had plans to skip the country and buy in Sydney near the harbour, near their daughter and grandkids and spend the whole lot on a waterfront view.

The sellers in Nelson just wanted to retire and put the £500,000 from Mr Hosking towards a nice nursing home and a stable future.

In Wellington the sellers of the house wanted to give their $500,000 to each of their two kids to give them a start.

Mike still had $2,000,000 to play with and he was going to use that to build (with a good mate, think his name was John) some apartments in the Hawkes bay to turn another 'wicked return' on cash...

Then, all of a sudden, Mr Chan disappeared..... Dave Fletcher was around (but the Fletcher's hadn't been doing so well doing their building stuff so all Dave could offer Mike was $5,000,000)..

What happens to everyone else?

Ah the impact of the marginal buyer... I think that's what you were referring to Custard when you first introduced me to Mr Marginal....please excuse my rather crash depiction of reality.

(disclaimer.... all names have been made up and in no way resemble any characters, past or present who could be considered part of this very very made up story)'

So...custard hits the fan then?

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Hosking strikes me as the sort of guy who’d hold a grudge for life against anybody who speaks the slightest against National.

His twin daughters are almost voting age, imagine if one of them voted Labour.

“I haven’t seen or heard from my Dad in 20 years”

That eventuality would be a great disappointment to me, if it were to occur. It could be worse though. Imagine if you were a National Party voter and the daughter you called ‘Monkey Face’ became PM?

I think Hosking and Hawkesby should go on strike.

Seems like the only logical thing for them, at this point.

Can we get Eco bird and TM2 to join them?

Another ban - Remuera tractors, vans and utes banned from Auckland car park
https://www.stuff.co.nz/auckland/local-news/east-bays-courier/106230539/...
The ban has raised concerns for the Remuera Business Association and its business development manager Cecilia Ngo said she was organising an "urgent consultation" with AT.

Let me guess the remuwera bidness association expects everybody to pay to structurally upgrade the carpark to be able to safely cope with their customers 2.7 ton Audi Q7 tractors. Perhaps Auckland council should just rip the top level off in the name of Elfin Safety. Wouldn't want Maude getting bonked on the head when one of those tractors falls thru the floor because the entitled owners ignored the weight limit signs.

Forgive any legalese errors........I've been trying to dig into who can actually buy under this legislation.

In this Act, a person is ordinarily resident in New Zealand,—
(a) for the purpose of an overseas investment in sensitive land where the relevant land is or includes residential land, for the purposes of a transaction that will result in an overseas investment in sensitive land where
the relevant land is or includes residential land, and related matters, if the person—
(i) holds a residence class visa granted under the Immigration Act 2009;

Next, the Immigration Act 2009 to find out what a "residence class visa" is.

"residence class visa means a permanent resident visa or a resident visa"

That would not include any student visas.

Confirmed in point 4 of the exec summary here:
https://treasury.govt.nz/sites/default/files/2018-07/CAB-paper-oia-bill-...

permanent resident visas and resident visas both entitle the holder to reside in New Zealand indefinitely

Whereas a student visa does not.

This is the relevant list of visas that might qualify:
https://www.immigration.govt.nz/new-zealand-visas/options/live-permanent...

I'm predicting a big impact to the Auckland market especially.

Thank you Zombie, good work clearing that up. I also saw mention somewhere that people with PR visas had to have been here for more than 6 months before they could buy a property. I think this will stop quite a few. Those who got PR then left and only come back to buy a property with their laundry money.

You're most welcome.

Another nice wee hurdle is anyone with PR coming back to launder funds would also have to have NZ tax residency to buy. Probably just means you need an IRD number but with information sharing increasing between countries you could possibly get caught out.

I think if you were desperately trying to get your money out of your home country, it's safe to say you wouldn't send your child to New Zealand to study in the hope that 3-4 years later they might get PR and be able to buy a home on behalf. Especially as that path from student visa to PR is getting much harder.

As you mentioned above, easier to just buy in another country that allows foreigners to buy.

It won't make a blind bit of difference.

You may well be blind to think it won't.

On it's own I agree it wouldn't make a lot of difference - but coupled with other changes and legislation - it may well make a significant difference.

Let's see shall we - not over a month or so - but 6 to 12 months should give an idea.

Given that it's going to take effect in three months or so, and how long it take for house sales to happen, we won't have hard data until February or later. Might see a short term spike while a few rush in the beat the ban.

Agreed - cool calm heads should prevail.

I can just imagine the shrieking of some if there appears to be no meaningful change over the next few months - ignore, give time for these changes to wash through.

And couple this with the huge cut in immigration numbers that was promised and in process, we should see house prices fall to far more affordable levels...

Amen ...

So be it....

Might be interesting to see how many “prestige” properties are thrown onto the market in the next few weeks…..clock’s ticking.

Congratulations New Zealand .. !
Also is there any update on implementing proper registry of overseas investors ?

as part of the new bill they gave the OIO full powers to look at who owns all property in NZ, they can now go deeper than LI as to who owns what

From Parker in the video... "Overseas owners will be required to spend enough time in NZ to qualify as a tax resident"

Its not what the law says. There is a difference between being a resident for immigration purposes and for tax purposes. As an NZ citizen living overseas I can buy a house in NZ without any intention of returning to NZ. If David Parker thinks he has addressed this from a tax resident perspective he needs to head back to law school

Watch this space I guess.

Ok, that's housing on the way.

Now, how about we tackle farming?

ok so now we can all forgive national for not telling the truth for all those years telling us this was something that cant be done, now we find out if they were also telling the truth about 3% or if most of us think that was another distorted truth.
my take on the 3% is that was for the whole country not Auckland and only captured a portion that did not take up the leverage tax option

Doesn't seem to be getting too much MSM coverage...are they scarred it will move the polls?

It's not as if we banned foreign investment in general, it's only a partial ban on real estate. There's still plenty of avenues for foreign investors to buy into business and innovation.

Any they will find a way, just like other countries where bans/restrictions are in place, but property cycles still move up and down regardless! Generally the people with enough money to go globe trotting for property are smart enough to get around these hurdles. Whilst it will curb some interest, we still lack enough housing to service the locals already here,so I don't see a massive impact from this at all moving forward. But at least this Govt will keep the narrow minded happy in the short term....

Has anyone thought and commented on how come so many of those Chinese who allegedly buy properties in the US, the UK, Australia, NZ, etc. do have money to do so and in such great numbers? Isn’t this where part of the (western) problem is?

Alex13, one of the reasons may be that a lot of the Eastern cultures have different ways of dealing with family Assets/Wealth and Money. They tend to pass on the assets and money to the kids early on and then those kids look after mum and dad in their old age, wealth is passed on differently. In our society Mum and Dad's wealth is usually of their own creation and is there's until they die, we might get a helping hand now and then for a deposit or Uni fee's etc. This is then given to the Children later on in life but not a lot money is spread when the kids are young(not always). I was in China talking to a local back in June and we were discussing wealth creation. This person had advised that they needed to buy an apartment/house for their Son (just out of Uni) so he could have a stable home for a future family or wife. Then Mum and Dad usually move in in their old age and are looked after by the working kids. So really wealth is passed on earlier in life within a lot of Asian communities (those that have money of course). Not to mention that a lot of these countries don't have a benefit system, so the work ethic is different. Work or starve. In our society so much is given as a handout to the privileged. Many Chinese just work a lot harder and smarter because there culture demands it. Buying Assets abroad like property also has tax benefits for them.

Dear Upside, we in the western world must be doing something right because so many "hard working" foreigners want to come and live here :)

Brilliant, let’s stop investment in NZ from overseas, that is surely what we need.
The ramifications rom this stupid bill is going to be more than just trying to stop foreigners from buying houses!
I agree that Kiwis should be able to buy a ho e before people that don’t live in NZ, but the reality is that you can in almost every place but Auckland at the moment.
News Flash! You don’t have to live in Auckland, and the reality,is that you will have a better lifestyle away from Auckland with all of its inherent problems and they are only goi g to get worse by the year.
If it is your choice to,live I. Auckland then stop complaining about everything and not being able to buy your dream home.
Start at the bottom where most first home buyers should start, and like the so-called baby boomers started!!!!
If you insist on staying in Auckland then then buy a home that is undervalued and with upside.
Renovate it And don’t overcapitalise, sell it and keep moving up,the ladder.
It is a no brai er really, and If I happened to want to live I. Auckland it would not be difficult to become financially independent thru property in a few years.
Keep moaning and groaning and you will be where you are now in a few years!

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Instead of ranting, try explaining to people how foreign investment in existing residential properties benefits NZ and ordinary Kiwis? It creates no employment, it creates a river of money leaving the country, it removes houses from the market and prevents Kiwis trying to get into homes from doing so, it irrationally pushes property values beyond what ordinary Kiwis can reasonably afford, and it helps parasites to demand exorbitant rents from people who cannot afford them locking them into a poverty trap, and the consequences flow on to child poverty and harm. This ignores the fact that it is likely supporting crime in other countries by providing a mean to launder ill-gotten funds.

You call yourself "The Man"? Try being one - own what you do, accept the consequences of your actions and be a real man and work to the benefit of your community not your wallet!

Hear, hear. Well said.

Anyone referring to themselves as The Man 2 won’t gain any credibility with me
In the big smoke of NYC you’d be sniggered at
The sad unfortunate facts are this restriction will not halt foreigners using their NZ connections to buy up NZ homes at all
This is politics played to appease the electorate & it is inadequate
Shame on Jacinda & Winston for pretending otherwise

I tend to agree with you here TM2. It's just easier for people to whinge and moan about the way things are, rather than making a plan for the future and changing their circumstances no matter the changing landscape, the same people will be moaning years from now and have gone nowhere in the process.

Do you not think that voting for a political party who campaigned to tackle both supply side and demand side is a part of 'changing their circumstances'? An actual attempt to actively 'change the landscape' rather than just reacting to changes in landscape.

Hi Penfold, no i'm talking about changing ones circumstance no matter what Govt or policy or property cycle is in place.
There are those individuals that make things happen, those that wait for things to happen and those that wonder what the hell happened.....which one are you?

They're not moaning and groaning. They're celebrating.

Bad example. China's own example shows that foreign direct investment does not need to be in buying land.

Also, boomers benefited greatly from successive governments' efforts at increasing supply and increasing access to home ownership. They should not resent present governments' efforts to increase access to home ownership. Goose, gander.

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Shame on the 57 who voted against this.

As a 44 year old Gen Xer fortunate enough to have got in before the foreign capital bubble.

I say to the NZ under 30s that these 56 National MPs and 1 ACT MP hate you. Remember that in 3 years time and in 6 years time .....

Dear Penfold
Don’t fret
GFC2 is on horizon which will rock the world
I couldn’t afford a house when mortgage interest rates were 23% in NZ either yet some how I’ve managed to own a multitude of properties all over the world so don’t limit yourself
Open your mind to possibilities like Zach has

If GFC2 is on the horizon, are you selling? Because you want to sell now to be ready to buy again after crash :)

Will this legislation prevent friends & family living in NZ buying NZ homes for their foreign compatriots?
No

Hopefully there is something in the Anti Money Laundering laws (acting as a front for a foreign entity without declaring it must be illegal in some way surely?) that will stomp on that.. I wonder if we can then seize the homes under the proceeds of crime act and turn them into state houses/ sell them under kiwi build for twice the win?

It'd send a nice message.. wait 6 months after the law comes in and quietly compile a list of all these fraudulent purchases, then go serve seizure notices on about 80 odd of them all at once and very publicly.. Nice front page article on how NZ will not tolerate this sort of behaviour and thanks for the 80 new state houses/ busy day at the auction room with the proceeds going into funding kiwibuild.

Yea, given the bank's don't want to mess with anything untracable now.
So good luck to those friends and family.

Probably not. It's just part of closing the loophole. It stops the actual honest foreign buyers.

Foreign Buyer Ban stops the actual direct foreign buyers.

AML rules reduces the cash buyers buying on other's behalf who suddenly have a lump sum from Uncle Whoever wired to their account.

2016 Non-Resident Borrowers changes by the banks: banks changed their lending criteria for non resident borrowers. (Although I'm sure there are still gaps). Tackles the drip-feed payments from Uncle Overseas masquerading as overseas income on a mortgage application. This is also probably related to the strict AML requirements banks need to meet.

This will cause a nearly instantaneous recession. The Govt would know that if they had actually done an economic scope on the possible outcomes.

Why? This only impacts 3% of buyers.

The other foreign money loopholes have already been tackled by the lending Banks and by the RBNZ over the last few years.

Let alone the Chinese Capital Flight restrictions which have been in place for several years.

As well, new builds are exempt.

Because deposit growth is nearly mirrored with Volume activity in residential property. Lower volumes means lower deposit growth = higher interest rates slightly.

Also because 100% of NZ recessions in the last 35 years had falling volume sales of this magnitude. It slows credit activity in an already slow economic environment.

Raises recession probability by quite a lot, unfortunately. The govt didn't want to hear any bad news about this bill though.

Recession is a positive experience, after the fact. One of my children wanted to buy an expensive iPhone on a plan and extrapolated his income over the next two years to say he could afford it. Two days ago his employer told him his hours were being cut back due to wage costs. Now he's worried about getting any wages and thankful he didn't commit to the phone. Recession teaches people the same lesson. Less is more and to value what you have.

That's all very well for you to say, but others don't fare as well as being able to afford an iPhone or not. Leave the virtue signalling to the current government.

Nation
noun
a large body of people united by common descent, history, culture, or language, inhabiting a particular state or territory.

More like the international party these days isn't it.

Even if we are to believe the funny statistics the Chinese are buying 3% year after year and only selling at 1/4 that rate while other groups are simply selling one house and buying another. If a group accumulates 2.25% of our assets it only takes them 22 years to own half the country.

almost there only 3 or 4 years to go

Hate to burst your bubble but nation and state are not the same things. Most states are made up of several (or more) nations (ethnicities)- the most homogeneous nation state is probably North Korea and who would want to live there?

As for the 22 years "they'll" be owning half of "our" country. How long did it take whitey to steal/own half NZs land in the 19th century? Process has been going on for at least about 180 years. Imagine if the Moari had a foreign buyer ban written into the Treaty in 1840. Where would all those immigrants have lived I wonder.

The question I'd like to know the answer to is why are Aussies and Singaporeans excluded? I guess it will to back to our Anzac roots but Aussies probably make up 1/2 of foreign buyers but are showing kiwis no favours over there and as for Singapore? Why the special privilege there?

Craig

Aussies and Singaporeans are excluded due to existing free trade treaties - CER with Australia and CEP with Singapore

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Seems to be a lack of cocksure property investors around here now. Interesting to see those who are commenting moving from Denial last week to Anger now that it has actually happened.

All FHB buyers should wait now as chances are that the market may correct (What percentage can be questioned) for is not going up fast in near future so why rush.

I think this is great. However doubt it will have much effect on property prices - which seem to be more a function of how many houses exist versus how many people want to live in them (irrespective of whether they rent or own). The only places that have ever significantly reduced house prices have done it by either: building too many dwellings or reducing the population.

New built multi-unit is exempt and 1/3 of houses sold to foreigners are to Australians who are also exempt.

Property prices will over time reflect the controls on the banking system and right now RBNZ is in the drivers seat with MPT.

Imagine if countries decided to ban certain products.. Prehaps MILK and other products because they were creating enough supply for themselves and wanted to encourage more domestic production.

Now you might say banning market trading is different from housing but really its al just goods and services.

If global trade stopped... well

and that is what you are all saying but don't realise it.

Will not make any difference to housing affordability. Building costs and land costs rise unabated
And look at the hypocrisy. An Australian now has an equal birthright as a nz resident to own property here but a Chinese national not

The legislation is pure politics that pander to the racist xenophobic left and nz first

It won't be a huge difference, the Chinese govt turning off the money tap already took most of the heat out the market, but it will help keep things subdued.

It is not politics. It is called bilateral agreements. China doesn't allow kiwis to buy property in China but Australia does, and we are just reciprocating.

So NZ is Xenophobic and Racist to all nations in the world interesting, why not chuck Martians in there as well. Here I thought NZ didn't want people to own land in NZ who are not contributing to NZ, or who are not NZers. Why don't we just put a big for sale sign on NZ instead of muskets and blankets, we are for sale for cash, get with the times.

Now that we are for Sale can you please stop calling us nasty names. Please buy up all our houses and make our houses so unaffordable that our children and their children cant buy property. But hey who cares about them, who cares about NZ, at least alpappy doesn't think we are Xenophobic and Racist.

I support regulating forefingers' access to NZ property market, regardless of any impact (or lack of it) on housing affordability for the locals. However, looking at the comments, it does look that many think that foreigner buying NZ property has been (if not the main factor) a major factor in the crazy house price inflation. Since the ban is on foreigners (i.e. not immigrants who have obtained residency status), it seems that it wont be stopping the impact of immigration on house prices. I am just curious to know what people think about other significant increases in house prices in NZ before? e.g. the increase in prices in 2001 to 2007 where prices increased by even a more ridiculous margin.

My own though on house prices is as follows:
Most people who buy houses are owner-occupiers, most investors are also NZ residents. As long as foreigners find it attractive to buy NZ debt, there will be more money for the banks to lend. In absence of real economic prospect in real businesses, banks will continue to primarily lend this money to NZ population so desperate to buy a first, second or tenth house, who will use it to outbid their fellow kiwi and inflating the prices in the process. And most of this foreign money does not come to NZ under the control of the government (e.g. government bonds or money printed by the RBNZ) but via private financial institution. If banks have the ability to raise the money cheaply overseas and then lend it to NZers, they will do, and there is little conventional legislation can do about that. The RBNZ can introduce additional restricting lending criteria but I don't see that changes the outlook significantly if net immigration to NZ continues at this pace and Kiwi mindset that property is a safe bet is significantly challenged in long term (at least 10 years). Once factor that has worked in favour of the perception of every increasing property values is that construction costs in NZ continue to sore, with no real prospect of them ever stopping to grow, let alone decreasing. That means that a house bought today will always be cheaper than a one built later. And when market dynamics may change in way that may causes reduction in construction costs, government steps in to help the construction costs to grow by guaranteeing that their current costs and charges are sustained by 10 years. This means that even if the stream of foreign money totally dries up, house prices are unlikely to drop meaningfully, they just stop increasing in value. Houses may even become a little cheaper, but the stock becomes of poorer quality houses too (as replacing stock now costs more than price the owner paid to buy it at previous peak prices, partially thanks to NZ government endorsement of construction costs by KiwiBuild)

In absence of real economic prospect in real businesses, banks will continue to primarily lend this money to NZ population so desperate to buy a first, second or tenth house, who will use it to outbid their fellow kiwi and inflating the prices in the process.

Except we are already running out of local buyers at this price level, and the banks are already restricted on the amount they can lend in terms of LVR. So this pretty much limits the rate of house price inflation to the rate that people can save a 20% deposit and meet serviceability criteria. And with the capital gains on property capped in this way and ring fencing of negative gearing there aren't going to be a whole lot of people that are going to want to rent houses at <3% gross yeilds for years on end. (And if rents go up, then the rate at which people can save for the deposit drop. Its a self regulating negative feedback loop).

PS:Please use white space, these wall of text posts are highly likely to be ignored by many readers.

I have no doubt that we have already passed the peak. This is evidenced by Auckland house prices being static (and recently even declining) since 2016. I expect that some capital gains over the past 3-4 years may disappear within the next 3-4 years.

The question is what is the long term prospect for house prices? i mean beyond a 5 years period. Do you see houses in 2024 cheaper than today? that with inflationary pressures continuing to build up (government spending on the way up, NZD on the way down etc)?

As said earlier, owner-occupiers continue to dominate NZ property market (about 70% of all transactions) with those changing (probably upgrading) houses being 50% of all the market. If net immigration continues at half of its last 3 years levels, there will be more than enough first home buyers (who now have even more start-up money thanks to a weaker NZD) to maintain the current level of prices (sure, no crazy capital gains) and enable other to change houses etc. Sure, market will be subdued, prices lower, stock of poorer quality, will take much longer to sell etc, but immigrants with money in their pockets will still be there.

I personally think that over the next decade, we will start to see the money that inflated asset prices to sip through general consumer prices increasing inflation (as asset prices are already saturated). I think house prices will maintain their nominal value, lose real value (compared to pace of inflation in consumables) and rents will start to increase faster than inflation.

I personally finding it fascinating that all the extra money that has been introduced since 2008 has gone to assets. And as deflation is considered the greater of two evils, i think policy makers will allow higher inflation levels in future to handle the resulted bubble. Instead of the bubble bursting, all other prices will go up much faster than today.

P.S. thanks for the advice on using white spaces. I looked at my previous comment, at it is just horrible looking.

Depends how you are defining cheaper.. Nominal dollars? Median house price to median income? Mortgage servicability? Time needed to save for the deposit? Or a combination of several of those?

Nominal Dollars, probably not. Median House price to median income.. yes. Mortgage serviceability.. not sure. Time to save deposit, yes, it will be reduced, just a question of whether its because of wage inflation catching up, or falling nominal house prices due to an economic shock of some sort.

duplicate

Labour has shown fortitude in pushing through with the OIA. It belies what National had declared that such legislation would put NZ in breach of TPP. Looks as if National had tried to pull wool over its people.Not that they cared for locals, as a linchpin of National,their Blue Dragons, had interests elsewhere.

That figure of 3% foreign buyers would have been fudged by overseas buying through proxies who are citizens or PR's.

Its quite easy to flush these out .IRD,AMLA could inquire into their sources of funds.And if they claim to be proxies for overseas parties then they are stuffed by their own admissions. Charge them for aiding,abetting,conniving to circumvent the provisions of OIA.

Well done and about time, the rest of the world has taken note.

BBC New Zealand bans sales of homes to foreigners
https://www.bbc.com/news/world-asia-45199034