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New Zealand Passes Law to Crack Down on Foreign Home Buyers

bloomberg.com

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Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#61

Post by Tiktaalik »

weberc2 wrote: post #51
Tiktaalik wrote: post #3

Seems reasonable to me. Housing should be for housing people, not a speculative financial investment. It's reasonable for cities to ask that people show that they have some skin in the game, that they're living, working, paying taxes and contributing to and enhancing the community.

Forgive my ignorance, but if you're investing in property, don't you have "skin in the game"? Presumably it's in your interest that the community thrives, because that will help drive up property values (increasing your ROI)? This is just my naive intuition, so please correct me. EDIT: Downvoters, what gives? Just asking a question...

Skin in the game means participating in the community and the local economy.

An investor doesn't buy groceries at the local store, doesn't go to local music venues etc.

They help out the construction industry and the FIRE (finance, insurance, real estate) industry, but local neighbourhoods weakly benefit.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#62

Post by wepple »

tdb7893 wrote: post #43
lawnchair_larry wrote: post #15

Good move. More cities need to adopt this. There is a flood of foreign capital into major western cities that is hurting those economies. And a lot of denial that this is happening.

As much as I like this solution it always seemed to me that if the problem was too many people buying houses the best thing to do would be to build more houses.

Sounds like a great idea, but NZ is struggling to build fast enough. NZ has a terrible attitude where everyone must have a backyard, and public transport is horrendous, so moving further out often isn’t much of a solution.

The current govt promised to build ambitious numbers of new affordable homes, but I haven’t seen any strategy on how they plan to execute on it.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#63

Post by wepple »

isostatic wrote: post #45
munificent wrote: post #39

Earlier quoted context omitted.

Local still needs to live somewhere Local buys an equivalent house to the one they sold for $500k + transaction fees, which scale based on the price of the house Local has less money than when they started

Not when the local is downsizieng from a 4 bed house and garden to a 2 bed apartment for retirement, or they simply die and it's local's kids that sell it. There's a simple solution to avoiding buying in expensive locations though - buy in cheap locations.

So the local sells to a foreign buyer and downsizes. That’s great for them. But their kids are now priced out of the market, and will never own a home but rent from someone who lives 15h flight away.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#64

Post by alaxsxaq »

goodJobWalrus wrote: post #31
pc86 wrote: post #18

Earlier quoted context omitted.

Are you suggesting the government steal their property?

No, but it could implement hefty property tax on properties owned by non-residents.

Vancouver Canada taxes foreign buyers 20% on top of the listing price and has a speculator tax of 0.5% (eventually 2%) tax on homes owned by people not paying provincial income taxes (primary residences and long-term rental properties are exempt). They also have a 1% annual tax on the assessed value of "empty homes".

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#65

Post by woolvalley »

zorked wrote: post #37
seanmcdirmid wrote: post #25

Earlier quoted context omitted.

> Many countries require some form of either citizenship or residence in order to qualify as a real estate buyer. ...like China.

Or Switzerland.

And many south east asian countries!

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#66

Post by wepple »

To add some context: NZ regularly rates in the top 10 least affordable cities to buy a house. The last stat I saw was that median house prices were 9.7x median salary.

That’s absurd for a relatively small city of 1.4m people.

It has further negative effects: everyone gets into property as their only real path to financial freedom, with 95% of new loans using family financial assistance. It’s stifling innovation and business that could be providing employment and international business.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#67

Post by woolvalley »

jonahhorowitz wrote: post #22
RestlessMind wrote: post #21

I hope SFBA does the same - not against foreigners per se, but against non-residents. Maybe a few ballot initiatives would help?

Corporations are people. It would probably be trivial to get around in the US.

Corporations are also owned by people. You get around this by making the law look at the entire ownership graph and seeing the total percentages from that.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#68

Post by ebikelaw »

munificent wrote: post #49
ebikelaw wrote: post #24

Western cities have only themselves to blame for turning housing into an appreciating asset. Housing is not supposed to appreciate and if it does not then nobody would speculate in it. In cities where they just build housing, like Vienna (typical rent ~1000 Euros/mo), they don’t have a need of these kinds of laws.

I don't think it's fair to blame cities for what is a nationwide problem. The entire economy is shifting from farming and production to a service economy. The former provided incentives for people to be widely distributed across a number of small cities and town. The latter does not, so there is a mass migration to cities. It's happening faster than the infrastructure, zoning, and physical layout of the cities can ad…

American big cities are not that dense. 80% of San Francisco is detached single-family housing.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#69

Post by kentosi »

weberc2 wrote: post #51
Tiktaalik wrote: post #3

Seems reasonable to me. Housing should be for housing people, not a speculative financial investment. It's reasonable for cities to ask that people show that they have some skin in the game, that they're living, working, paying taxes and contributing to and enhancing the community.

Forgive my ignorance, but if you're investing in property, don't you have "skin in the game"? Presumably it's in your interest that the community thrives, because that will help drive up property values (increasing your ROI)? This is just my naive intuition, so please correct me. EDIT: Downvoters, what gives? Just asking a question...

The problem is when rich investors buy properties to hold, but don't actually rent them out to people. This in turn reduces the number of apartments available to the people that need them, and just drives prices artificially upwards.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#70

Post by toby »

Tiktaalik wrote: post #54
briandear wrote: post #11

Earlier quoted context omitted.

If they own a house, they are paying taxes, so they do have significant skin in the game. They pay property taxes despite not using the local schools or most other city services. As far as not allowing housing as a speculative financial investment, there are some significant unintended consequences there.

The problem with absenteeism is that while taxes are still being paid to maintain city services, the city doesn't function correctly, because there's weak street life. Here's an article about the struggles of retailers in Vancouver's Coal Harbour neighbourhood, which has estimates of around 20-25% empty housing. https://www.theglobeandmail.com/real-estate/at-vancouvers-co...

Vancouver has a vacancy tax, which strikes me as a really good idea to avoid these problems. Does anyone know why these aren't more popular?
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