New Zealand has cancelled its plans to tax foreign investors in its property market.
Foreign buyers have become something of a hot button topic in many countries since the global financial crisis, as markets recover at uneven rates and varying degrees of supply and demand cause house prices to climb at different paces.
In Australia, the Foreign Investment Review Board has responded to these concerns by introducing stricter penalties for foreign investors who buy property illegitimately in the country. New Zealand’s Prime Minister, John Key, meanwhile, suggested that a land tax could be introduced for foreign buyers, if overseas speculation was found to be fuelling the residential property boom.
New figures, though, suggest that the problem may have been dramatically exaggerated: data collected by Land Information New Zealand (LINZ) shows that just 3 per cent of home sales in the first quarter of 2016 went to overseas residents.
Officials have noted that the data does not accurately reflect foreign property ownership, with LINZ chief executive Peter Mersi adding that this is “not a register of foreign ownership”, as residency and nationality are not the same thing.
Indeed, opposition parties have argued that the data could indicate that one-third of properties sold during the three months went to foreigners who had registered as living in New Zealand but were paying tax overseas.
Housing Minister Nick Smith, however, dismissed the concerns as a “diversion”.
“Every time New Zealand has a political debate on unemployment, on crime or housing the easiest trick in the book is to create a scapegoat that it’s these foreigners that are the problem,” he told RNZ’s Morning Report.
Other politicians have called for a transparent, searchable database of property ownership, similar to ones introduced in Britain and Australia.
While the debate continues, though, the good news for the foreign investors who are buying property in the New Zealand market is that they will not face a new tax.
“There isn’t any data here that supports it… if we see a radical change then we are a government that’s pragmatic that will respond,” added Smith.