Property prices shaped by New Zealand based buyers?
The NZ Labour governments Overseas Investment Act Amendment Bill has been before a select committee with a report being released on 18 June making recommendations for modifications based on over 200 public submissions.
The aim of this Bill is to create a housing market with prices shaped by New Zealand based buyers and thus make homes more affordable to New Zealanders.
The report proposes a number of changes in an attempt to maintain foreign investment into certain sectors, where there is demand and into businesses that create jobs. These include large residential and hotel developments and the viticulture and forestry industries.
Queenstown and Wanaka based submitters have highlighted the importance of the luxury property buyers to the local economy. Offshore buyers bring substantial capital into the region and it is feared that the building industry related to this sector may collapse and real estate in the high-end market would depreciate. The Select Committee has not proposed any changes to address any of the potential impact on these identified sectors. At the moment foreign investors are very actively in the market buying to secure property to beat the legislation that is set to be introduced in the third quarter of 2018.
The changes proposed by the Select Committee are not yet confirmed, they are recommendations at this stage. The Bill now goes to its second reading in parliament which is scheduled for 19 June 2018.
The legislation is complex and as a result overseas buyers will need to be professionally advised to establish their eligibility to make an investment in residential property in New Zealand.