Ravi Chandran
In a bid to avoid the booming house prices of capital cities across New Zealand, the Government issued a bill banning the sale of existing New Zealand residential properties to foreign buyers. The move the Government explains, is an effort to make housing more affordable to locals. The bill, Overseas Investment Amendment bill, prohibits foreign buyers from purchasing existing properties.
The ban on the purchase of New Zealand residential properties is applicable to foreign buyers of all nationalities, except buyers from Singapore and Australia. The new bill does not apply to purchases of new apartment complexes in large scale block developments and other specified parts of the real estate market. The government hopes that this new law will incentivise construction companies to build smaller, family-friendly houses.
David Parker, New Zealand’s Associate Minister of Finance said: “We think the market for New Zealand homes and farms should be set by New Zealand buyers, not overseas buyers. That is to benefit New Zealanders who have their shoulder to the wheel of the New Zealand economy, pay tax here, and have families here. We don’t think they should be outbid by wealthier people from overseas.”
The bill was enacted after New Zealand Prime Minister Jacinda Ardern was elected on the campaign promise of reforming the country’s housing policy platforms, which included banning foreign investors from buying New Zealand residential properties. Reflecting his party leader’s views, Parker said in the Kiwi Parliament on Wednesday: “We should not be tenants in our own land.”
New Zealand’s housing crunch has pushed prices up more than 50 percent nationally in the last decade and in Auckland they have almost doubled. The country has become a popular haven the likes of billionaire investor Peter Thiel and Reid Hoffman.
Peter Thiel, the billionaire behind PayPal, sees New Zealand as a good place to go in the event of an apocalypse. He has bought a $13.5m 193-hectare section in the Otago region, where the only other building there at the moment is a barn. LinkedIn co-founder Reid Hoffman suggesting the country had become shorthand for apocalypse insurance in Silicon Valley, and said: “Saying you’re ‘buying a house in New Zealand’ is kind of a ‘wink, wink, say no more.”
The new bill which prohibits foreigners, except Singaporeans (and Australians), from purchasing certain New Zealand residential properties may be much welcomed news for Singapore investors – especially if the new legislation leads to a reduction of property prices there. With the new property cooling measures introduced recently, real estate markets like New Zealand’s may be attractive for investors from Singapore.
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https://www.icompareloan.com/resources/new-property-cooling-measures/
The minimum loan amount for New Zealand properties is 300,000 Australian Dollars or its equivalent in New Zealand, United States or Singapore currencies. The maximum loan amount is subject to the investors’ circumstance, such as their ability to service the loan, the security provided and other credit criteria. Loans will also be subjected to prior credit approval and satisfactory documentation required by the banks.
Based on such criteria, Singapore banks may lend up to 80 per cent of the lower of the purchase price or certified value of the security property only where the loan is in the currency of the country where the property located. Banks may extend loans up to 100 per cent of the purchase price of the overseas property with the provision of additional supporting security. Alternatively, banks may lend up to 75% of the lower of the purchase price or market value of the security property in SGD, USD, AUD, NZD, GBP or other currencies with the ability to switch between those currencies at each roll-over date.
https://www.icompareloan.com/resources/new-zealand-homes/
Banking on the legislative change affecting purchases of New Zealand residential properties, a leading real estate services company, Knight Frank has entered into a strategic partnership with its counterpart in New Zealand, Bayleys Realty Group Limited.
The partnership between the two prominent real estate services companies opens up the immense opportunities for cross-border collaboration which will increasingly position them collectively as one of the market leaders for property seekers of New Zealand residential properties.
Announcing the partnership, Knight Frank regional head, Kevin Coppel, said: “Asian buyer activity in Oceania has been significant over the last few years, with New Zealand being one of the preferred targets. The relative returns from New Zealand property is a strong attraction to offshore investors. According to MSCI, the average annual return generated by commercial and industrial property across New Zealand have been 10.5% over the year to March 2018, which is higher than those prevailing in many other mature markets.”
Coppel added: “Also, with a higher pursuit towards lifestyle living, we are seeing rising interest in waterfront and recreational homes which New Zealand is well-known for. With the new partnership, not only do we have access to the best insights around the dynamics of the New Zealand market, but also world-class properties which would interest our international investors. Come October, we will be introducing new development projects from Auckland and Queenstown in New Zealand to Asia, starting from Singapore. If current legislation is passed, Singapore is potentially the only nation outside of Oceania that will have full rights to buy a New Zealand home. We expect interest from Singapore investors in New Zealand to remain robust in the year.”
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