Wellington, Sep 1 (AP) New Zealand is set to ease its restrictions on foreign home ownership, permitting certain wealthy international business investors to purchase a high-value residential property, Prime Minister Christopher Luxon announced on Monday.
The policy change marks a partial amendment to the 2018 ban imposed by a previous government to curb an overheated housing market driven by property speculation. Holders of the "golden visa" residency, reintroduced by Luxon's administration in April, will be allowed to acquire a home valued at least 5 million New Zealand dollars (USD 3 million).
According to Luxon, this approach aims to attract affluent investors while mitigating concerns over house prices. Nevertheless, the adjustment remains limited, impacting a small segment of wealthy foreigners and a finite number of properties.
The visas are designed to attract international investors to New Zealand's businesses, offering residency to individuals committing a minimum investment of NZD 5 million in local enterprises over three years, or NZD 10 million over five years for less risky deposits.
Previously, certain visa holders faced restrictions on property purchases due to a six-month annual residency requirement, which will now be abolished.
Critics of the policy alteration, including opposition Labour housing spokesperson Kieran McAnulty, condemned Luxon's decision on Monday. They argued that it prioritizes enticing wealthy foreigners over addressing pressing domestic issues.
"Many Kiwis are already struggling to buy a home, and he has just made it worse,” McAnulty stated. “Homelessness is up, unemployment is up, and people cannot afford the basics at the supermarket.”
The government seeks to stimulate economic growth amid a recession by reversing the ban partially, hoping to attract wealthy foreign investors. “We're a safe haven in a very volatile and uncertain world,” Luxon expressed to reporters in Auckland, emphasizing job creation through foreign investments.
Luxon refuted claims that the policy would increase house prices, which have declined from a 2022 peak. Current applications for the residency visa could potentially lead to investments totaling up to NZD 1.8 billion, he asserted.
Government data indicates the receipt of just over 300 visa applications, accounting for about 1,000 individuals. Nearly 40% of these applicants hail from the United States.
Luxon highlighted that the requirement for properties to meet a minimum value means fewer than 1% of New Zealand's homes—around 10,000 properties—are available to foreign buyers. Most of these properties (approximately 80%) are located in Auckland, with another 10% in Queenstown, a coveted South Island region for wealthy foreigners.
In July, the average home cost was NZD 767,250, according to the Real Estate Institute of New Zealand. In Auckland, the average price stood at NZD 975,000.
The ban on foreign property purchases was originally introduced during a housing affordability crisis, spurring debates about the influence of foreign buyers on soaring prices that excluded domestic first-time buyers.
Data from that period reflected that approximately 3% of New Zealand homes were sold to foreigners, with the number rising to 22% in Auckland.
Exceptions to the ban were granted to Australians and Singaporeans under specific trade agreements.
The ban garnered support amid unverified anecdotes of wealthy foreigners constructing doomsday bunkers in the scenic Queenstown area.
New Zealand, known for its remoteness in the South Pacific, frequently attracts migrants seeking to escape global instability, with migration applications often spiking during turbulent times.
Luxon’s center-right party pledged to overturn the ban during the 2023 election campaign. However, coalition government negotiations necessitated a compromise, leading to only a partial reversal. (AP)
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