New Zealand Opposition Would Ease Ban on Foreign Home Buyers

(Bloomberg) -- Foreigners will be able to purchase property in New Zealand worth more than NZ$2 million ($1.2 million) if the country’s main opposition National Party wins the October election.

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National, which is ahead in opinion polls, has pledged to partially repeal a ban on foreign buyers if it wins office. It would retain the ban on properties valued under NZ$2 million and apply a 15% foreign buyer tax on purchases above that, leader Christopher Luxon said Wednesday in Wellington.

This would raise an estimated NZ$740 million a year, which would be used to help pay for a tax-cuts package National is taking to the Oct. 14 election.

The ruling Labour Party introduced the ban on foreign buyers in 2018, saying that overseas speculators had driven up house prices and made property unattainable for many young Kiwis.

While data at the time suggested overseas buyers played only a small role in New Zealand’s housing market, wealthy foreigners such as tech billionaire Peter Thiel, film director James Cameron and singer Shania Twain made headlines for big property purchases in the country.

Luxon said the proposed change would encourage entrepreneurs to come to New Zealand, set up new businesses and invest in the country.

“We want them to be able to do that here in New Zealand,” he said. “We need to be able to access talent, we need to be able to access capital.”

National finance spokesperson Nicola Willis said the policy won’t fuel house-price gains. The average house price was about NZ$900,000 in July.

“These buyers won’t be competing with ordinary New Zealanders,” she said. “And also they will face a major barrier to speculation because they’ll be paying 15% more than any New Zealander.”

Read more: New Zealand’s Main Opposition Party Unveils Tax-Cuts Policy

House prices in New Zealand have been on a volatile ride over the past three years. The country became a poster child of the pandemic housing boom when prices rose close to 30% in 2021, and then a bellwether when they unraveled last year. Price have now stabilized, and the central bank forecasts they will rise this year.

Australian and Singapore citizens are exempt from the current ban in order to comply with trade agreements and that would remain the case under National’s policy, Willis said.

National also said it will fully restore interest deductibility on rental properties by July 2026. This would reverse the current Labour government’s move to curtail a tax loophole that had allowed landlords to deduct mortgage interest from rental income before paying tax on it. That had the effect of deterring some investors and helping first-time buyers snatch a record market share.

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