From an article on Stuff yesterday:
Labour leader David Shearer has thrown down a challenge to his political opponents to say why his policy on foreign house buyers is bad for New Zealanders.
Well we’re clearly not his political opponents, but we’re quite interested in real estate so what the heck – challenge accepted.
Labour’s housing plan is this: ban foreigners from buying any existing houses, flats or apartments in New Zealand.
In short, it’s a rubbish policy tackling a non-existent issue. One could even say it’s dog whistle politics. If I did say that, I’d be one of many who already have.
Australians are excluded from the policy, which leaves one ethnic group, already with a large target on their back, especially highlighted.
It’s no secret that there’s an undercurrent of concern about “foreigners” buying up big in Auckland. It’s no surprise that when this is discussed it’s the most ‘obvious looking’ foreigners that are singled out.
BNZ economist Tony Alexander once commented that social media was “ablaze” with people complaining about Chinese buyers dominating the real estate market. In March he sought to find out whether these concerns were justified.
According to the BNZ-REINZ Survey of real estate agents just 9% of sales were to buyers from offshore. In comparison, 24% were first home buyers, and 19% investors (both foreign and domestic).
Of this 9%, 40% of them are planning to make New Zealand their home. Apparently residents will also be exempt under Labour’s rules. Whether people will need to bring their passports and visas to open homes is yet to be decided.
Leaving that to one side, these figures suggest that, as of March, 5.4% of sales are made to overseas investors. Of these, 1.3% are made to Australians – so the ban would only have applied to a maximum 4.3% of sales.
The Survey’s May figures suggest an even lower number: just 3.6% of overseas buyers plan to remain offshore. With 0.4% Australian, the target drops to 3.2%.
Labour are relying on very different and shakier figures: the IRD has on their books 11,000 ‘overseas investors’ who own property here. As Rob Hosking wrote in the National Business Review (subscription only), most of these are expat New Zealanders who are renting out their properties while overseas. The figure also includes commercial properties.
On top of all that, there is also serious talk that the ban would be in violation of our free trade agreement with China. It makes one wonder how much research has gone into the policy.
Other nationalist political parties, also with very little to go on, have predictably come out in support. New Zealand First’s Winston Peters ran his analytical mind over the policy and proclaimed:
“When I see Barfoot and Thompson’s top 25 agents and 19 are Asian and they’re not selling to the New Zealand population, they’re selling to foreign buyers, then we’ve got something seriously wrong.”
What wonderfully scientific evidence.
Here’s a fact that can be backed up: high house prices at the moment are caused by a lack of supply. It’s nothing to do with demand at all. Serious about lowering house prices? Make it easier, and cheaper, to build new houses. Prices won’t drop because a few foreign buyers aren’t allowed in.
One suspects that Labour, deep down, knows this. So what’s the point? It’s hard to conclude that it’s anything other than a way to get the attention of a particular type of person.
You’ve got everyone’s attention. Now let’s see some constructive policy.