New Zealand Has Banned Foreign Residents From Buying Houses

Should Australia follow?

New Zealand Has Banned Foreign Residents From Buying Houses

A ban on foreign residents buying homes in New Zealand has been passed into law - but Australians have been given a free pass.

The policy was one of the major promises by PM Jacinda Ardern's Labour Party during last year's New Zealand election and was pitched as the previous government struggled to put a lid of skyrocketing house prices in parts of the country.

It sets rules roughly in line with Australia's and prevents overseas residents from buying existing residential property.

MPs voted through the bill on Wednesday afternoon.

Rampant house price growth in recent years has been a hotly debated issue in NZ politics, with the country's biggest city, Auckland, and the resort town of Queenstown in particular becoming increasingly unaffordable for average families.

Although Auckland's market has cooled this year, prices almost doubled in the decade that preceded and went up 60 per cent across NZ during that time.

Meanwhile, Queenstown has become the most unaffordable part of the country and the one with the highest rate of foreign ownership, as rich-listers snap up holiday homes around its pristine lakes and picturesque mountains.

But while Aussies make up the second-largest group of foreign home buyers in New Zealand - after Chinese residents - trans-Tasman trade arrangements mean they will be exempt for the ban, along with residents of Singapore.

The government has argued that while it welcomes overseas investment into new housing, the bill is designed to keep property speculators out of the market to give Kiwis a better shot at buying homes.

"(We're) ensuring that the prices of New Zealand homes are set on the domestic rather than international market," Trade Minister David Parker told parliament on Wednesday.

Economists however  say it's not overseas investment to blame for increasing housing prices, but low interest rates and high migration, combined with supply issues. 

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