Changes coming for foreign purchases of N.Z. properties

Today the Government announced that farm properties will be subject to new restrictions from 15 December. The decision to tighten rules follows concerns about a directive from 2010 which the Minister for Land Information Eugenie Sage considers to be very weak and undermines the Overseas Investment Act.

For New Zealand buyers wanting to invest in New Zealand properties, this is good news. It helps to give them a bigger foot in a doorway crowded by the feet of many wanting a slice of New Zealand real estate. Concerns had been raised that New Zealanders were being locked out of their own country – ironic since it was former Prime Minister John Key who said that New Zealanders risk becoming renters in their own country.

It will invariably invite criticism by National whose party spiel about foreign investment was that it was important for overseas investors to not feel unwelcome in New Zealand. True to an extent, but the National Government of Mr Key, like the Labour Government of Prime Minister Helen Clark to some extent ignored the fact that New Zealanders ability to invest in our own country’s real estate. This helped to give rise to the New Zealand First narrative of New Zealand being sold to the highest bidder by the two major parties.

One group of people particularly likely to feel the pinch are the Chinese. I have mentioned below why Chinese investors find New Zealand so attractive. But it needs to be noted that the Chinese Government has a global agenda in much the same respect as America – power, prestige, but also the means to enable that power to continue to grow.

For the ordinary Chinese citizen though, the reasons are likely to be more mundane. The reasons for Chinese investing here are many and not all necessarily for reasons that Americans or Europeans would:

  1. Chinese purchasing property in New Zealand has to do with many of them seeking a place to invest wealth that they do not want subject to Chinese Government scrutiny.
  2. Ensuring they have a bolt hole in the event that for whatever reason China becomes untenable as a country to live in.
  3. New Zealand may be seen as a less regulated market
  4. New Zealand properties and New Zealand come with a perception – largely true – that New Zealand is clean and green

With a huge population now pushing 1.5 billion people and megalopolises like Guangzhou with 35 million people, urban life in China is one of huge numbers of people, smog, traffic jams and central government planning simply not able to keep up with planning needs. One can sort of sympathize with them for wanting to move to cleaner less polluted countries.

However that does not change the fact that New Zealand needs to look after its own people and real estate. One concern that has arisen in the last several years is that whereas other countries have criteria on who can buy property based on citizenship status, we do not and that New Zealand needs to toughen up. Another one was that if a person from another country buys New Zealand property, would they then live on it, or be absentee landlords of some sort, when a New Zealand buyer would at least live there.

So, I welcome the new measures being put in place.

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