New Zealand is already facing a crisis concerning the affordability of houses on the island, so the government is determined to do something about it by adopting a set of measures. These measures will also keep foreigners from getting their hands on residential properties on the island, which will keep speculations at bay. This triggered an interesting phenomenon on the island, as investors coming from foreign countries are rushing to grab their desired homes while they still can. Soon, the new rules will become active and oversea home purchases will be severely limited.
According to the country’s statistics, in the city of Queenstown alone, 10% of the purchased properties went to buyers that did not have a citizenship in New Zealand, not even a resident visa in some cases. What does this number show? It shows that the percentage of foreign buyers doubled its value this month, in comparison with the past 3 months. In the country’s largest city, Auckland, this percentage reaches a staggering 19% in its residential suburbs. In order to keep houses still affordable for New Zealand’s citizens under these circumstances, the government decided, toward the end of the last year, to adopt new measures that will keep foreign speculators away from the country’s property market.
According to Ms. Melissa McKenzie, who is a property statistics manager, this increase of purchases made by foreign investors may have been induced by the Overseas Investment Act. But, the shortage in supply when it comes to residential properties and increased demand led to a steep increase in property values, which drastically increased in the past years. Still, the rules adopted by the country’s central bank, concerning lending money with the purpose of acquiring a home, prevented these numbers to reach record limits. At a national level, the prices in May 2018 were 6.9% higher than they were in May 2017, according to the data released by Quotable Value. Still, there are areas in New Zealand where the increase is more significant. For example, in Queenstown, the average prices of houses are around 9.6% higher this year. In other words, it is more expensive to want to live in Queenstown than in the most sought-after suburbs of Auckland. Overall, 3% of the country’s transfers, regardless of their type, concerning residential properties involved non-citizens.
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