With New Zealand just days away from an election that the Nationals are tipped to win, it’s worth pausing to consider the party’s proposed tax policy that is said to open up 50,000 homes to foreign ownership.
While this has gained much attention in real estate circles, it will likely affect only 3% of the estimated 1.7 million homes in New Zealand.
Overseas buyers will be able to buy homes valued under $2 million before being hit by a 15% tax, according to the plan.
If these purchasers hold the property for more than two years and use it as their primary residence, they will not have to pay capital gains tax when they sell.
Part of the aim is to help kick-start the real estate sector after a 20-month series of interest rate rises that have taken the benchmark to 5%, the highest level in 14 years.
The Nationals said it expected to see a boost to Auckland real estate with its policy affecting almost 40,000 properties, or 15% of the local market.
In July, the Reserve Bank of New Zealand said it was getting on top of the post-Covid inflation spike – the reason why rates have been rising – and it was unlikely there’d be any increases for the rest of the year.
Industry expert CoreLogic has expressed caution, fearing the policy could limit the availability of properties in the medium to long term.
It could “affect the broader market if foreigners chose to hold the property, but not live in it, or put in a tenant”, a spokesman said.
“That would reduce the overall supply of housing for locals and could flow through to higher prices for all properties.”