Decision on foreign buyer ban could come as early as Monday

- The Government may soon loosen the foreign buyer ban, allowing "golden visa" holders to buy homes.

- Christopher Luxon confirmed a Cabinet decision is imminent, with legislation expected this year.

- The change could impact homes worth $5 million or more, particularly in Auckland and Queenstown-Lakes.

The Government could decide to loosen the foreign buyer ban as early as tomorrow.

OneRoof has heard growing murmurs from the real estate industry that a decision on the ban was close, and that an announcement could be made after Monday's Cabinet meeting.

Less than two weeks ago, Prime Minister Christopher Luxon told Newstalk ZB's Mike Hosking that a deal on the foreign buyer rules had been done with his Coalition partners, and that the legislation would be enacted this year.

He signalled that foreigners holding an Active Investor Plus Visa would soon be able to buy homes in New Zealand.

Hosking asked the Prime Minister about comments Finance Minister Nicola Willis had made to US reporters about the ban.

The housing market in Queenstown-Lakes could be targeted by foreign buyers if restrictions are loosened. Photo / Getty Images

When asked by Bloomberg if the Government was looking at letting foreigners with the “golden visa” buy residential property, Willis said: “Those talks have been underway and you would expect that a decision would be made by our cabinet in the coming weeks.”

Hosking asked the Prime Minister on August 18 if Willis's statement was true and if a decision was going to Cabinet in the "next couple of weeks".

"Does she [Willis] mean it's going to Cabinet in the next couple of weeks because we've got a deal, we'll put it in Cabinet, they'll tick it off, and then we'll make the announcement."

Luxon replied: "Yes. Correct."

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OneRoof reached out to the Prime Minister's office and asked if the foreign buyer ban would be discussed at Monday's meeting. The office replied: no comment.

Since 2018, only citizens, tax residents, and nationals from Australia and Singapore have been able to freely buy houses in New Zealand.

There is growing belief in the real estate industry that foreign buyers with the "golden visa" will soon be able to buy homes worth $5m or more without approval from the Overseas Investment Office.

The visa is currently available to wealthy overseas people who are prepared to invest a minimum of $5m in New Zealand. Under the current rules, they still can’t buy a house until they become a resident.

Luxon and the National Party had campaigned to scrap the foreign buyer ban, arguing in the lead-up to the 2023 election that tax cuts for Kiwis could be partially funded by taxing $2 million-plus property purchases by foreign buyers.

That pledge was dropped as part of the coalition agreement with New Zealand First. However, New Zealand First and its leader, Winston Peters, appear to have modified their position in recent months.

Peters told the New Zealand Herald last month if a foreigner was coming to New Zealand “with millions of dollars to invest in this country, then yes, you could buy a house”.

He added that an announcement on the issue was likely to be made this year.

Research published by OneRoof earlier this month identified just under 10,000 New Zealand residential / lifestyle properties worth $5m and above, around 7000 of which can be considered ready-to-live-in homes.

According to analysis by OneRoof's data partner, Valocity, the vast majority of these homes are in Auckland (4479) and Queenstown-Lakes (1213).

The analysis also shows just how small the prestige market is in New Zealand when it comes to sales. Last year, just 0.2% of homes sold were in the $5m-plus bracket. Even at market peak, $5m-plus sales represented just 0.4% of total sales.

Of the 31 suburbs with more than 50 homes in the higher price range, just three are outside Auckland and Queenstown-Lakes: Mount Maunganui, in Tauranga (204); Whangamata, in Thames-Coromandel (89); and Merivale, in Christchurch (54).

“All the suburbs are where you’d expect them to be and highlight just how popular the coast is in New Zealand. Most of the suburbs on the list are within touching distance of water,” Valocity senior research analyst Wayne Shum told OneRoof earlier this month.

The suburb with by far the greatest concentration of $5m-plus homes is Remuera, in Auckland. The Valocity research identified 1056 high-value houses in the wealthy inner-city enclave, more than 700 than the suburb with the next highest tally, neighbouring Parnell.

Both these suburbs are prized by upper-end buyers for the luxury homes they offer, but they are also a magnet for Aucklanders looking to get their children into two of the country’s top schools, Auckland Grammar and Epsom Girls Grammar.

What is likely is that owners of more expensive properties might choose to hold off from listing until the law changes. “If you were selling a $20m house in Auckland right now, you would have only a handful of buyers who could purchase your home. In six months, when the policy is more certain, you might have a bigger pool of buyers and potentially a bigger price.”

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