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New Zealand bans sales of homes to foreigners
New Zealand's parliament has banned many foreigners from buying existing homes in the country - a move aimed at making properties more affordable. The ban only applies to non-residents. Australians and Singaporeans are exempt because of free-trade deals.
New Zealand is facing a housing affordability crisis which has left home ownership out of reach for many. Low interest rates, limited housing stock and immigration have driven up prices in recent years.
[...] [Foreigners] are now banned from purchasing most types of homes - but they will be able to make limited investments in new apartments in large developments.
[...] Chinese investors have been among the biggest and most active offshore buyers of property in the New Zealand market. Also, some wealthy Americans - like Silicon Valley tech billionaire Peter Thiel - have become New Zealand citizens or have bought property in the country. Average prices in New Zealand have risen more than 60% in the past 10 years, while in Auckland - the country's largest city - they have almost doubled.
(Score: 1, Interesting) by Anonymous Coward on Friday August 17 2018, @03:06AM (8 children)
Say someone buys property X. Then sells it for double. The new owner has to pay the bank more, and so rents it out for more. The tenant then needs higher income/profit to pay for the higher rent. And so the costs for everyone goes up.
So the increase in the price of your latte/sandwich/etc is actually mostly due to high property and rental costs (the wages going up is just a side effect of high property costs).
Does the quality of the latte actually go up in accordance to the price? I doubt it. So you're paying more for less for almost everything in that area. And why? So rich people can play Monopoly in real life?
When the bubble bursts the rich buy and extend their monopolies. The cycle starts again. Property bubbles mainly benefit the rich. Even if the nominal value of what they're worth halves they won't starve while they wait for the bottoming out and they can buy a lot more in the aftermath.
Are the alternatives a greater evil? In some places it may not be so good to be a property owner because of the laws (e.g. rental caps): https://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/ [qz.com]
(Score: 1) by khallow on Friday August 17 2018, @03:55AM (5 children)
The whole cycle breaks down when the tenant doesn't pay more rent.
(Score: 0) by Anonymous Coward on Friday August 17 2018, @04:56AM (2 children)
(Score: 1, Informative) by Anonymous Coward on Friday August 17 2018, @05:16AM
(Score: 1) by khallow on Friday August 17 2018, @11:40AM
(Score: 0) by Anonymous Coward on Friday August 17 2018, @09:13AM (1 child)
The bubble bursts if this happens a lot. But for a long while before that the landlords kick the tenants out and try to get new ones. Look at how high rents are in some places. If the landlords don't manage to get enough rents to pay the banks, the banks take over the property.
I suppose this is supposed to be the market intelligently allocating resources... But I need a lot more convincing...
See also:
https://www.vox.com/2016/9/14/12892994/facebook-silicon-valley-expensive [vox.com]
https://www.mercurynews.com/2018/02/14/buying-a-bay-area-home-now-a-struggle-even-for-apple-google-engineers/ [mercurynews.com]
http://observer.com/2018/02/google-facebook-engineers-cannot-afford-silicon-valley-houses/ [observer.com]
(Score: 1) by khallow on Friday August 17 2018, @11:38AM
Only if you ignore the typical non-market obstructions to the market allocating said resources (like restrictions on new construction and zoning). "Foreign investors" are merely a scapegoat for yet another dysfunctional market.
(Score: 1, Interesting) by Anonymous Coward on Friday August 17 2018, @05:44AM
That's why, even though I'm in the bottom quintile of wage earners, I decided to be rich and it seems to be working.
People told me I was stupid when I bought a junked trashed house and sent me articles from the NYT saying how home ownership was a bad idea. Maybe it is and I just got lucky, but it's working well and in the absolute worst case, I will always have a warm place to sleep, even if it is with roommates who pay for my food and property taxes.
(Score: 0) by Anonymous Coward on Friday August 17 2018, @09:58AM
Yes - the property market is hideous, but the Millennials aren't helping themselves.