The real estate industry says foreign buyers will not leave the housing market altogether after the government banned them - they will invest in developments.
Photo: RNZ / Richard Tindiller
After campaigning on the promise, last night the Labour-led Government passed its foreign buyers ban on existing homes.
The Government has blamed offshore speculators, in part, for pushing house prices up.
Trade minister David Parker said New Zealanders should not be outbid by wealthy foreign buyers.
"If you've got the right to live in New Zealand permanently, you've got the right to buy here.
"But otherwise, it's not a right. It's a privilege."
But he acknowledged there was debate about how much impact they had had on prices.
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For the March quarter official Stats NZ figures showed just over three percent of homes were transferred to someone who wasn't a New Zealand citizen or resident.
Many have been critical of the law as unnecessary, including the Real Estate Institute.
Its chief executive Bindi Norwell said it would not impact affordability.
"We're quite disappointed that the bill has now passed its third reading and we're not alone.
"It's not just the Real Estate industry, it's telecommunications, it's been councils, it's been financial services providers, law firms."
Adjusting wouldn't be a big problem, with the work of checking citizenship and eligibility likely to fall to lawyers.
"There's going to be a huge amount of checks in terms of making sure where people live and where they're from and identity identification process.
"From the consultation with the industry, a big issue that it could have potentially stopped new development happening, the Government listened to that and actually changed the clauses."
Ms Norwell said "a lot" of new developments were reliant on foreign investment to get underway.
"They may now have more interest in those new developments from overseas. They don't have the requirement to sell them after 12 months but they are not allowed to live in them."
International real estate website Juwai had a jump in the number of Chinese investors interested in property late last year and a further surged at the start of the year as buyers looked to get in before the ban.
Inquiries were up 15.6 percent in the first quarter of the year compared to the start of 2017.
"It's been advertised for many months now, so we saw many Chinese buyers move their intended transaction forward," spokesman Dave Platter said.
"New Zealand does need foreign investment to help build new products, new homes, and foreign investment is very good for that because, especially, Chinese buyers are more willing to buy off the plan which gives developers the commitment they need to get financing to start construction.
"We think foreign buyers will continue to be an important part of the market - it's just that they won't be as active in the existing home segment."
Juwai would continue to advertise New Zealand property listings as some of their users were based there. However, he said they would have to adapt once the ban came into effect.
