New Zealand Sotheby’s International Realty managing director Mark Harris is advocating for a stamp duty on foreign buyers of residential property.

Following yesterday’s Budget 2022 announcement, Harris believes that a stamp duty would help increase the Government’s tax take to offset the proposed $6 billion in additional spending.

Labour’s foreign buyer ban was implemented in 2018 but hasn’t had the anticipated effect on house prices. In New Zealand, the average house price has increased by 25% since then, and much more in some areas.

While inflation is increasing across the board, house price inflation has slowed recently as a result of Government policies aimed at curtailing demand and increasing housing supply. House prices are starting to fall at the lower-end of the market and price caps have been lifted for first home buyers to get grants, plus price criteria has been removed to apply for first home loans. The Government also announced significant investment into more public housing for the 2022 Budget.

NZSIR managing director Mark Harris says: “At the high end of the market, things are still very buoyant as wealthier clients tend to fly through these down-cycles. If there are still concerns about protecting the first home buyer’s market, a stamp duty, which is employed successfully in many other countries, could be geo-targeted or price targeted. For example, it could be put in place in the Southern Lakes and start at $3m. And it could ratchet up from the first investment as a foreigner at 10%, then up to 20% for any additional properties.

“The current policy settings are frustrating – for prospective foreign buyers and for us as agents – and, as has been shown here and overseas, they haven’t played a significant role in reducing house prices, so a stamp duty would allow foreigners to invest in the market in the right way, without overheating it,” Harris adds.

“Geopolitical issues are also increasing interest in New Zealand property because it is seen as a safe haven, it’s economically stable and our successful Covid response has helped cement the idea of ‘Fortress New Zealand’ among expats and foreigners. We need to harness that perception, lower the drawbridge and let more foreigners invest in property here – for their own benefit and for the benefit of the public purse.”
 

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