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Big cities all over the world are grappling with the same problem: how to make homes more affordable for the people who live there.
Part of the problem is that the rich see buying overseas real estate as a way to safely store their wealth, raising the prices beyond what many residents can afford and locking young people out of the housing market.
In New Zealand, housing affordability is a huge political issue. Elections in September saw a change in the governing party over this very problem. This week, the new prime minister, Labour’s Jacinda Ardern announced plans to ban foreigners from buying existing homes from early next year.
Home prices in New Zealand have soared in recent decades. For the past two years, the country has recorded double-digit growth in property prices. Low interest rates on mortgages, immigration, and a limited supply of houses have all played a role. In the year ending in June, there was an estimated shortfall of about 9,000 new homes slated to be built, compared with what was needed to serve the population increase over the same time.
Other efforts by governments in Canada and Australia to reduce foreign purchases, especially by buyers from China, have failed to significantly lower house prices. Still, in New Zealand, it’s clear something needs to be done. —Eshe Nelson
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