Greens call for tighter rules on foreigners buying NZ homes

Growing demand for Auckland homes from overseas buyers may shut young Kiwis out of the market unless the Government follows Australia's lead and tightens foreign ownership rules, Greens co-leader Russel Norman says.

Dr Norman has found an ally in successful North Shore real estate agent Matty Ma, who says strong demand from mainland China-based buyers is set to accelerate further.

Dr Norman yesterday called on the Government to tighten overseas investment rules around housing after the Australian Government responded to complaints about foreigners driving up house prices there.

Temporary residents, including students, will have to sell their houses when they leave Australia and the Government will also match travel details with ownership data to ensure people who violate the laws are caught.

New penalties created under civil law will also apply to real estate agents and the Government may also claw back any capital gains made by foreign investors who breach the arrangements.

"The danger to New Zealand is that if Australia tightens rules on foreign investment in housing, investors may head to New Zealand [which has an] open door foreign investment policy", said Dr Norman.

Foreign investors had already contributed to "speculative bubbles" in Australia and New Zealand's housing markets.

"This has made housing expensive and inaccessible for ordinary New Zealanders," said Dr Norman.

Ms Ma, of Harcourts Albany, said it was likely that tighter rules in Australia would see "more people from Asian countries come to invest in New Zealand automatically".

She could "fully understand" why Australia was moving to tighten ownership restrictions, and if New Zealand didn't follow suit, young buyers here may soon find it difficult to compete for limited housing stock with cashed up foreign investors.

Ms Ma, who has reportedly handled $180 million worth of sales since she joined Harcourts in 2001, said while demand from local buyers had been soft early this year, "the Chinese segment of the local market still has good energy and funding support from mainland China".

Most of the demand was coming from a young generation of buyers who have completed their studies in New Zealand and are choosing to settle here.

They were receiving financial support from their families back home to buy homes, often in new subdivisions in areas such as Albany. "Those leftover new subdivisions, nearly all have been bought by those people."

Ms Ma said there was also demand from new immigrants approved under business criteria. While at present that was "just a few early birds", that may increase quickly over time.

However, for buyers looking for investment properties, prices in the New Zealand market were extremely attractive. "$1.5 million worth is equal to a two-bedroom apartment in a middle city of China."