Real estate heads doubt Labour plan

Hayden Duncan is the chief executive of Harcourts.

Real estate agency bosses don't back the Labour Party's foreign house buyer exclusion policy, saying sheer lack of supply is the nub of the issue.

Hayden Duncan, chief executive at Harcourts, which is the country's largest agency with 180 offices and 1895 people, doubts the proposal announced by Labour leader David Shearer would work.

The policy was lacking in detail and the real problem was housing supply, particularly in Auckland, Duncan said.

"My concern about Labour's suggestion is that by fixing one problem we're creating another," he said referring to the potential for rents to rise if overseas buyers were banned.

These buyers rented out properties, providing vital accommodation and excluding them could tip the balance in the market, he said.

Duncan also fears a trade backlash, referring to China being New Zealand's biggest trading partner.

Peter Thompson, chief executive of Barfoot & Thompson which sells one in three Auckland houses, said Labour's policy wouldn't solve the housing affordability issue.

"The reason prices are going up is lack of supply. We need more building, to free up building processes and free up more land," Thompson said.

Twenty out of Barfoot's top 25 agents were of Asian ethnicity but they worked harder than many other agents, he said, estimating only 3 per cent to 5 per cent of buyers were foreign.

Countries which banned foreign investors did not enjoy lower house prices and New Zealand did not have to follow other countries on the issue.

Thompson backs Reserve Bank moves on loan-to-value ratios, saying some people borrowed too much and this change was positive.

Shearer said first-time buyers were struggling to get on the housing ladder, partly because 2600 homes were sold to foreign speculators who had no intention of living in New Zealand. This figure was based on a voluntary survey of 549 real estate agents which found that 9 per cent of sales went to overseas buyers.