9. PETER BROWN (Deputy Leader—NZ First) Link to this
to the Minister of Finance
How does the total value of deals approved and the amount of land approved for sale by the Overseas Investment Office since the overseas investment legislation changed in 2005 compare with the total value of deals approved and amount of land approved for sale in the 18 months prior to the change in legislation?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
The total value of deals has increased from approximately $4.7 billion to $7.2 billion. The net amount of land approved has increased from 58,000 hectares to 300,000 hectares. This apparently extremely large increase is almost entirely—99 percent—due to a single transaction, the sale of Carter Holt Harvey’s forestry interests offshore. Those interests had until recently been owned offshore anyway, before Graeme Hart bought them with, clearly, the intention of reselling them subsequently.
Does the Minister believe that the current legislation, which places minimal restrictions on foreigners or non-residents buying residential property, is contributing to the property price boom; if so, why is the Government doing very little—or, some might say, nothing—about addressing this issue, especially given that it claims that access to quality, affordable housing is one of its policies?
Hon Dr MICHAEL CULLEN Link to this
I know there are often articles about that, usually in the Listener, but I do not agree that it is one of the major drivers of the increase in housing costs. The increase in house prices has occurred across almost the entire country, often in areas of previously quite low housing value, and still relatively poor housing areas. Even an area such as Ōhai-Nightcaps has seen significant increases in property values. It is hard to believe that that is due to foreign owners coming in.
Shane JonesHon Dr MICHAEL CULLEN Link to this
I have seen a report entitled Overseas Investment Guidelines Working, which quotes a real estate agent suggesting that the new legislation was “scaring off potential overseas buyers who did not meet its requirements”. Although we welcome applications that meet the requirements of the Act, which are, in fact, quite strict, I am glad to see that the legislation is fulfilling its purpose of acknowledging that it is a privilege for overseas persons to own or control sensitive New Zealand assets.
Does the Minister think it is fair that foreign property speculators earning higher incomes in stronger currencies face no restrictions on buying residential property, whilst New Zealanders earning an average income are being priced out of the residential market; if he does not think that is fair, will he tell us what he proposes to do to level the playing field and give New Zealanders—particularly young New Zealanders—a fairer go?
Hon Dr MICHAEL CULLEN Link to this
The issue, of course, is that restrictions on urban land tend to be quite a lot fewer than those on rural land, or sensitive land that abuts reserves, etc. As I said, I do not believe there is strong evidence that it is overseas buyers who are pushing up property prices in urban areas. That is due to a combination, firstly, of strong employment growth; secondly, of income growth; and, thirdly, of population growth. These are the real factors that have been driving the growth in property values within New Zealand. The other point I would make is that the level of the dollar being quite high at this point means that for an offshore owner it is relatively expensive, rather than cheap, to buy a New Zealand property.