It’s time to rethink NZ’s foreign buyer ban
Tuesday, 22 July 2025
Glen Jones is managing director of New Zealand Sotheby’s International Realty (Wellington).
OPINION: We are struggling, and part of the problem is that we’re turning away the very people who could help us recover.
Real estate, long a pivotal driver underpinning our economy, has been in decline for almost four years.
Many who bought homes during the market peak, and even some prior, are now in negative equity, with values unlikely to recover until at least 2029. As such, homeowners are unable to leverage equity uplift, which historically there has been in spades (which then flowed back into our economy).
Our reliance then predominantly returns to salaries, but with one of the lowest average salaries in the developed world; one of the highest cost of living on the planet; and a very small population – expect our recovery to be painfully slow.
While there are no magic fixes, we need to be bold and take practical steps to turn things around. One area ripe for reform is our foreign buyer policy. Right now, we are sending a mixed message: we want global investment, but those same people are not welcome to buy a home here.
I’d suggest that the wholesale foreign buyer ban never made sense. It’s a conflicting, paradoxical stance, especially when we’ve recently created investor visas encouraging people to move here and build businesses - yet still block them from buying a house.
There have been suggestions of loosening the rules for the ultra-wealthy, for homes of $2 million or more. But why should buying here be the privilege of only the richest foreigners? This binary approach: rich people welcome, others not - doesn’t reflect Kiwi values. It also overlooks the many skilled, experienced people who could positively contribute to our economy but aren’t multimillionaires.
Here’s a recent example: a couple from the US wanted to buy a $1.2m home while on a fixed-term work contract, but due to current legislation, can’t. That one purchase would have produced a domino effect of positive outcomes in an economy so badly needing even the smallest of relief.
Instead of blanket bans, we could implement targeted taxes which have wider benefits. Here’s how:
Stamp duty for foreign buyers: Charge a 15% tax on the purchase price. On a $1m home, that’s $150,000 straight into government revenue - money that could fund social housing, healthcare or infrastructure. Add tiered rates for second and third homes (30% and 60%, respectively) to discourage speculation.
Capital gains tax for foreign buyers: Apply a flat 40% tax on profits when the home is sold, regardless of how long it's held, generating an ongoing revenue stream.
Vacancy tax: If a home is vacant for more than six months a year, charge commercial council rates (in Victoria, Australia they have something similar called the absentee owner surcharge). This deters “ghost homes” and generates local funding.
These steps offer a balanced approach, welcoming investment while protecting community interests.
Most other countries haven’t closed their doors. They understand the world we live in is more competitive and feels smaller than it’s ever been. Until relatively recently, Singapore charged foreign buyers 30% - that now sits at 60%. The UK, Canada, Hong Kong and many others also allow foreigners to buy, but tax them for the right.
New Zealand’s brand is strong globally. Our lifestyle, stability and natural beauty are attractive to many, particularly those leaving politically unstable environments. After the 2024 US election, more than 50,000 Americans searched “how to move abroad”. Did we capitalise on that? No - we dithered, played politics and our doors remained closed.
Yes, we’ve missed opportunities. But it’s not too late. By allowing foreigners on student or work visas - and those who invest at more realistic entry points like $1m - to buy homes - we stimulate the economy without giving away the farm.
More people are leaving for Australia than arriving. Meanwhile, thousands abroad are looking for exactly what we offer.
The horse hasn’t completely bolted, however. Although we have missed some great opportunities to inject much needed relief back into our economy, it is not the end. But let’s hope we don’t continue sleepwalking through current events and wake-up when it is too late. And, looking back years from now - saying, “if only”.
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