Roll out welcome mat
New Zealand has no plans to chase away foreign buyers, writes Peta Tomlinson
Foreign investors can be a soft target. Real estate in relatively sound or "safe" locations has appeal for just about anyone with money, and when property markets overheat, the finger tends to be pointed at wealth from abroad.
Wherever foreign investment is prevalent in property markets, we've seen the reaction of late. Singapore, Canada, Malaysia - and soon Britain, reportedly - have jumped on the overseas buyer disincentive bandwagon. But not, it seems, New Zealand. Its markets are running hot - specifically, Auckland, where home prices are 27 per cent above the previous peak in 2007. Overseas buyers are active, judging by reports.
But rather than cook the offshore golden goose, New Zealand has looked closer to home to bring price rises back to sustainable levels: its "speed limits", or higher loan-to-value (LVR) mortgage lending, aimed at local borrowers.
Not everyone is happy with the Reserve Bank of New Zealand's decision, but Fitch Ratings Agency argues that even if the LVR reforms have limited impact on mortgage demand and house prices, they should help improve financial stability by lessening the risks of borrowers falling into negative equity in the event that house prices fall.
And property agents are pleased that the welcome mat is still out for overseas investors.
Ross Hawkins of New Zealand Sotheby's International Realty says foreign buyers, particularly from China, are more active than ever.