Foreigners buying houses in the Australian state of Victoria will be subject to two new taxes as the state government tries to cool the rising property market.
Photo: RNZ / Diego Opatowski
While New Zealanders will be exempt from the changes, they raise questions about whether this country should introduce a similar scheme.
Under the new system foreigners will be charged three percent of the purchase price and absentee landlords will be made to pay a tax of half a percent of their property's value.
The changes coincide with a wider crackdown on foreign investors by the federal government, which has announced tougher penalties on foreigners who unlawfully buy property.
Under Australian law foreigners are allowed to buy only new dwellings, not existing ones.
Labour Party housing spokesman Phil Twyford said the majority of New Zealanders wanted the Government to follow Australia's lead.
"Both at the state and the federal level in Australia, governments there are taking seriously the affect of offshore speculators bidding up the cost of houses and making houses unaffordable for local people," he said.
"That is stark contrast to here in New Zealand where the Government refuses to even accept there is a problem."
Mr Twyford said while offshore speculators were not the root cause of the housing crisis in Auckland, they were a significant factor.
He said there was no reason why New Zealand should not follow Australia's example.
"Restricting the purchase of existing houses to New Zealand citizens or residents - it's a no-brainer because there's no benefit to New Zealand or New Zealanders in allowing people on the other side of the world to buy and sell our houses for capital gain."
Housing shortage blamed
Bank of New Zealand chief economist Tony Alexander agrees restrictions are needed here.
"It makes perfect sense to introduce pretty much the same regime in New Zealand, given that we are going to see more and more foreign buying of houses throughout New Zealand in the next few years."
However Mr Alexander said he did not believe overseas buyers were responsible for Auckland's housing problem.
And the head of the Real Estate Institute of New Zealand, Colleen Milne, said a shortage of houses was a bigger problem.
"The issue does not appear to be foreign ownership, particularly in Auckland. It's actually investors, and they're more New Zealand investors," she said.
"Foreign ownership would only account for probably seven percent of the sales."
Capital Property Investors Association president Alistair Gillespie said restrictions would do more harm than good.
"Why would you tax the investors bringing money into the country?", he asked.
"I guess at the end of the day they are still providing houses for people."
Finance Minister Bill English declined to be interviewed, but in a statement said the Government was always keeping an eye out for measures which would improve the operation of the housing market.
He said the Government's main focus was on improving the supply of houses, especially in Auckland.