There are fears the government's foreign buyer ban will have little effect on house prices in the country's most unaffordable area and may make matters worse.
Queenstown Photo: 123RF
Queenstown is both the most unaffordable place to live in New Zealand and has the highest rate of foreign home ownership.
The proposed foreign buyer ban, which is intended to help alleviate affordability issues, has caused the foreign backers of a planned development of 50 affordable homes in Queenstown to pull out of the deal.
Residents and authorities in the Queenstown Lakes district have implored the government to exclude high-end real estate in the area from the ban, and introduce a tariff on foreign buyers which contributes to the construction of affordable homes.
Those in the district believe foreign buyers are essential to their community and give much more than they take.
But the government is unmoved on the matter.
"We believe that it's the right of New Zealanders to buy our homes not foreign buyers and that we should have a market that's determined by New Zealanders not rich people from overseas," Associate Finance Minister David Parker said.
Mr Parker is the MP in charge of the Overseas Investment Amendment Bill - known colloquially as the foreign buyer ban.
The government believed by removing foreign buyers from the market homes would be more affordable due to decreased demand, Mr Parker said.
He had little sympathy for those he labelled "one percenters from overseas".
"In respect of high-end houses, which is one end of the spectrum, a foreign buyer won't be able to outbid a successful New Zealander for a beautiful house in the Bay of Islands or around a Southern Lake," Mr Parker said.
"But that's true all of the way down the spectrum and no existing house and no existing apartment will be able to be purchased by a foreign buyer."
Critics of the Bill believed it would turn foreign capital away from the country and as a result residential development - particularly large-scale developments - would slow.
It was why the government included a number of carve-outs in the bill following select committee, including Australian and Singaporean residents, new apartment builds and rent-to-own schemes.
Mr Parker stood by the intent of the bill and had resisted attempts by those in the Queenstown Lakes District to include a carve-out for high-end homes in the area.
National Party finance spokesperson Amy Adams said the statistics did not support Mr Parker's claims that wealthy foreigners were pushing up housing prices.
The net impact of foreign buyers in the market was about 2 percent, and was a "very small proportion" of the real estate market, she said.
Of those foreign buyers, a third were estimated to be Australians who were exempt from the ban.
Ms Adams said that considering the various carve-outs in the bill, the legislation would have little to no effect on housing affordability.
But it would impact foreign investment and therefore the capital available for development.
Queenstown Lakes District mayor Jim Boult agreed with those assertions and supported the attempt by the push from Ms Adams' colleague, Clutha-Southland MP Hamish Walker, for a carve-out for high-end Queenstown homes.
She said she had already witnessed the unintended consequences of the bill.
Mr Boult said foreign buyers were essential lifeline for the resort's economy.
"They're building or buying very large high-value properties that provide lots of jobs, that provide work for tradespeople and those foreign buyers that come in here not only end up with an expensive property.
"They're generally the people who are first to put their hands in their pockets when we're looking for money for philanthropic reasons," he said.
Plans for foreign backers to contribute to a modified rent-to-own scheme in Queenstown had to be shelved because the investors got cold feet when the bill was introduced.
"The irony is that legislation aimed at making it easier for folk to get into a house has in this case caused 50 available houses not to be available anymore," Mr Boult said.
A carve-out for high-end homes and a tariff which contributed to affordable housing developments made more sense than the current legislation, he said.
The amendment would only act to annoy a "valuable resource for the community".
You can hear more about foreign buyers on Insight this Sunday.