What changes to New Zealand's foreign buyers real estate ban will mean

Explainer - In a flurry of last-minute activity before the holidays, Parliament has approved changes to the foreign buyers ban that has been in place for the last seven years.

The changes will allow "golden visa" investors to purchase a home in New Zealand - but there's a catch. They've got to spend at least $5 million on buying or building a home, as well as committing to other contributions to the economy.

So, can foreign buyers once again buy houses here?

Only some of them with pretty deep pockets. The $5 million minimum purchase requirement will keep buyers to pretty small numbers, and they also have to meet other "golden visa" investor requirements.

"If a migrant invests a minimum of $5 million to help grow the economy, passes a good character test, and has acceptable health, they will now be able to buy or build a home," Immigration Minister Erica Stanford said while announcing the passage.

The change will take effect in early 2026.

Cotality NZ chief property economist Kelvin Davidson told RNZ's Afternoons the change is quite specifically focused.

"Generally, it's not an easing of the foreign buyer ban. The foreign buyer ban is as it's always been. This is actually a different visa category that's being talked about."

The foreign buyers ban was passed by the then-Labour-led coalition government in 2018. Figures at the time showed up to 20 percent of homes in some of Auckland's most expensive suburbs were being sold to foreign buyers.

The only people who will be allowed exemptions are those wealthy investors who are already committed to growing New Zealand's economy.

"It's a happy compromise," Prime Minister Christopher Luxon said in announcing the changes earlier this year.

"We're doing everything to make sure that it's not just frothy speculative... driving a property market. It's actually genuinely about supporting more investment which drives more jobs."

How is the government trying to bring in foreign investors?

This is all part of the government's broader goals to attract more overseas investment into New Zealand.

Earlier this year, the government announced a new "golden visa" for investors, the Active Investor Plus, which introduced two simplified investment categories - Growth, requiring a minimum $5 million investment for a minimum of three years, and Balanced, which requires a minimum $10 million investment over five years.

As of 15 December, Immigration New Zealand data shows there had been 491 golden visa applications, covering 1571 people, representing a potential minimum investment of $2.9 billion.

The foreign buyer changes are included in the overall passage of the Overseas Investment (National Interest Test and Other Matters) Amendment Bill, which also now says that overseas investment decisions must be made within 15 working days.

"Under the new law, decisions on all investments except residential land, farmland and fishing quota must be made within 15 working days, unless there is a potential national interest concern," Associate Finance Minister David Seymour said in announcing the passage. "That compares with a 70-day statutory timeframe for the current benefit test."

So, how many houses would this actually affect?

"The scale of potential foreign investment is pretty small, really," Davidson said.

"The number of properties that are valued at $5 million or above, which is where these people will be able to purchase, it's about sort of 5- or 6000 across the country as a whole."

Rural, farm and "sensitive" land is also excluded.

Davidson said that represents less than 0.5 percent of the housing stock, "mostly focused on parts of Auckland and parts of Queenstown."

"Of course, for buyers to actually come to buy these properties, they have to be for sale in the first place. There might only be a few hundred transactions a year in that price bracket."

Stanford has said the change meant to show that New Zealand is "open for business".

"New investors don't just bring their capital, they bring skills, knowledge and experience that will drive future economic development," she said.

Wasn't this passed rather quickly?

Yes, it was passed late Friday night along with many other bills as Parliament sat in urgency.

Changes were introduced in an amendment paper to the Overseas Investment (National Interest Test and Other Matters) Amendment Bill.

As the bill had already been through select committee, that means the public didn't get a chance to give feedback on the softening of the foreign buyers ban through typical parliamentary processes.

The real estate news website OneRoof reported that some agents were surprised by how quickly the changes were passed, although Seymour had previously said the changes would come before the end of the year and "be law before New Year's Eve".

So, is this a controversial change?

"I think this is a fairly non-controversial sort of policy," Davidson said.

The intent is that investors are meant to come here and buy one home to live in for their own use.

"It's not a price bracket where the average home buyer in New Zealand would really be even thinking about."

The average house price in New Zealand sits closer to $800,000.

The Real Estate Institute of New Zealand said it welcomed the change.

"REINZ and our members support sensible reform that reduces unnecessary barriers while maintaining safeguards for sensitive assets," it said in a statement.

National campaigned in 2023 on letting foreigners buy homes worth more than $2m subject to a 15 percent tax, but was forced to abandon that plan during coalition negotiations with NZ First.

Peters, who helped introduce the foreign buyers ban in the first place in 2018, supports the change that he called a "very, very minor" one.

He told RNZ earlier that the original foreign buyer ban was introduced in the context of "rampant" house-flipping and "serious duplicity and cheating" by some foreigners who had been "using this country as a bolt-hole".

"That's why the total ban happened, and this very, very, very minor adjustment will attend to the benefits of the investor."

Davidson said that he felt overall the changes to foreign buyer restrictions could help boost investment.

"I think there's wider positive benefits from this. It's always seemed a little bit odd that the government's been trying to attract foreign capital to New Zealand but not allowing those people to buy a house."

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