It seems they will ban foreigners from buying homes in New Zealand

by on October 26, 2017 at 1:34 pm in Current Affairs, Law | Permalink

Foreigners are set to be banned from buying houses in New Zealand as part of a phase of new policies outlined by Prime Minister-elect Jacinda Ardern.

The 37-year-old, who was elected as part of a coalition government on 23 September, said the new plan was designed to stop rising house prices and will apply to non-residents.

‘We have agreed on banning the purchase of existing homes by foreign buyers,” said Ms Ardern, according to AFP.

Here is the full story.  Will the Kiwis be returning to their mercantilism of the 1970s?  She also wants to renegotiate TPP.  And here is the immigration update.

1 wait October 26, 2017 at 1:41 pm

Wish they would do this in NYC to lessen the pricing insanity here.

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2 Ian October 26, 2017 at 1:44 pm

Me too 🙁

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3 Pshrnk October 26, 2017 at 1:51 pm

How is it insane?

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4 Effem October 26, 2017 at 1:56 pm

It’s insane because of the sheer numbers of empty residences. I know, that’s the buyers “right to do.” Would we feel the same if i bought up every ticket to the Super Bowl and simply decided not to attend?

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5 A Truth Seeker October 26, 2017 at 2:34 pm

What if the King of Saudi Arabia bought all the tickets because he likes plenty of personal space for him and his lackeys?

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6 dux.ie October 27, 2017 at 1:32 am

https://www.bloomberg.com/news/articles/2017-10-06/inside-the-saudi-king-s-1-500-person-entourage-in-moscow

“””Saudi officials booked two entire luxury hotels and brought their own carpets and hotel staff with King Salman bin Abdulaziz on his historic visit.”””

https://www.businessinsider.com.au/saudi-prince-80-hawks-on-plane-photo-2017-1?r=US&IR=T

A Saudi Prince bought 80 airplane seats for his hawks.

7 wait October 27, 2017 at 11:45 am

It’s also literally a haven for money laundering. Even if you want to stick 100% to your open market principles (which is fine), you can still be against forcing New Yorkers to spend excessively more on real estate in order to aid foreign criminals.

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8 John October 26, 2017 at 2:40 pm

The problem is that almost all new construction consists of large luxury apartments targeted at foreign buyers looking to launder/park assets. These are purchased for $2,000-5,000/sqft and left vacant. Meanwhile the mortal human beings on the ground are left scrambling over a static supply of regular 1-2 bed apartments.

Case study:
https://ny.curbed.com/2017/2/27/14750138/one57-penthouse-money-laundering-kola-aluko

You can check out the story of Trump’s SoHo project for more of the same.

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9 Bernard Guerrero October 26, 2017 at 3:27 pm

Great news in the long-run, then. The foreign money won’t stay parked forever, but the buildings will.

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10 John October 26, 2017 at 3:50 pm

Perhaps, but these apartments are enormous and fantastically expensive, and won’t be meeting the needs of even fairly wealthy bankers and lawyers when they come for sale. The city needs more modest 1-3 bedroom in higher density, not 100 story towers with 100 apartments total (cough couch, 432 Park Ave, cough cough).

11 Jackie Padilla October 26, 2017 at 3:37 pm

They are paying property tax and not using any services. That’s a win

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12 John October 26, 2017 at 3:54 pm

While normally I’d agree, there are two problems with this arguments.
1) Real estate taxes in New York City, especially on tax abated new development, are extremely low.
2) Land is scarce. That means there’s a large opportunity cost to sticking a giant tower in Manhattan where no one lives. Taking up space pushed people who actually work in the city and want to live there out into the outer boroughs and suburbs, taxing transit infrastructure and imposing commuting costs.

13 Viking October 26, 2017 at 6:25 pm

Wouldn’t we expect by the invisible hand argument that the jobs should move elsewhere, if the peninsula gets filled up with condos so expensive nobody can afford them?

14 John October 27, 2017 at 7:22 am

Viking, yes, I agree. Over the long run, jobs will spring up near “displaced populations”, provided zoning allows it. Optimistically, you might see something like a Renaissance in Newark to attract workers displaced to New Jersey. That’s a healthy readjustment, it’s just unnecessarily painful in the short to medium term in my view. I’d rather see maximally efficient development of current population centers before displacement and realignment of job centers.

15 BC October 26, 2017 at 5:39 pm

Let’s review. A trade deficit is bad because it means foreigners are not buying as many of our exports as we are buying of their imports. When foreigners buy our homes though, that is also bad because it leaves fewer homes available for domestic citizens.
Question: if foreigners bought our exported products like cars, would that also be bad because it would leave fewer cars available for domestic citizens? It’s even worse that these foreign home buyers leave the homes empty. So, does that mean foreign home buying would be better if it were accompanied by more immigration? Question: would a trade surplus caused by foreigners buying our cars but leaving them undriven be worse than one where foreign buyers actually drove the cars too?

So under “economic nationalism” theory, it’s bad when foreigners don’t buy our products (like cars) or do buy our products (homes). Immigration is bad, but so is not immigrating (buying homes but not living in them). Does that about cover it?

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16 John October 26, 2017 at 6:09 pm

Unfortunately, Manhattan apartments are not cars. Car production scales easily, Manhattan real estate doesn’t (at least not in anything like the same way). Unlike cars, Manhattan land is in extremely limited quantity which demands dense, efficient development. That’s the opposite of the massive, unused apartments in most new luxury developments. When a Russian oligarch levels a city block of small apartments in order to build a mega apartment that he leaves vacant, there are huge opportunity costs. There’s a city block of people that need to move out and spend two hours a day commuting, lowering their quality of life and further burdening an already burdened transit system. The Russian oligarch will have contributed dollars to the US economy, but in an incredibly unproductive and in many ways costly way. So yes, I’d say an oligarch buying a stable of Corvettes is, in fact, very different than buying an unproductive mega apartment in Manhattan.

Don’t get me wrong, I’m not categorically opposed to foreigners buying Manhattan apartments. I’d just much prefer, for instance, that developers build buildings with many smaller apartments that are then bought by Russian oligarchs and then rented to locals. That’s not what’s happening. These “luxury” developments push up rents by crowding out productive housing opportunities, and add little to the life of the city.

17 Effem October 26, 2017 at 7:30 pm

Agree with John’s points. But also, I might be equally upset if they bought cars and simply left them idle forever.

18 Harun October 26, 2017 at 9:07 pm

So when it’s American workers that are inconvenienced that’s fine but God forbid a Manhattanite have to pay more or move somewhere cheaper

19 Harun October 26, 2017 at 9:10 pm

Kevin will I am son says you should move

20 John October 27, 2017 at 7:18 am

Harun, people displaced by oligarchs can and do move. Normally, that’s a healthy process. In this case it’s a high cost and inefficient price to pay to facilitate someone else’s money laundering.

21 BC October 27, 2017 at 3:55 pm

@John: “Car production scales easily”

That’s not the relevant factor. Any resources allocated towards car production necessarily must be taken from producing other goods. The decisions of what goods to produce for domestic consumption and which to sell to foreigners results from the aggregation of Americans’ individual decisions. It’s a strange form of “populism” to suggest that the government intervene to divert consumption goods from the American heartland to foreigners so that coastal elites can enjoy cheaper housing in Manhattan.

22 John October 29, 2017 at 1:35 pm

@BC

Ah, so now we’re making it about “coastal elites” vs “the heartland”.

The fact remains that buying a mega apartment in Manhattan and leaving it vacant involves both large opportunity costs and significant negative externalities. That’s not true to the nearly the same degree as car production. An oligarch buying Corvettes doesn’t crowd out local consumers. In fact, car production benefits from economies of scale, so locals may actually experience lower prices do to foreign consumption.

I’m not asking the government to intervene and ban purchase of large apartments by foreigners to be left vacant. Rather, the government should address the question of why these are the assets of choice for money launders. Namely, minimal required disclosure and a twisted local tax regime. Should the government also levy an additional surcharge on underutilized property? It may be difficult in practice, but not crazy in theory..

23 JCC October 27, 2017 at 4:08 am

I f a foreigner wants a house in NZ badly he can buy one through an SPE can’t he? Or they’re thinking about banning foreigners to own companies in NZ as well?

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24 tjamesjones October 27, 2017 at 7:17 am

I bet the one thing they’re not doing here is thinking.

25 Benjamin Cole October 26, 2017 at 9:50 pm

I do think Tyler Cowen’s tsk-tsking misses an important point.

“Quotable Value data for July shows that the average house price in Auckland is $1,044,303.”

So…should the Kiwis embrace getting priced out of their own homes and neighborhoods?

This is the virtue of globalism? Higher living standards (for those people supplanting you).

Tyler Cowen and the macroeconomics profession need to go upfront and center and wrestle with the issues of trade deficits, property zoning and resulting housing price explosions.

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26 Watson Ladd October 27, 2017 at 1:40 am

The entire New Zealand population could comfortably fit in two copies of Paris. Zoning is the problem here.

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27 Kevin English October 27, 2017 at 11:44 am

This is just my humble opinion of having visited NZ for 1 month but Auckland is probably the last place I would want to live in there. Taupo, Nelson, Dunedin, Wellington even Christchurch seem like much better places to settle down. As you drive around the country, you quickly see there is not a lack of land. As you mention, there must be some kind of restrictive zoning at play here that is creating artificial scarcity.

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28 Roy LC October 26, 2017 at 9:54 pm

Come to Vancouver

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29 David K October 26, 2017 at 1:50 pm

From another article (https://www.theguardian.com/world/2017/oct/25/new-zealand-to-ban-foreign-buyers-existing-homes-jacinda-ardern):

>> The country’s proposed ban on foreign buyers, which would only apply to non-domiciles…

So if you’re a foreigner and you move to New Zealand (using their newly “tight” immigration policy of double US levels per capita), you’re fine. They just don’t want foreigners buying homes as investments and not living in them. As anyone who’s visited the ghost town that is Mayfair, London, in the last several years can attest, having foreign non-residents owning property is, generally, a recipe for useless, but pricey, wasteland.

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30 Pshrnk October 26, 2017 at 1:52 pm

Yea, but Mayfair is pleasant to walk in.

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31 Assimilate the Cosmic Sausage October 26, 2017 at 2:14 pm

They got ya down they wanna keep ya there

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32 Warren Zevon October 26, 2017 at 3:23 pm

Except for that Werewolf.

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33 Napolean Symphony October 26, 2017 at 3:37 pm

223
180
+- = 43, 423, On February 23, 1942, the Zweigs were found dead of a barbiturate overdose in their house in the city of Petrópolis, holding hands

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34 Warren Zevon October 26, 2017 at 6:01 pm

A little old lady got mutilated last night.

35 Ray Lopez October 26, 2017 at 2:42 pm

Nice correction @ David K.

In the Philippines foreigners are not allowed to own residences (same as in Mexico) and for businesses they must have a 50% Filipino co-owner. It’s in the constitution I believe (same as in Mexico). Non-news. Holds back property prices however.

In Washington DC, the WaPost had an article that many embassies that are not recognized or in trouble, like Myanmar, Pakistan? and others, have embassies on “Embassy Row” that are expensive but boarded up, overgrown with weeds. The local government is forbidden by treaty from foreclosing.

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36 mulp October 26, 2017 at 4:52 pm

Any reason property prices should exceed to cost to build the property, especially as the property decays as economic theory that I learned says, and is worth less than the build cost?

I am a Keynesian:

“Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital. An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant. But even so, it will still be possible for communal saving through the agency of the State to be maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce.”

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37 Daz October 26, 2017 at 10:52 pm

In Auckland, the land costs drive a significant part of the property price inflation. Along with hideous subdivision costs payable to the territorial authority. Property taxes (rates, in NZ) are quite low (<1%pa). Building costs are also spiralling upward due to minimum wages, labour shortages (Christchurch earthquake), increasing materials costs and distance from import markets.

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38 Rick Zhang October 27, 2017 at 12:51 am

The obvious solution is to increase property taxes and sales taxes, and correspondingly decrease income taxes in a revenue neutral manner. Not only will this direct more money to local municipalities, counties, and states to allow more targeted spending on infrastructure and services (vs less efficient federal spending), but it will also shunt some of the cost of government to foreign buyers and tourists. Locals on average will not be harmed due to the corresponding reduction in income tax. Think of this as the Las Vegas solution.

A virtuous side effect is decreasing home prices and to allow first time buyers, such as young people crowded out of the market, a chance to get on the property ladder.

39 John October 26, 2017 at 2:13 pm

“banning the purchase of existing homes by foreign buyers”

So presumably foreigners will be able to develop and purchase new homes.

Will this end up having a meaningful impact on price? Foreign demand will just be funneled to one segment of the market (new developments). I guess this might add some friction to the buying process, and therefore dissuade some foreign investors, but I wonder what the net impact will be. If prices are rising, that would seem to promote additional development anyway.

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40 Jackie Padilla October 26, 2017 at 3:43 pm

There’s more jobs in building a new home. So there’s that

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41 Roy LC October 26, 2017 at 9:57 pm

New homes require permitting, that is a whole additional avenue of control

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42 Don Wallace October 26, 2017 at 10:38 pm

“Funneled to one segment… (new developments)”–this is Honolulu and Oahu, Hawaii. Highest homelessness in the US per capita, $733K average house price, lowest incomes to real estate prices in the US–and 2,500 miles to the next suburb. Islands tend to concentrate the mind.

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43 Daz October 26, 2017 at 10:55 pm

Yes, the title of the post is misleading. There’s no suggestion yet that you filthy foreigners won’t be able to build. Just jokes, only the left-wing here truly hate foreigners. The rest of us are normal.

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44 Georgina Brown October 31, 2017 at 10:09 pm

No

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45 Mark Thorson October 26, 2017 at 2:24 pm

This reminds me of the upcoming disposition of my mother’s estate, for which I will be executor. The major asset is a two-acre property in a very desirable neighborhood in Silicon Valley, within walking distance of Apple headquarters. On this property are three dilapidated houses, four if you count a freestanding garage. I’m sure the buyer will demolish all of them and build a palace, as has happened all along this street. Will I get a better price if I demolish them all first, or should I leave that to the buyer? Should I run an advertisement in the Asian Wall Street Journal? I can’t believe real estate agents think they should receive 9% for handling property that practically sells itself. I would guess this property is worth about $4M, and they want nearly $400K for handling it? That’s crazy.

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46 msgkings October 26, 2017 at 2:32 pm

Well, part of their fee is answering questions like you just asked a mostly anonymous internet comment forum. You can always do sale by owner and save half of that.

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47 Ray Lopez October 26, 2017 at 2:49 pm

You’re right MT. That sounds about right $4M, if anything two little (two acres in Silicon Valley is huge). I would try and sell it yourself, get a baseline, then use an agent, get another baseline, then sell it yourself after your contract ends with the agent and save the 9%. In DC area agents often want 7%. You will notice that properties that sell in two weeks are because the owners are selling since they must leave (either a Starker Exchange like happened to us once, or, they are leaving town for a new job). Don’t fall into the “must sell soon” trap. Maximize your return. Go slow. And $4M is not that much money. To get into the 1%, like my family, you need a minimum of $9M net worth. And we don’t even feel rich. IMO real wealth is $20M and above these days. Also remember this: the real estate agent is NOT working for you. They want to make a sale. It’s like in law, the mediator is not working for your side, they want compromise. No matter how strong your case is, every mediator I know will always try and “split the difference” with the other side. Don’t be fooled into thinking the agent is on your side. Don’t be rude, but treat them like you would a buyer. Of course the agent will try and tell you what others have sold in your neighborhood (the comps) but comps also lie, since lots of those sellers may be rushed. It’s like home improvements, there’s a big difference in what people pay for the same job. Good luck! And on your nuclear invention too. 🙂

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48 Mark Thorson October 26, 2017 at 3:38 pm

Yes, I consider real estate people to be adversaries. They want to sell quickly, but my view is that if it sells faster than six months, it was priced too low. The property in in Saratoga, which is desirable because of the good reputation of its schools. It also has good access to the roads, but not so close as to have a problem with air pollution or noise. I can get to highway 85 in about 3 minutes, which is the direct route to the Mountain View companies like Facebook and Google, though 85 is practically in LA-style gridlock during morning rush hour. I’ve been thinking when the time comes I should walk a picket at the entries to Apple, Facebook, and Google to hand out flyers describing the property. If there was a real estate agent that would do that, maybe I’d consider him worth the money. I used to pass by a guy at the corner of Page Mill Road and El Camino Real on the way to work who wore a zebra suit to advertise Zebra Copy, a print shop. I wonder how much one of those zebra suits would cost. Or maybe a gorilla suit. Maybe both, on alternate days.

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49 Ray Lopez October 26, 2017 at 4:06 pm

Yes I used to work in SV and am familiar with it. Or hire a Mexican to carry the sandwich sign. However, if you try too hard in advertising it might be a put off for certain people, sending the wrong signals. Then again, they probably can’t afford it. Keep in mind if you have money and can improve and subdivide the property (rebuilding these dilapidated houses) it would increase your returns, but it takes money. We might do the same next year for certain WWII era junk houses in DC, probably it will take $300-500k to build a nice house on them and resell. Or, depending on your time horizon, sell one property for the land and then build on the others with the money you get. You assume some risk but no risk no return. Here in DC they have a lively and competitive home developers market, not sure about SV.

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50 Mark Thorson October 26, 2017 at 4:40 pm

That’s a good idea. There’s a Home Depot just up the street, and always plenty of Mexicans (or probably a lot of Central Americans) milling in the parking lot looking for work. With that much labor, I could cover every entrance to all three companies simultaneously. For what I could pay, they’d rather do that than construction work.

51 Anon October 26, 2017 at 6:57 pm

……” if it sells faster than six months, it was priced too low.”

I wonder if that is true in SF/SV market , which is a crazy one. SF more than SV , but even SV is probably on fire.

You have already received some good advice.

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52 Dick the Butcher October 26, 2017 at 3:07 pm

You could sell without a broker.

I was an executor. The additional $10,000 bequest was no where near enough for all the planning, decisions, work, craziness; including two beneficiaries “losing” final distribution checks so I had to stop payment and issue new ones adding months to the finalization. My uncle’s brother (a beneficiary) died during the process and his only son died immediately thereafter.

I “solo” sold twice. Once as executor for my uncle’s. If nothing else, you will have $400,000 in “play” in the final sale price. That is, other will beneficiaries will have $400,000 less reason to question the price at which you sold. The brokers flock like vultures when they learn a decedent’s residence is available. My uncle’s mail box was full of notes and business cards. Use multiple brokers for market price estimates and you may, if you must, be able to negotiate a lower broker’s commission. You may also want to get a MAI appraisal. Walk through with the appraiser and ask questions, including his thoughts on raze or not to raze. These guys are supposed to be pros in their markets. I used a lawyer for the contracts and closings. I’m sure CA is different from NY.

If you raze the structures, you may not get the expenses back in the sale price. You need to research and think about that. I would tend to sell them and allow the buyer to pay negotiated a lower price and decide what he/she wants to do. My brother is a long time RE developer. He says it’s best to sell as-is. You can’t be sure you can recoup the costs and it’s an added pain in the ass, with everything else in the estate you will be working.

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53 Mark Thorson October 26, 2017 at 4:49 pm

Thanks for the advice. I’ve been contemplating the demolition work, and there’s so much concrete and brick it would be a daunting task. The buyer will probably hand the project over to a developer who would be much more expert than me at getting the job done competently at a good price.

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54 dearieme October 26, 2017 at 3:17 pm

9%? Dear heavens. Very dear.

For England, from the consumer magazine “Which?”:

‘The average high-street estate agent fee is 1.3% including VAT, according to conveyancing firm MyHomeMove. ….

you might also want to consider using an online estate agent. Online estate agent fees are typically charged at a flat rate, rather than as a percentage, and range from around £400 to £2,000.’

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55 Ray Lopez October 26, 2017 at 4:08 pm

But England has sky high housing costs too..or rather London does.

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56 Thor October 26, 2017 at 8:38 pm

Wish I’d known more when selling my mother’s house. I started listing it myself and lost the courage of my convictions. I should’ve listed it in a couple of major newspapers. Oh well. Good luck Mark.

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57 Kevin P October 26, 2017 at 11:47 pm

Bay Area should be 5%. Brokers like to pretend 6% is still standard so they look like it’s a discount.

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58 Mark Thorson October 27, 2017 at 11:55 am

I frequently get postcards from a real estate firm that advertises their purportedly low 3.5% rate, while claiming others are 6%. I might consider them, but still for that kind of money I’d expect to see them out there in a zebra/gorilla suit.

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59 DevOps Dad October 27, 2017 at 7:24 pm

Try this site Mark, it is a Stackoverflow for Personal Finance for example:

https://money.stackexchange.com/questions/77818/how-do-i-minimize-capital-gains-on-rental-real-estate-in-california

Regarding the article, “Foreigners are set to be banned from buying houses in New Zealand.” from my perspective as a Bay Area rent seeking bastard, it is smart legislation by the New Zealand government and show they truly care for their citizens.

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60 Deepish Thinker October 26, 2017 at 2:32 pm

A couple of thoughts on my home country’s recent anti-immigrant turn.

(1) I expect the ban on foreign buyers to have very little practical effect. While there are undoubtedly foreign domiciled buyers who purchase residential property that they neither reside in nor lease, it is a stretch to believe that there are enough of them to drive the dramatic house price inflation seen in parts of New Zealand. The rather more plausible explanation is that housing supply growth has been consistently low relative to population growth due to a bunch of practical and regulatory constraints. None of which will be addressed by banning non-domiciled foreign buyers who are somehow unable to get around whatever ban is put in place (Setting up a property investment company in NZ is not exactly difficult). In truth this an exercise in gesture politics. The new coalition government consists of a populist party (NZFirst) that wishes to seen as cracking down on foreigners and a conventional left wing party that wishes to be seen to be doing something about housing prices (even if this mostly not doing anything in a doing something kind of way)

(2) A great many American commentators seem oddly disconcerted that this anti-immigrant push in New Zealand is coming from the left, because skepticism of immigration is so strongly associated with the right in US politics. I’d suggest that the anti-immigration stance taken by Republicans in the US has given Democrats something of a free pass on the issue. If Republicans weren’t blocking meaningful immigration reform, Democrats might quickly discover that immigration is much less popular amongst their supporters than it might first appear. After all, if you’re opposed to trade deals because of foreign competition for American workers, it hardly makes sense to be for importing the foreign competition so that it can displace American workers locally.

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61 mpowell October 26, 2017 at 4:36 pm


After all, if you’re opposed to trade deals because of foreign competition for American workers, it hardly makes sense to be for importing the foreign competition so that it can displace American workers locally.

As with all extremist movements, for the American left when ideology conflicts with reason, ideology wins. And you don’t understand the Democratic base very well. A large portion of it is former immigrants!

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62 Step Step Step on Toads October 26, 2017 at 4:55 pm

If Republicans weren’t blocking meaningful immigration reform,

“Meaningful immigration reform” = another amnesty followed by another haphazard mass naturalization to manufacture more Democratic voters. For some reasons Republicans block this.

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63 Careless October 26, 2017 at 9:00 pm

What you seem to not be getting is that the large majority of immigrants and their descendants to the US over the past 50 years or so are solid Democratic voters (when they vote). It’s quite thoroughly tied into left/right politics in this country, although many Republicans have been too stupid to figure it out.

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64 Chip October 26, 2017 at 11:40 pm

The immigrants driving property bubbles in NZ and Vancouver are buying million dollar homes.

Most immigrants to the US are poor and overwhelmingly vote Democrat.

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65 Alex October 26, 2017 at 10:10 pm

I think on point 1 you’re somewhat underestimating the impact of NOM as opposed to the standard supply side stories in elevating house prices, as is often the case in Aus. NZ and Aus genuinely have very high immigration rates, and this is pretty likely to pump up your house prices regardless of whether the supply constraints are reasonable or terrible. More to the point, if you are concerned with house prices you can look at both supply and demand issues, and in both of our countries infrastructure, planning, housing etc have not kept up with the pop growth. Yes supply side issues should be fixed, but well, they don’t seem to have been in the past 10+ years for Aus at least so perhaps the simpler solution is fix the demand side. I know this is tangential to your original point, but I do think it’s important to whether you see it as ‘step in the right direction’ or not.

On 2, I think that NZ is actually pretty unusual in this – Aus for instance has everyone left of ON on the side of high immigration, and I think that’s fairly typical of left wing parties, whether or not it’s consistent with helping workers.

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66 rayward October 26, 2017 at 2:42 pm

By restricting purchases by foreigners, foreigners who already own houses in New Zealand could suffer significantly losses since they can only sell to residents. Is this new law titled the Peter Thiel Ain’t Gonna Buy No More No More No More Houses Act? Will Thiel Sue?

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67 mpledger October 26, 2017 at 4:42 pm

Peter Theil is a NZ citizen – he will be able to buy as many houses as he wants in NZ.

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68 rayward October 26, 2017 at 5:04 pm

“[T]he new plan was designed to stop rising house prices and will apply to non-residents. We have agreed on banning the purchase of existing homes by foreign buyers.” Is Thiel a resident? Is Thiel foreign? Does the new law apply to foreign or non-resident buyers? The new law is flexible enough to permit NZ to sell houses to anybody they wish, preferably to people like Peter Thiel, I suppose. Peter Thiel is a naturalized U.S. citizen (a German by birth). It’s true that NZ gave him citizenship after spending 12 days in NZ, but there’s a price for everything. One can be a citizen of the U.S. or not. That’s the U.S. policy – the U.S. doesn’t recognize dual citizenship. If Thiel wishes to renounce his U.S. citizenship, he has the right to do to. But pretending to be a citizen of more than one country is, well, disloyal.

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69 dearieme October 26, 2017 at 3:10 pm

Are Aussies foreigners for this purpose? isn’t there a free trade agreement? Isn’t housing part of it? What if Kiwis are banned from buying houses in Oz?

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70 Anonymous Bosch October 26, 2017 at 5:09 pm

> Are Aussies foreigners?

Yes, outside Australia they’re clearly foreigners. Worse, they’re convicts, too.

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71 Georgina Brown October 31, 2017 at 10:07 pm

Aussies are not classified foreigners in new zealand or vice versa

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72 Ryan Reynolds October 26, 2017 at 6:19 pm

From what I’ve read, it wouldn’t impact Australians, maybe. The New Zealand Herald suggests that it’s intended to prevent purchases from people “not intending to move to NZ”. Since Australians can live and work in NZ as they like (barring any criminal convictions), then an Australian could still move to NZ and buy a house. But maybe not buy a holiday home or invest in an Airbnb, unless it was a new dwelling.

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73 Georgina Brown October 31, 2017 at 10:05 pm

Aussies and new zealand have reciprocal rights on everything wont effect aussies…only real foreigners. ..the rest of world

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74 anon October 26, 2017 at 3:38 pm

I am too seduced by the glamour of economics to think this ban is a good idea, but ..

It is interesting that homeowners want higher prices (for themselves) but not too much higher (for their kids). It is a difficult thing to balance..

(Personally I think the kids should be favored and housing prices should be much lower. This would reduce the need for government transfers for rent as well.)

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75 Jackie Padilla October 26, 2017 at 3:49 pm

Japan has shown you don’t need immigration to increase per capita living standards. Because of that I say good for NZ on both counts. An economy is more successful when residents have money to spend. They will have more money to spend when they are not paying huge amounts for a place to live.

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76 rayward October 26, 2017 at 3:52 pm

The median price of a house in the U.S. is approaching $200,000. That’s the median price and takes into account houses in, God forbid, Detroit, Dubuque, and Paterson NJ. The rule of thumb when I was a young adult was the price one paid for a house should not exceed two and a half times one’s annual income. That’s a Laffer. Rising asset prices have consequences, some not so good. If the Fed looked at rising asset prices in the same way the Fed looks at rising wages, . . . .

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77 Kevin English October 26, 2017 at 3:53 pm

The logic of this policy is based on poor economic logic.

Foreigners buying property in your country is a good sign, it means that your country is considered a safer place to invest or move. This can only be a plus. If a Chinese person buys a $500,000 condo in Chicago, $500,000 moves from China to the USA and the USA is also $500,000 richer. Also, the existing property owners are also richer because there is now a wider demand for their property. Also, if the person is not a long term resident, they will have to sell that property eventually. They can’t hold it ad infinitum.

I have no data to back this up but most the countries that I have visited that restrict foreigners from owning property are poor countries: Thailand, Philippines, etc. This is not a policy that makes your people wealthy. There must be a study that shows this…

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78 Step Step Step on Toads October 26, 2017 at 5:02 pm

I think Kuwait at one time had a law which prohibited foreign residents from owning land. Not sure about the other Gulf emirates.

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79 Anon October 26, 2017 at 6:58 pm

The United Arab Emirates, Dubai included liberalized foreign ownership of Housing.

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80 Warren Platts October 26, 2017 at 8:57 pm

That $500K flowing back into the US is the result of the trade deficit: current account deficit = capital account surplus. We would be better off exporting goods, rather than selling assets.

IMHO YMMV

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81 Rick Zhang October 27, 2017 at 1:31 am

But when the Chinese immigrate to the US, that’s $500k that was previously an “account deficit” that’s now “capital outflows” for China. It’s win-win-win for the US. Import cheap goods from China, import their wealthy/educated at the same time, and raise asset prices all in one go.

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82 Elam Bend October 26, 2017 at 4:21 pm

But a local trust with a foreign beneficiary is just fine, right?

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83 Zach October 26, 2017 at 4:50 pm

I assume this will be paired with some tighter controls on capital flows or else yeah it won’t make much of a difference for foreigners trying to convert cash to kiwi homes.

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84 Mogden October 26, 2017 at 4:55 pm

Unfortunately, there is an inexhaustible supply of economic idiocy around the world.

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85 Daz October 26, 2017 at 11:05 pm

In NZ, we’ve only just begun. Check it out in a year or two. You will fall off your chair laughing.

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86 Borjigid October 26, 2017 at 4:59 pm

Fortunately, this sort of thing always ends well.

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87 Step Step Step on Toads October 26, 2017 at 5:00 pm

She also wants to renegotiate TPP.

No one has a clue what it entails (though the rent-seekers know what is entailed by the specific carveouts they got inserted into it).

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88 Chill out October 27, 2017 at 2:19 am

Yes they do. It entails banning foreigners from buying houses. This blog is counting one policy twice.

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89 chuck martel October 26, 2017 at 5:24 pm

This is basically identical to a zoning restriction. If the parties feel that they are negatively affected by the sale of another’s property they need only buy it themselves for the high bid. Same goes for houses painted an undesirable color, with unmowed lawns, or unattractive residents.

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90 P October 26, 2017 at 7:29 pm

Good. Here in Australia we have the same problem. Huge blocks of luxury apartments are being put up and sold to foreign (Chinese) investors, driving prices up by 10% plus every year in our major cities.

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91 Harun October 26, 2017 at 9:20 pm

Yes these laws are anti chinese. Nobody will call the racist of course

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92 P October 27, 2017 at 2:11 am

Nothing anti-Chinese about it. Houses are for living in, not an instrument for speculation by cashed up foreigners. Chinese just happen to be the largest group doing it.

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93 Georgina Brown October 31, 2017 at 10:01 pm

Australia are excempt from the ban

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94 Thomas Sewell October 26, 2017 at 9:58 pm

Mexico has a similar law. It’s routinely avoided by having the U.S. (or other foreign) buyer purchase a shelf corporation, which then purchases the property.

So this tends to end up as another of those laws which make a good politician’s sound bite, but in the end just provides jobs for accountants and lawyers and marginally increases inefficiency.

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95 Anonymous October 26, 2017 at 9:58 pm

This is hardly unprecedented for a Left-wing party to support as some commenters seem to think. For example, the Green Party’s 2015 electoral manifesto stated that they would:

“Not simply accept people just because they are rich. The London housing market in particular has been gravely distorted by
the number of rich migrants buying property, bidding up prices all along the housing chain.”

https://www.greenparty.org.uk/assets/files/manifesto/Green_Party_2015_General_Election_Manifesto_Searchable.pdf

Competition from migrants is suddenly relevant when it affects the Green Party’s voter demographic.

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96 jorod October 27, 2017 at 12:23 am

Who would want land in New Zealand? It has been beneficial to the US to have foreigners buy land at exorbitant prices as we dump problems on them. The prices usually collapse and the US people make out like bandits. There’s a sucker born every minute.

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97 Trump Fan October 27, 2017 at 12:46 am

But which US people “make out like bandits?” An American property owner bought at 200,000$ dollars, sold to a Chinese tycoon for 500,000$. For a few years, the Chinese tycoon charged exorbitant rents to his American tenants. Then the property values tanked back to their natural levels. The original property owner made out like a bandit, but the tenant got screwed. Sure, one man making 50,000$ and the other losing 30,000$ is still a “net gain,” that’s cold comfort to the loser.

That’s not to say this is a good policy. There’s a smart way to solve the problem and a dumb way to solve the problem: the smart way is to deregulate housing so that if foreign capital is sent into the industry it results in more housing being built and actually lowers prices for American consumers. But no one wants to take on the cartel.

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98 Rick Zhang October 27, 2017 at 1:36 am

As I mentioned earlier, naturalize the Chinese tycoon and suddenly all the gains will stay “within the family” so to speak. Also, this is a bit of a straw man argument. I’m sure there are more US banks and pension funds investing in property and becoming landlords than foreign tycoons.

Furthermore, you need to make up your mind. Are rising asset prices a good or bad thing?

In your hypothetical scenario, a true conservative would say that the tenant should have thought harder and planned ahead to anticipate rising house prices, buying in when things were cheaper instead of wasting the money on drugs and other frivolous consumption. After all, there are Chinese plumbers who live on instant noodles every day to save enough so their kids can own property (and be marriageable) and get an engineering degree in the US. If you’re not willing to sacrifice and compete for a house with others hungrier than you, you deserve to “get screwed” by tycoon landlords.

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99 dsgntd_plyr October 28, 2017 at 7:34 pm

“As I mentioned earlier, naturalize the Chinese tycoon and suddenly all the gains will stay “within the family” so to speak. Also, this is a bit of a straw man argument. I’m sure there are more US banks and pension funds investing in property and becoming landlords than foreign tycoons.”

America doesn’t exist to help foreigners make money off of Americans…Or at least it shouldn’t.

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100 Georgina Brown October 31, 2017 at 9:59 pm

Australians are except from ban ..because we have reciprocal freedom with New Zealand on residents

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