A view of a neighborhood with three story homes in Las Vegas, Nevada April 4, 2013. The buying of foreclosed homes and other distressed homes by three big institutional buyers is reshaping the housing market in Las Vegas.
In a move that may lead to a shakeout in the property market, the New Zealand Reserve Bank has issued an advisory to banks to treat loans on investment properties as riskier than residential home loans. It wanted the lenders to segregate the two and count the risks appropriately. A view of a neighborhood with three story homes in Las Vegas, Nevada April 4, 2013. The buying of foreclosed homes and other distressed homes by three big institutional buyers is reshaping the housing market in Las Vegas. Reuters/Steve Marcus

Housing shortage coupled with its soaring prices in New Zealand have turned into a political issue with main opposition parties, Labour and Greens taking the government to task, alleging that New Zealand homes are being marketed in Asian countries projecting it as a property haven for attracting buyers who want to make quick bucks and hefty profits.

The two parties had been blaming foreign speculators for spoiling Auckland's red hot housing market. They are now claiming evidence that New Zealand homes being advertised as an easy place to make a fast buck. "A Malaysian property website lists nearly 4000 New Zealand houses and boasts they work with a real estate company here to help Malaysians invest in our lucrative property market," Labour's Phil Twyford said.

Radio Ads In Malaysia

Twyford claimed that radio ads are playing in Malaysia, Singapore and Queensland, calling upon investors to buy Auckland properties while heralding the fact that capital gain tax or stamp duty are payable in New Zealand. Claims are also being made that investing in rental properties will be lucrative as they can earn half the New Zealanders' weekly wages.

Green Party housing spokesman Kevin Hague also said cash-rich non-resident buyers are thinking that New Zealand is an easy mark. "They can come here, score a bunch of properties, pay no capital gains tax and charge a premium for rent," he said. Hague said current rules allow foreign buyers a free ride because official approval is needed only for deals worth more than NZ $100 million (AU$97.23 million). "We need to urgently tighten our overseas investment laws,” he added.

The Greens are still demanding clamping of capital gains tax despite Labour having reneged from that position after campaigning on that plank in the last two elections. Twyford now says action is needed on property speculators.

Progress In Christchurch

Meanwhile, Building and Housing Minister Dr. Nick Smith and Christchurch Deputy Mayor Vicki Buck welcomed the release of the first Christchurch Housing Accord monitoring report, which showed a strong recovery in Christchurch’s residential housing since the earthquakes. "There is strong evidence in the building consent, median house price and average weekly rent data that we are getting supply and demand back into balance since the earthquakes destroyed 10,500 homes in 2010 and 2011," Dr. Smith said.

Weekly rents in Christchurch also improved from NZ$344 in March 2012 to NZ$418 in March 2014, showing 11 percent increase and it is now steady at the same rate even in March 2015. The Christchurch Housing Accord, signed in 2014 between the council and the Government complements the broad programme of work going on for Christchurch’s housing recovery.

For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)

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