New Zealand Brings To Halt ‘Unstoppable’ Chinese Land Grab, Passes Law Banning Foreign Purchases

New Zealand Brings To  Halt ‘Unstoppable’ Chinese Land Grab, Passes Law Banning Foreign PurchasesThe Auckland Sky Tower in New Zealand’s capital. (Michael Bradley/Getty Images)

New Zealand's parliament passed a law to ban many non-resident foreigners from buying existing homes, completing the Labour-led government's election campaign pledge reported Reuters.

Jacinda Ardern, New Zealand's popular 38-year-old Prime Minister, campaigned before September's election on a promise to clamp down on house price growth and reduce high rates of homelessness, in part by banning foreign buyers.

“This is a significant milestone and demonstrates this government’s commitment to making the dream of home ownership a reality for more New Zealanders,” associate Finance Minister David Parker said.

Foreign ownership has attracted criticism in recent years as New Zealand grapples with a housing crunch that has seen average prices in the largest city, Auckland, almost double in the past decade and rise more than 60 per cent nationwide.

The majority of overseas buyers were from China and neighbouring Australia, according to Statistics New Zealand.

Chinese property buying is an “unstoppable juggernaut,” said Jon Ellis, chief executive of Investorist, an online portal for cross-border property transactions.

The rapid devaluation of the Chinese yuan triggered a massive capital outflow of between $700 billion and $1 trillion in 2015. And a great deal of this investment capital is going into overseas real estate. In the first half of 2016 alone, Chinese entities invested $16.1 billion into overseas real estate. Half of this investment, $8 billion, came from Chinese insurance companies. 23 per cent came from Chinese conglomerates, with another 10 per cent from property developers.

Chinese investors have contributed to a massive real estate boom in certain Canadian cities – most notably Vancouver, where the price gains have been called “gravity-defying”.

Chinese buyers spent a total of $17 billion on commercial real estate in the US between 2010 and 2015, and a whopping $93 billion on US homes. African property is also becoming popular among Chinese investors. A recent in-depth study by Dr Honita Cowaloosur at Stellenboch University in Cape Town documents growing Chinese appetite for property in South Africa and Mauritius.