Has the ban on foreign buyers taken the heat out of the Auckland market? (Getty Images)
Has the ban on foreign buyers taken the heat out of the Auckland market? (Getty Images)

The BulletinMay 3, 2019

The Bulletin: Has foreign house buyer ban worked?

Has the ban on foreign buyers taken the heat out of the Auckland market? (Getty Images)
Has the ban on foreign buyers taken the heat out of the Auckland market? (Getty Images)

Good morning, and welcome to The Bulletin. In today’s edition: Figures of foreign buyers shows a big decrease, principals unimpressed by government teacher recruitment fund, and CRL funding issues debated at Council.

The statistics on foreign house buyers since the ban came into effect have shown a dramatic decline in sales to those overseas. It has pretty much entirely dropped away on the official figures – Interest reports that sales to those who weren’t NZ citizens or resident visa holders fell by 81% in the March quarter this year, compared to the March quarter last year. In raw numbers, that’s 204, down from more than a thousand. As a proportion of total sales, those few hundred accounted for less than 1%, after previously being more like 3%.

How are there even 204? Due to pre-existing agreements, the ban doesn’t apply to those from Australia or Singapore. As Radio NZ notes, the Overseas Investment Act clause also doesn’t apply to those making a significant investment in new housing stock, or buying apartments and large developments. It is unlikely that the figures are catching people buying houses through trusts, so it’s possible the actual proportion hasn’t really changed, and rather the stats are just being juked.

It should be remembered how extremely tense this was as an issue, before the ban was instituted. House prices were constantly spiralling up, many people felt utterly shut out of the market, and overseas buyers were often given the blame – fairly or otherwise. A memorable example of this was the then-opposition Labour Party releasing ridiculously misleading figures based on how many buyers had ‘Chinese sounding names.’ They were accused of race-baiting for partisan gain, and even then-leader Andrew Little admitted it was crude and would lead to accusations of racism.

But has it actually affected the housing market? It’s difficult to say with certainty, but there has been a correlating slowdown in prices where foreign purchases were most pronounced. For example, the percentage of sales to overseas buyers in Auckland has plummeted for the quarter. At the same time, Radio NZ reports house prices have dropped steadily in Auckland over the last three years, which means that a trend that was already in place has largely continued. On Newstalk ZB, REINZ CEO Bindi Norwell said it hadn’t had any effect on the affordability of the overall market.

It’s potentially more of a correction than anything else, and can’t necessarily be put down to one specific factor, even though foreign capital was probably playing a heating role in the market. A blog on the Squirrel website by John Bolton offered some really interesting insights around the end of last year on this. He said then that in isolation it wouldn’t have an effect, but coupled with other changes like anti-money laundering laws and tighter credit from banks, the changes would be felt. Interest has also reported that new dwelling consents in the city are finally starting to meet demand, which will also take some pressure off.

So has the government been successful? That’s in the eye of the beholder, and they certainly haven’t done much to add to the overall supply of housing through Kiwibuild. But you could look at the overall range of measures that have been taken, compare them to – at the very least – the Auckland market, and say yes, it has become more affordable. Then again, part of it as well could simply be capital flight to the regions. As was talked about back in early March, house prices in the provinces are absolutely surging.

The government has put a large amount of money towards training new teachers, but principals aren’t impressed, reports Newshub. $95 million has been put towards training 2500 new teachers, but there’s an obvious problem – teaching has an increasingly high churn rate of people leaving the profession, and it’s entirely possible there won’t be that many people wanting to become teachers. There’s also the increased strain that will put on dwindling numbers of senior staff, who are also being told that there’s no extra money on top of the pay rises they’ve been offered.

The City Rail Link has run into severe cost issues, but Auckland’s Councillors appear to have found a way to dig their way out. For an explanation of how they managed to come up with a cheeky $500 million extra without cutting services, Simon Wilson in the NZ Herald (paywalled) was there for the epic, day-long journey that councillors had to make. A funding plan based on selling Council-owned carparks has also been taken off the table, after an intervention from Heart of the City.

The government has been accused of trying to decriminalise drugs by stealth, through directing police to ‘use their discretion’ when prosecuting. The NZ Herald’s Derek Cheng has reported on comments made by Police Association boss Chris Cahill, who says the ‘discretionary’ change to the law was slipped through without many noticing. He says the wider public should have the chance to debate it. However, the Drug Foundation is all in favour of the change, saying it will prevent undue punishment and “open the door to therapeutic help” for drug users.

Meanwhile, keep an eye out for the details of the marijuana referendum to be announced next week, reports One News. It is part of the confidence and supply arrangement between the Greens and Labour, and One News understands it is “broadly in-line with what the Green Party campaigned on at the 2017 election.” That included legalising possession and cultivation for personal use, as well as setting a legal age limit on personal use.

The re-entry into Pike River mine, which had been expected today, has been delayed due to safety concerns, reports Newstalk ZB. Work had to be put on hold because of a spike in oxygen levels, which if it had continued would have raised the risk of an explosion. Re-entry will still happen if they can figure out the problem.

This is an excellent feature from One News journalist Anna Whyte, on a problem many New Zealanders would much rather ignore. A huge amount of this country’s recycling ends up in massive, towering piles in Indonesia. So what is it like for those people living amongst our trash? Not good, and we should be aware of the real consequences of our use of plastics.

New Zealand has a new Supreme Court judge, reports Law Points. Justice Joseph Victor Williams has been appointed, after a vacancy was left by Supreme Court judge Justice Sir William Young being named as chair of the inquiry into the Christchurch attacks. Justice Williams is the first Māori person to be appointed to the role. Meanwhile David Goddard QC is now a Judge of the High Court and the Court of Appeal.

There was a big blunder from me yesterday, and a lot of you sent emails to point it out, so thanks for that. So, this article by freelance journalist Jessica McAllen about Māori voices being suppressed after the mental health inquiry should have been included. I said it was well worth reading yesterday, and I say it again. Some of the examples that have been pulled out seem to show that what has been put in a Māori voice has the opposite meaning of what was intended.

But instead, there was a link to this article from Stuff journalist Henry Cooke, which I was saving up to use today. It’s also well worth reading – in fact from the click analytics I can see that many of you already have. Basically, it unpacks the chances the End of Life Choice bill has of making it through parliament, and it has been included as a testament to the serious legwork that would have gone into it – he literally asked every single MP how they were going to vote. For supporters of the bill, the upcoming second reading could be a particularly nervous one.

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Right now on The Spinoff: Joseph Nunweek and Edward Miller take a hard look at what ditching the capital gains tax will mean for the government’s willingness to address inequality. Don Rowe makes a pitch as to why the capital should be moved to Hamilton. TOP leader Geoff Simmons comes out strongly in favour of more research into gene editing. And Alex Casey goes on a deep search to find the women behind iconic Kiwi songs like Lydia and Maxine.

Finally, because it has been one of those weeks, we’ve significantly broadened out our coverage of slushy issues. Alice Neville, food editor, does a deep dive on the history and nutritional information on the beverage beloved by prison guards. And Madeleine Chapman has done a similarly deep frame by frame analysis on what could become an iconic moment in NZ politics – leader of the opposition Simon Bridges standing up in parliament, and screaming the word ‘slushies.’

So, an article came out on Politico in the last few days, attacking the coverage decisions NZ media companies have made about the Christchurch terror trial. Just so everyone is on the same page, those decisions are here, and basically boil down to not giving any coverage or allowing any glorification of white supremacist views. Politico’s senior media writer Jack Shafer says media outlets are censoring themselves, going against the “robust free-speech traditions of such other former British colonies,” is an example of “the nation’s paternalistic opposition to free speech,” and that it is a sign that editors don’t trust their readers to not be influenced by those views. “You can’t stop a threat you have blinded yourself from seeing,” he concludes.

To say I disagree with his position would be an understatement. In fact, I disagreed with it so much that I decided to write about it. That response piece is here. I don’t believe the overseas critics of this decision have any understanding of the context they’re talking about – rather they’re taking a theoretical position and running hard on it. However, I’m interested in your thoughts on it, so if you want your feedback heard, please email thebulletin@thespinoff.co.nz.

Heartfelt congratulations to Kumar Sangakkara, who has been named as the first non-British President of the MCC – the world’s most prestigious cricket club. Cricinfo recounts a famous incident he had with the club in delivering a powerful 2011 Spirit of Cricket lecture, as a moment when he struck on the power of the game to be transformational. The position is a 1 year term, and he says it’s an honour.

In athletics, a strange decision has been made by which South African sprinter Caster Semenya will have to take drugs in order to compete. She has unusually high levels of testosterone, and as such the IAAF has ruled that she must forcibly alter her hormone levels, or give up competing as a woman. Vice has an article that points out some of the mental backflips the IAAF has had to do to get to the position they landed in.

From our partners: Climate change has already affected how electricity gets delivered to customers, and it’s only going to get more challenging. Vector’s Chief Networks Officer Andre Botha outlines what the lines company is doing to respond.

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