New Zealand economist says foreign buyer ban unlikely to curb housing prices
'Public policy quite often is complicated and has unintended consequences,' warns Shamubeel Eaqub
While New Zealand's just-passed foreign buyer ban is getting a positive reception from some in B.C., an economist in the southern hemisphere is calling it misguided.
On Wednesday, New Zealand banned most foreigners from buying most types of housing in that country, where affordability has become a struggle.
B.C. Green Party leader Andrew Weaver wants the province to look at a similar ban, but Auckland, New Zealand-based economist Shamubeel Eaqub calls it "a rushed bit of policy, and not very good."
"Be very careful what you wish for because public policy quite often is complicated and has unintended consequences," Eaqub told On The Coast host Gloria Macarenko.
"Getting rid of the foreigners is not going to make housing more affordable. The way that the legislation has been written… it's probably going to make it harder for overseas investors to supply new housing in New Zealand."
Eaqub says the policy is weak in several regards.
First, foreigners are still allowed to buy apartments in new developments.
Second, it still allows Australians and Singaporeans to buy property in New Zealand because of existing free trade deals. Australians alone, he said, account for about 30 per cent of foreign buyers in the New Zealand market.
But, he also said the ban is a solution in search of a problem.
In Auckland at least, which is the largest urban area of the country, foreigners make up less than 10 per cent of all buyers. "We are trying to deal with something that is very much at the margin."
Home prices are increasing all over New Zealand, he said, not just where foreign buyers are active. There are also widespread supply issues and construction comes at a slow pace.
He believes there are better solutions to housing problems in his country: renting could be made more affordable and have more secure rules; social housing supply could be increased; and policies and planning could be improved to encourage affordable housing.
Listen to the full interview:
With files from CBC Radio One's On The Coast