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IMF officials, in New Zealand this week, called the Overseas Investment Amendment Bill "discriminatory" and hinted that banning foreign investment in housing was an over-reaction to a problem that might not even exist.
"Foreign buyers seem to have played a minor role in New Zealand's residential real estate market recently," IMF division chief for Asia and Pacific Thomas Helbling said on Tuesday. He added that there were other ways for the Government to respond if large volumes of unwanted foreign money suddenly flowed into New Zealand's property market.
Associate Finance Minister David Parker said the Government disagreed with the IMF.
"It's a matter of values," he said yesterday. "We believe New Zealand homes should not be traded on an international market."
The OIAB, a cornerstone government initiative, is designed to stop foreign speculators buying houses that would otherwise be available for New Zealanders.
But most of the more than 200 submitters to the parliamentary select committee considering the Bill are worried the legislation will have the opposite effect.
Land and property developer Alastair Porter welcomed the IMF's stance, saying the foreign buyer ban was just bad law.
The Real Estate Institute of New Zealand was also cheered by the IMF's statement. It has argued there is no data to suggest foreign buyers are taking the nation's houses. In fact, a survey of real estate agents last year found fewer than 4% of buyers were from overseas.
Reinz chief executive Bindi Norwell said the problem was with supply, not overseas demand.