A Treasury analysis report released on Friday showed the new exemption to the foreign buyers’ ban was expected to briefly boost prices in areas with larger proportions of luxury homes such as Auckland and Queenstown.
In September, Prime Minister Christopher Luxon announced holders of the Active Investor Plus visa would be able to buy or build one home worth at least $5 million.
The visa is available to those who have invested between $5m and $10m in New Zealand investments.
Mr Luxon said the change was intended to support investment and drive job growth.
It would not inflate the property market given the small numbers of people and properties affected, he said.
The report said about 0.5% of New Zealand housing stock was valued at $5m or above and could be expected to experience a ‘‘small and temporary uplift in prices’’.
‘‘This could be geographically concentrated - e.g., Queenstown and Auckland, where there is a larger proportion of over $5 million properties than other parts of New Zealand.’’
A slight price uplift might also be seen in properties valued just below $5m - as values were bid up to meet the threshold, the report said.
‘‘In addition to the low proportion of qualifying houses, any effect on house prices would be limited by visa numbers, which are unlikely to increase beyond the hundreds on an annual basis and not all of the approved applicants are expected to purchase a home.’’
Since 2018, foreign buyers were largely locked out of the housing market following a Labour-NZ First coalition ban, imposed as affordability concerns rose.
Exceptions have been made for Australians and Singaporeans under trade deals.
As at September, only about 10,000 houses across the country would be eligible for purchase under the new scheme - 80% of them in Auckland and 10% in Queenstown.
Ministers had considered a $5m threshold for Auckland and Queenstown and $2.5m for the rest of New Zealand but it was not considered by Cabinet.
The report said 300 new visa applications with a potential total minimum investment of $1.8 billion were recorded since April 1.
The change is expected to come into effect in about three months’ time.
— Allied Media/ RNZ
