Is This The Solution To The UK's Rising Rent & House Prices?
08-19-2018
Nick Levine
Close up of keys to a house in the background
Is it any wonder so many young people are worried about housing? The average UK property price is now a hefty £225,000 (and more than double that in London) and rents are predicted to rise considerably in the next five years.
But the situation is even direr in New Zealand, whose house prices were last year named the most unaffordable in the world by The Economist. Whereas half of adult New Zealanders owned their own home in 1991, just a quarter do so now.
In an effort to combat the country's housing crisis, which has resulted in 1% of the population living on the streets or in emergency accommodation, New Zealand's government has just banned the sale of existing properties to foreign buyers. “We should not be tenants in our own land,” associate minister of finance David Parker told parliament this week.
Buyers from Australia and Singapore will be exempt from the ban, and foreign buyers will still be able to buy properties in large-scale new-build developments. But broadly-speaking, the ban is designed to prevent rich foreign investors from snapping up houses that could be bought by New Zealand citizens, and inflating property prices in the process.
However, economic Economist Shamubeel Eaqub had already questioned how effective the ban will be, telling The Guardian: "The kind of property that billionaires buy is never going to be used for public or social housing. Locking out multi-million dollar buyers doesn’t mean developers will start building smaller, basic houses. There is never a market for poor people, it is not profitable to build houses for poor people. That’s the challenge.”
Row of typical English terraced houses in West Hampstead, London with a To Let sign outside© Getty Row of typical English terraced houses in West Hampstead, London with a To Let sign outside
Putting scepticism aside for a moment, New Zealand's blanket ban on foreign buyers could give London's Mayor Sadiq Khan food for thought.
According to Hamptons, around 30% of homes in the capital were sold to international investors last year. This has already prompted the Mayor to devise a system that he hopes will give Londoners – and UK inhabitants generally – priority over foreign buyers on less expensive London properties. In February, the Mayor said that the capital's leading housing associations had agreed to a "first-dibs'"system on new-build homes.
“Through the extensive research I commissioned, I was alarmed to discover that overseas buyers were focusing to such an extent on the lower-cost end of new-build homes – many of which were being sold long before Londoners even knew they were available," the Mayor said in a press release.
“That is why I have been discussing steps with the capital’s leading homebuilders and I welcome their landmark offer to give Londoners ‘first dibs’ for up to a month on all their new homes under £350,000, with sales ringfenced to UK buyers for three months before they are marketed overseas.
"The industry offer is an important breakthrough – I will now work with them to put it into practice, whilst also being clear we need the government to help us go further, for instance by guaranteeing extended mortgage offers to put London’s first-time buyers on a level playing field with investors."
Gallery: The best UK property apps ranked by users (Provided by Lovemoney)