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New Zealand election result stokes housing, migration fears
[SYDNEY] Temporary workers and foreign students previously drawn to New Zealand on the promise of gaining residency will start leaving en masse, migration agents say, as the incoming coalition government promises to cut record migration.
The tie-up between the traditionally centre-left Labour Party and nationalist New Zealand First represents an abrupt shift in the formerly open door policy that fuelled strong economic growth but has also been blamed for soaring house prices and growing inequality.
"We are told (foreign) students are working as many hours as possible to make as much quick money as possible on the understanding there is no more path to residency, and they will need to return home," said Connor Brady, immigration adviser and manager director at agency New Life Global.
New Zealand had almost 122,000 international students in 2016, up 40 per cent from three years earlier, led by China and India.
New Zealand has developed a particularly close economic relationship with China, signing the OECD's first free-trade deal with Beijing in 2008 and welcoming record Chinese investment and immigration in recent years.
But Prime Minister-elect Jacinda Ardern and her coalition partner Winston Peters have found common ground in "fortress New Zealand" type policies that align more with the populist movements across Europe and the United States than Labour's free market predecessors and the outgoing National Party government.
While the coalition government is still being formed and policy detail worked out, the 37-year-old leader made clear she intends to stick with a promised reduction in migration and restrictions on foreign ownership of houses.
Labour is planning to cut net immigration by up to 30,000 from the current level of just over 70,000 a year. It also plans to renegotiate certain trade deals to accommodate for a planned ban on foreign ownership of existing homes.
There may also be changes to the treatment of large foreign purchases, part of a Chinese-led investment spree that has helped propel the country during a period of otherwise subdued global growth.
"It's almost 2020 and you want to take us back to 1980," Marcus Beveridge, principal at immigration and foreign investment-focused Queen City Law said of the proposals.
The Sept 23 election thrust the country into political limbo for almost a month with neither National or Labour winning enough seats to form a majority. Holding the balance of power, NZ First formed a coalition with Labour on Thursday, while the Greens have offered "confidence and supply".
Labour and NZ First campaigned on similar housing policy platforms that included banning foreign investors buying New Zealand homes, introducing measures to dissuade people from quickly buying and selling properties, and increasing housing stock.
Jane Lu, head of Australia and New Zealand for international property portal Juwai.com, said there would likely be a rush of foreign property investment to beat any new rules. A similar trend emerged in Vancouver and Sydney when new taxes and restrictions were about to be introduced.
"They could cause buyers to front-load activity they already plan for next year," said Lu.
"One premium buyer in Sydney closed his transaction 15 minutes to midnight before the new regime kicked in." New Zealand's housing crunch has pushed prices up more than 50 per cent nationally in the last decade and in Auckland they have almost doubled, placing housing affordability at the centre of the recent election campaign.
It's unclear what the immediate impact on house prices will be, as there has already been a pullback in foreign investment in New Zealand property from its frothy highs.
"At this stage what we know is that the new government has indicated that they will ban foreign purchase of existing houses. Whether there are further restrictions beyond that, there is a lot of uncertainty," said Christina Leung, principal economist at the New Zealand Institute of Economic Research.
"But I would say that at the moment, it's more the uncertainty itself over what new protectionist measures will be put in place which would weigh on demand for housing." The election result caps a remarkable rise for Ms Ardern, who only took over the party's top job in August with polls then predicting a resounding victory for the Nationals.
And while the sweeping policy changes are yet to be introduced, the New Zealand dollar has already reacted, with the Kiwi dropping to five month lows on Friday.