Why is New Zealand allowing golden visa holders to buy luxury homes?

New Zealand is lifting its ban on foreigners buying houses. Now, wealthy outsiders who invest in local businesses will be allowed to purchase luxury properties in the country.

The change in policy will benefit golden visa holders. A golden visa is a scheme that includes countries offering temporary or permanent residence to individuals in exchange for investment in real estate or business, or paying a hefty tax.

Let’s take a closer look.

New Zealand’s golden visa

New Zealand’s Active Investor Plus visa offers applicants the right to live, work, and study in the country in exchange for a significant investment.

Designed to attract high-net-worth individuals, the golden visa programme has two investment categories: Growth and Balanced.

The Growth category entails a minimum investment of NZ$5 million (Rs 25.77 crore) in managed funds and direct business investments.

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Those who choose the Balanced category are required to invest at least NZ$10 million (Rs 51.5 crore) in equities, bonds, managed funds, direct business investments, property development, or philanthropy.

In April, New Zealand relaxed rules around its golden visa scheme. It lowered the minimum required funds on higher-risk investments to NZ$5 million from NZ$15 million (Rs 77.3 crore) and removed the English language requirement.

According to data from Immigration New Zealand, 308 applications have been received for the visa covering 1,000 people as of August 31. Nearly 40 per cent of applicants are from the United States.

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If all these applications are approved, the golden visa holders would contribute a potential total minimum investment of NZ$1.9 billion to New Zealand’s economy.

New Zealand to let rich foreigners buy properties

New Zealand has announced it will open its luxury housing market for golden visa holders.

Prime Minister Christopher Luxon said on Monday (September 1) that foreign investors will be allowed to buy or build a house worth at least NZ$5 million in the country.

“Globally, New Zealand has a deserved reputation as a great place to live and we want to grow our economy,” he said in a statement. “By opening our door just a little to allow significant investors to own a home, we will help attract more of those who want to contribute to the community and country.”

“If you are a major international investor, New Zealand is just one of 195 countries all competing for your money and your ideas,” Luxon told reporters at a press conference in Auckland, as per Bloomberg. “The competition is fierce and the solution is actually competing harder. The Active Investor Plus visa, coupled with the ability now to purchase a NZ$5 million home, is doing exactly that.”

In 2018, the then PM Jacinda Ardern had banned golden visa holders not living in New Zealand for six months of the year from purchasing properties amid fears of skyrocketing property prices.

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Why NZ is changing the foreign buyer ban rule

New Zealand is hoping the change will revive its sluggish economy.

“This change navigates a path between those who do not want foreign ownership opened up, and the desire to attract high-net-worth investors by deepening their connection to our country to help grow the economy,” Luxon said.

The change will be implemented by the end of the year, when reforms to the Overseas Investment Act are passed into law, as per Bloomberg.

With this, the government is attempting to lure foreign investment to boost an economy that plunged into a recession in the second half of 2024 and remained weak in the first half of this year.

However, foreign investment in property has been a concern in New Zealand amid fears that offshore buyers drive up house prices.

Quelling these concerns, PM Luxon said less than one per cent of homes in the country were worth over NZ$5 million.

New Zealand has about 7,000 houses valued at more than NZ$5 million, only 0.4 per cent of the nation’s total homes, Bloomberg reported, citing property consultancy Cotality. Of these, 4,500 are in Auckland and 1,250 are in the South Island ski-resort town of Queenstown.

Moreover, just around 350 of those luxury properties are usually put on sale each year. This means only a small pool of homes will be up for grabs for wealthy foreign buyers.

The change is likely to make New Zealand one of the more desirable locations for wealthy investor migrants, Stuart Nash, a former government minister told Bloomberg. 

“Those who may have considered New Zealand in the past, but discounted investing here because of the inability to purchase property, are now back in the game,” Nash said.

With inputs from agencies