By Warren Robertson
In an attempt to keep property prices down, governments around the world are moving to restrict foreigners from investing in property in their cities.
UK lawmakers announced in late January that a tax will be imposed on foreign real estate buyers in London following years of sky-high prices caused by investors from the Middle East and Russia, who buy a significant percentage of the best, centrally-located properties.
The number of home sales in Vancouver, Canada, dropped 32% in 2018 from the previous year, following a series of new taxes, stricter mortgage rules and rising interest rates. Median prices in Auckland registered its first annual drop since 2008 after the New Zealand government passed legislation to restrict foreign buying that it says is partly to blame for escalating housing costs. Home prices have dropped 11% in one of Australia’s largest cities – Sydney – from their 2017 peak following government restrictions on foreign purchases and tighter credit.
‘Government action to reduce foreign purchases and / or stretched borrower affordability has already caused home prices to stall or fall in cities such as Sydney, Melbourne, Toronto, Vancouver and Stockholm,’ states a Fitch Ratings report issued on 15 January 2019, regarding global home price growth.
On the contrary, Lightstone Property recently reported a steady increase in foreign sales over the past five years in Cape Town, with just over 7% of current sales coming from foreign buyers. With Cape Town property prices already high and the restrictions on other leading cities around the world, under current circumstances the city can probably expect to see greater foreign investment and even higher prices than currently exist.