New Zealand is planning to ban foreign buyers from purchasing existing homes in an attempt to tackle a housing crisis by halting a trend among the world’s wealthy to snap up property in the country.

The restrictions announced by the prime minister-designate, Jacinda Ardern, are likely to be closely watched by other countries around the world also facing housing shortages and price rises driven by foreign investors. At 37, Ardern has become New Zealand’s youngest leader for 150 years.

New Zealand has become a destination for Chinese, Australian and Asian buyers and has gained a reputation as a bolthole for the world’s wealthy – who view it as a safe haven from a potential nuclear conflict, the rise of terrorism and civil unrest, or simply as a place to get away from it all.

The country has become a hotspot for wealthy Americans seeking an escape from political upheaval elsewhere, who view it as a stable nation with robust laws and far from potential conflict zones. Peter Thiel, the co-founder of PayPal and a Facebook board member and donor to Donald Trump’s campaign, is among those to have purchased property in New Zealand.



PayPal co-founder Peter Thiel. Photograph: Roger Askew/Rex/Shutterstock

Global financiers have been increasingly snapping up properties in the country. Speaking at the annual gathering of the world’s elite in Davos, Robert Johnson, the president of the Institute for New Economic Thinking, said: “I know hedge-fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway.”

Reports by Bloomberg and the New Yorker have suggested dozens of Silicon Valley futurists are secretly preparing for doomsday, acquiring boltholes in the country. Jack Ma, the man behind Alibaba, China’s answer to Amazon and its richest man, is also reported to have shown interest in buying a home there.

Alibaba founder Jack Ma. Photograph: Xinhua/Rex/Shutterstock

Land sales to foreign buyers are booming in New Zealand, with 465,863 hectares (1.16m acres) bought in 2016, an almost sixfold increase on the year before. That is the equivalent to 3.2% of farmland in a country of 4.7 million people.

Despite this apparent boom, official statistics show that of the 48,603 property transfers registered by the government in the three months to June, just 3% were buyers with an overseas tax residency.

The bulk of those buyers were Chinese, followed by Australians. Tax residents of the UK, US and Hong Kong were also among the biggest buyers of property.

Domestic buyers feel they are losing out. Only a quarter of adults in New Zealand own their own home, compared with half in 1991. Soaring house prices have put home ownership out of reach for many. Hundreds of families in Auckland were found last year to be living in cars, garages and even a shipping container.



Houses in Devonport, Auckland. Prices in the city have climbed 75% in the last four years. Photograph: Patrik Stedrak/Getty Images/iStockphoto

According to research from property agents Knight Frank, New Zealand was the 10th fastest growing country in the world in terms of house prices. Prices increased by 10.4% in the year to the end of June, compared with 2.8% in the UK. In Wellington, the capital, they soared by more than 18% in the same period. A report by the Economist this year showed New Zealand had the most unaffordable house prices in the world, with prices in Auckland climbing 75% in the last four years, although the market has cooled in recent months.

The country’s proposed ban on foreign buyers, which would only apply to non-domiciles, comes amid rising support for protectionist policies in developed nations around the world. Trump rode to election victory by pledging more jobs and support for US citizens, while the Brexit vote has been interpreted as a call to prioritise British workers over European migrant labour.

The steps announced by Ardern form part of a coalition deal unveiled this week by her Labour party and the minority partners forming her government – the Green party and anti-immigration New Zealand First. It follows a campaign pledge by Labour to crack down on “property speculators”.

Speaking after the announcement of the ban on foreign buyers of existing homes, the leader of NZ First, Winston Peters, said: “There’s going to be a change and a clear signal sent internationally that New Zealand is no longer for sale in the way it has been. And we are happy with that.”