NZ urged to lift ban on foreign home buyers

WELLINGTON: The International Monetary Fund called on New Zealand to reconsider a controversial plan to ban foreigners from buying residential property, warning the move could discourage foreign direct investment necessary to build new homes.

The IMF offered an upbeat view on New Zealand´s economic outlook despite a recent slew of soft data, and said the housing market was on course for a soft landing as price gains moderated.

The Labour-led coalition government won September´s election with a pledge to clamp down on soaring housing prices and reduce high rates of homelessness, partly by banning foreign buyers.

Foreign ownership has attracted criticism in recent years as New Zealand grapples with a housing crisis that has seen average prices in the main city of Auckland almost double in the past decade and rise more than 60 percent nationwide.

In its annual assessment of member countries´ economies, the IMF said on Wednesday New Zealand´s ban was unlikely to help much in making housing more affordable.

"This ban on foreign home ownership could discourage potential foreign direct investment that could help build more houses," the IMF said in a staff report.