Australia’s property rules may push global capital to NZ

An Australian regulatory change restricting foreign purchases of residential property is forecast to shift international investor attention to New Zealand, prompting debate over whether New Zealand is positioned to capitalise on this opportunity.

Australian property ban

Australia has implemented legislation that prohibits foreign buyers from acquiring established residential dwellings between 1 April 2025 and 31 March 2027.

This policy aims to address concerns around housing affordability and availability.

However, it may also re-route significant volumes of global capital, with high net worth purchasers now searching for alternative destinations for investment in the region.

Caleb Paterson, Founder of Paterson Luxury Real Estate, believes these changes represent an important turning point for New Zealand. According to Paterson, if New Zealand does not make its own foreign buyer policies clearer and more inviting, billions in investment risk bypassing the country entirely.

Missed opportunities

Paterson noted that New Zealand's current uncertainty with residential property rules for overseas buyers may have already resulted in lost opportunities, as investors look toward destinations offering a more straightforward acquisition process.

"We've had deals collapse because investors couldn't buy a home to settle here first. That's an avoidable failure of policy. Meanwhile, in places like Dubai, capital is being welcomed and economies are booming because of it."

He argues New Zealand's offering of political stability, attractive natural environment, and high-quality lifestyle remains a drawcard, but these are not translating into investment without a streamlined and reliable path for international purchases.

"New Zealand has a unique combination of political stability, natural beauty and a lifestyle that's incredibly appealing to global investors. They're not just looking to park capital, they want a safe, long-term base for their families and their businesses. What's missing is a clear pathway for them to invest and if we don't act they'll go elsewhere. We are talking about an investment in the billions right when the economy needs it most. I'm dealing with ultra-high-net-worth clients from China, Canada, the US and the UK who are currently sitting on the fence. They want to invest here not just in homes, but in businesses, developments, the tech sector and other industries but they're not going to do that while the rules remain unclear."

Paterson warns that uncertainty could see investment redirected to more accessible markets, highlighting the UAE as a major competitor. He attributes recent policy ambiguities to a situation where "hundreds of millions in immediate capital" is held back, awaiting regulatory clarity.

"We're talking about people with serious capital including a $4 billion syndicate from Taiwan, developers with $70 million commercial projects sitting ready and expats and migrants waiting to buy homes, set up companies and inject money into our economy. I recently had someone trying to bring in a major international coffee roasting brand, but they couldn't get a foothold here because they couldn't buy a family home first to get settled," he says.

Changing investor sentiment

According to Paterson, Canada's proposed wealth tax and ongoing political shifts in the United States have increased the number of international investors considering New Zealand, but competing jurisdictions like Dubai are attracting attention due to the clarity of their investment rules.

"I've got clients telling me they'll take their money to Dubai where they know what the rules are. There's no shortage of appealing alternatives," he says.

Paterson reports that uncertainty in New Zealand has also affected local real estate activity, with as much as 40% of luxury listings withdrawn over the past year as sellers waited for the possibility of rule changes.

He says the result is a stagnant high-end market, impacting not only buyers and sellers but also broader economic sectors tied to property transactions.

"Everyone's being impacted, even high-net-worth individuals who are less agile right now. This winter will be our coldest yet, metaphorically. People can't keep borrowing to stay afloat and we're going to see more financial strain."This isn't about pitying someone in a $15 million home. It's about what happens when they can't sell, builders aren't contracted and tradespeople sit idle. The wealth isn't circulating and the economy suffers. I'm probably one of the few people in the country who speaks to around 20 high-net-worth individuals a day. These people are worth $4 to $5 million or more on paper but right now every single one of them is feeling pressure. It's not just one or two outliers; across the board, I'm hearing stories of business strain, stalled investments and uncertainty. Unless you're a billionaire, people are navigating real challenges. We need a solution that gets capital flowing again, not just for their sake, but for the broader economy that depends on that investment."

Regional implications

Paterson also highlights the impact on regions beyond New Zealand's main urban centres, suggesting that allowing limited high-value international buyers could stimulate development and economic activity in outlying areas.

"Outside of Auckland and Queenstown, opening the door to high-value international buyers would also unlock stalled developments in regions like Northland, the Bay of Plenty, and Central Otago. These are areas where investment could mean hundreds of new homes, jobs for local tradies, and real economic momentum outside the main centres."

Market effects and policy recommendations

Paterson contends that if the New Zealand Budget were to introduce a clear threshold for overseas residential investment, significant pent-up demand could be released, resulting in rapid market movement.

"Even if international buyers were allowed back into the market tomorrow, we wouldn't see a spike in prices straight away. There's a significant backlog of unsold high-end stock, it could take 12 to 18 months just to clear that. What we'd see first is volume returning, not price pressure. And that's exactly what the market needs right now - movement. I could quadruple my sales volume in a month. We have listings ready to go, marketing prepared, and global agents waiting. The economic impact would be almost immediate with millions of dollars in real estate value unlocked we just need the green light."

Paterson warns that the absence of action could mean New Zealand risks losing both the immediate benefit of investment capital and the long-term advantage as an attractive destination for international investors.

"We've got the lifestyle and the stability investors want. Now we just need to show them that we're open for business before they go elsewhere."