02/09/2025

BIZ & FINANCE TUESDAY | SEP 2, 2025

18

New Zealand to let some foreigners buy homes o Govt hopes reversing ban will boost economic growth

UK house prices unexpectedly fall in August LONDON: British house prices unexpectedly fell in August as buyers struggled to afford high valuations, mortgage lender Nationwide Building Society said yesterday. Property prices slipped by 0.1% last month from July, Nationwide said, the third month-on-month fall since April when a tax break expired for buyers of many lower-value homes. Compared with 12 months earlier, prices in August were up by 2.1%, the joint weakest rate of growth since June of last year. Economists polled by Reuters had forecast a 0.2% monthly rise and a 2.8% annual increase. Prices were rising by almost 5% in annual terms at the end of last year ahead of the end of the stamp duty land tax exemption. “The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms,” Nationwide chief economist Robert Gardner said. An average earner buying a typical first-time home with a 20% deposit currently faces a monthly mortgage payment equivalent to around 35% of take-home pay, well above the long run average of 30%, he said. The Bank of England cut its benchmark interest rate to 4% from 4.25% on Aug 7 but it also signalled concern about inflation pressures in the economy that could slow the pace of further reductions in borrowing costs. Last month, the Royal Institution of Chartered Surveyors said a recovery in the housing market had lost steam as some buyers worried about possible tax increases in Finance Minister Rachel Reeves’ next budget. “The risk is that speculation over possible property tax rises in the autumn Budget, such as a mansion tax, hits buyer sentiment further in the coming months,” Ashley Webb, UK economist with consultancy Capital Economics, said. – Reuters ECB president warns of risk to world economy via Trump interference on Fed PARIS: Steps by US President Donald Trump to remove Federal Reserve chairman Jerome Powell or Fed governor Lisa Cook would represent a “very serious danger for the US economy and the world economy”, said European Central Bank President Christine Lagarde yesterday. Trump has repeatedly attacked Powell, for not cutting the short-term interest rate and threatened to fire him. Trump is also attempting to fire Cook. “If U.S. monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world,” Lagarde told Radio Classique. Lagarde also told Radio Classique that a ruling on Friday by a appeals court that most of Trump’s tariffs were illegal were adding a “further layer of uncertainty” to the global economic outlook. – Reuters

Foreign investment in New Zealand’s property market has been a concern for locals as it is seen as a significant driver of house prices and in 2018 the then Labour-led government passed a law to ban many non-resident foreigners from buying existing homes. Luxon said less than 1% of New Zealand homes were worth over NZ$5 million and they believed this changed balanced the need to meet the needs of high-net worth investors with the desires of those who do not want foreign ownership. Mischa Mannix-Opie, from Greener Pastures, which specializes in helping people get residency in New Zealand through investment, said while not everyone wanted to buy a house in New Zealand, their clients would be pleased to have the option. “It really enhances the proposition,” she said adding for many people it’s lifestyle that attracts them to investing in New Zealand and being able to buy a home would help them achieve that lifestyle. – Reuters

WELLINGTON: New Zealand’s government said yesterday it will open its housing market to wealthy foreigners who invest in local businesses, reversing a previous ban in expectation it will boost economic growth. New Zealand Prime Minister Christopher Luxon said investors on the foreign investor migrant visa reintroduced in April would be able to buy or build one home if it costs at least NZ$5 million (RM12.4 million). Previously those on the visa but not in New Zealand for six months of the year were banned from buying property. “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 in a statement. The government hopes relaxing the ban

will make investing here more attractive. It is part of broader government efforts to increase foreign investment into the country to boost an economy that dipped into a recession in the second half of 2024 and has remained weak in the first half of this year. In April, it loosened rules around eligibility for the so-called “golden” visa known as the Active Investor Plus residency visa. This included lowering the minimum required funds for the category that focuses on higher-risk investments to NZ$5 million from NZ$15 million and removing the English language requirement. The government said 301 applications for the visa have been received and if these are all approved and proceed it means a potential investment of at least NZ$1.8 billion in the country’s economy.

Germany’s Merz vows no tax hikes despite growing budget deficit FRANKFURT: German Chancellor Friedrich Merz said on Sunday his coalition would not increase taxes, despite a growing budget deficit and calls from his governing partner to raise levies. agreed in this coalition agreement that taxes will not be raised,” Merz said in an interview with public broadcaster ZDF. “And this coalition agreement stands.” Merz ally Markus Soeder, CSU premier of Bavaria, recently advocated for tax cuts and argued they would help Germany’s competitiveness.

But Merz, under pressure to turn Europe’s top economy around, told ZDF that Germany needed to “work more and longer”. He cited an excessive number of days of sick leave, stagnant productivity and high labour costs as factors weighing on the nation’s competitiveness. – AFP

Merz dismissed concerns of a “clash” in the coalition and said the fact the SPD had a different view on the issue was “acceptable”. Germany’s economy, in decline since 2023, shrank more than expected in the second quarter as US tariffs battered exports, official data showed last week.

Finance Minister Lars Klingbeil of the Social Democrats (SPD) has floated tax increases to plug a €30 billion (RM148 billion) hole in 2027 spending plans. But Merz’s centre-right Christian Democrats (CDU) have rebuffed the suggestion. “We have a coalition agreement, and we have

Merz is welcomed by North Rhine-Westphalia’s State Premier Hendrik Wuest (right) as he arrives for his first official visit as Chancellor to the western federal state yesterday. – AFPPIC