New Labour Prime Minister Jacinda Ardern said she aimed to have the ban take effect before the wide-ranging Trans-Pacific Partnership (TPP) trade agreement is ratified in February.
The government believes that blocking foreign homebuyers and cutting back on immigration numbers will help reduce demand and drive down prices in a heated housing market.
Ardern, who was only sworn in as prime minister last week, said Australians would be exempt.
She said the government would change the Overseas Investment Act to classify residential housing as “sensitive”, which would effectively stop purchases by non-residents other than Australians and New Zealanders living overseas.
It would not impact on most of New Zealand’s free trade agreements (FTA), she added.
“This solution does not breach our Korea FTA, it will not impact on TPP if passed on the timeline that I have proposed, nor will it impact on the China FTA,” said Ardern.
The ban would apply to existing dwellings and non-residents would still be able to buy land to build a house on.
“Our position has always been that if you’re adding to supply, for on-sale of that new dwelling, then you will be able to build,” Ardern said.
Foreign ownership and a housing shortage in New Zealand’s larger cities were prominent issues in the lead-up to the September 23 election, which brought an end to nine years of rule by the conservative National Party. DM
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