Legislation to ban foreigners from buying existing homes will be introduced tomorrow - although some non-residents and citizens will be allowed to buy property.
Housing Minister Phil Twyford and Land Information Minister Eugenie Sage announced the timetable today, saying the ban would be in effect early next year.
"Purchases of homes by offshore speculators push first home buyers and families out of the housing market," Twyford said.
The housing market was cooling, he said, but "when the cycle turns" the ban on foreigners buying homes would help address prices.
The legislation would allow a resident visa holder to buy residential land, under new Overseas Investment Act screening rules.
Resident visa types include skilled migrants, residence from work, investors, entrepreneurs, parent, refugee, dependent child and Pacific Access. People on temporary visas will not be able to buy residential land.
There will be two exemptions for resident visa holders. The first is for those that can demonstrate a purchase will increase housing supply.
The second is for those who can demonstrate they intend to live in New Zealand long-term. If people in that category subsequently left the country, they would need to sell the property.
Sage said there were 47,000 residency class visa holders in New Zealand last year, but there were no figures on how active those people were in the property market.
The OIO would assess the commitment of the person applying to reside in New Zealand long-term.
"It will mean, for practical purposes, that foreign buyers will not be able to buy residential property unless they are either increasing the number of residences and then selling them or converting the land to another use. They will need to be able to show that this will have wider benefits to the country," Sage said.
"New Zealand and Australian citizens will be exempt from the regime."
Overseas buyers will be able to buy apartments off the plan, but they will need to onsell the property once construction is complete.
Sage said the legislation would go through a truncated select committee process.
National's land information spokesman Gerry Brownlee said it was clearer than ever that the "ban" on foreign buyers was no such thing.
"They are simply applying the existing sensitive land test to residential land. This is further watering down of their original announcement.
"Their overseas buyer ban is rapidly heading the same way as their billion tree programme, the immigration cuts that aren't and the 100,000 Kiwibuild houses."
Labour campaigned on banning overseas buyers, and in October Prime Minister Jacinda Ardern confirmed changes would be made to the Overseas Investment Act to classify residential housing as sensitive. That would stop non-residents or non-citizens from buying existing residential housing.
Yesterday the Real Estate Institute of New Zealand (REINZ) issued results from a survey of 173 of its residential agent members and said responses indicated that currently only 3.8 per cent of buyers are overseas.
However, questions remain over the status of Singaporean buyers.
The ban breaches New Zealand's free trade agreement with Singapore, and Twyford said Singaporean buyers may be exempt from the ban in the same way as Australians will be if the FTA cannot be successfully renegotiated.