Building industry figures lobbying to change the government's mind over the foreign buyer ban have been buoyed by the International Monetary Fund adding its voice to the cause.

IMF officials, in New Zealand this week, called the Overseas Investment Amendment Bill "discriminatory" and hinted that banning foreign investment in housing was an over-reaction to a problem that might not even exist.

"Foreign buyers seem to have played a minor role in New Zealand's residential real estate market recently," said IMF division chief for Asia and Pacific Thomas Helbling.

He added that there were other ways for the government to respond if large volumes of unwanted foreign money suddenly flowed into New Zealand's property market.

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Any such measures should be "temporary and targetted", Helbling said, whereas the buyer ban is a "very definitive measure" and could send a negative signal to foreign investors more broadly.

The OIAB, a cornerstone government initiative, is designed to stop foreign speculators buying houses which would otherwise be available for New Zealanders.

But most of the more than 200 submitters to the Parliamentary select committee considering the bill are worried the legislation is far more likely to do the opposite to what is intended.

Land and property developer Alastair Porter, one of the submitters to the committee hearings, welcomed the IMF's stance, saying the foreign buyer ban is just bad law.

"The political problem is that what they are suggesting sounds like a good idea. If you stop selling houses overseas somehow there will be more for New Zealanders. But as 95 per cent of submissions [to the committee] said, actually it will have the reverse effect - it will aggravate the shortage of affordable housing."

The Real Estate Institute of New Zealand was also cheered by the IMF's statement. Reinz has consistently argued there is no data to suggest foreign buyers are taking the nation's houses. In fact, a survey of real estate agents last year found less than 4 per cent of buyers are from overseas.

Reinz chief executive Bindi Norwell said the problem was with supply not overseas demand.

"We need to focus on increasing levels of housing supply – and measures such as KiwiBuild and decreasing red tape will help solve that, not banning a small number of people from buying properties," she said.