Legislation will be introduced to Parliament today making it harder for foreigners to buy houses in New Zealand - which the government says is the first step in reigning in the speculative housing market for the future.
In the future, only New Zealand and Australian citizens - and possibly people from Singapore - will be able to buy residential housing without undergoing special screening tests.
Exceptions may be made for citizens of Singapore as the ban on foreign buyers may run afoul of New Zealand's free trade deal with the country.
The proposed law change does not ban foreigners from building new homes and some migrants with resident class visas, such as skilled migrants, can buy a home if they pass a new test by the Overseas Investment Office.
Migrants on temporary visas, such as student visas, will not be able to buy a house.
Housing Minister Phil Twyford, speaking this morning to TVNZ 1's Breakfast, said this is the first step in preparing New Zealand for the next market boom and giving young Kiwis "a crack at their first home".
"We're making an amendment to the Overseas Investment Act and applying the mechanisms in that Act to residential land," Mr Twyford said.
"It will change the settings so that when the market turns and it picks up again and when we see another surge of foreign direct investment in the housing market, we're much less likely to see the kind of un-checked demand driving house prices up that we've seen in the last five years.
"It's not about the state of the market now - it's about the state of the market when it inevitably picks up.
"The market is cool right now and I don't think overseas buyers are any kind of significant presence in the market now - in contrast to two or three years ago where there was huge demand."
Mr Twyford said the government does not want to discourage migration - it just wants to know that people buying a home here want to stay here.
"We don't want to discourage people who genuinely ... want to make this place their home, they want to contribute here - and so if they've got what's called a Residents Class visa and ... if you can pass a test that will be set under regulations under the bill about [having] a genuine intention to stay here, you will be to buy a single home and live in it," he said.
"But if anything changes and you leave the country or your visa expires then you'd have to sell the property.
"New Zealand relies on immigration - we want to encourage skilled people to come here and make their home here and we don't want to put an obstacle in the way of that."
The former National government had been less than forthcoming about foreign investment numbers, Mr Twyford said, adding that he disagreed with the Overseas Investment Office's estimate that just four per cent of home buyers are foreign, but declining to give his own estimate.
"The former government refused year after year to gather credible data on this," Mr Twyford said.
"They did release data over the last couple of years but it was almost as if it was designed to confuse the debate rather than clarify it."
The introduction of the legislation is the first step in the government's plan to make housing more affordable for first home buyers.
"This is one small but important part of our housing reform agenda," Mr Twyford said.
"We've got other taxation measures designed to reign in speculation, we're going to build 100,000 affordable homes, reform the rental market, build more state housing - there's a whole range of reforms designed to settle the housing market down and give young Kiwis a crack at their first home."
The government is looking to pass the changes into law by early next year.