WELLINGTON (Reuters) - New Zealand's housing minister said on Wednesday the new government would introduce a law banning foreigners, including students and temporary workers, from buying existing homes into the country's Parliament the following day.
The new Labour government, led by Prime Minister Jacinda Ardern, campaigned in the recent New Zealand election to restrict foreign buyers and reduce demand while the country tackles what the party calls a "housing crisis".
Housing Minister Phil Twyford told reporters that overseas buyers were not currently a major part of New Zealand's housing market, which was seeing "temporary cooling" after soaring in recent years.
But he said the government was determined to ensure the regulations were in place if the market took off again and the rules would come into force in the first quarter of 2018.
"Our view is that house prices should be set by New Zealand buyers and sellers, not by being treated as an investment asset for overseas speculators," Twyford said in his office at Parliament.
The changes are among the first to highlight the more protectionist stance taken by the centre-left coalition government. That comes in stark contrast to the previous decade of centre-right National Party rule during which time the government touted the Pacific nation's open economy.
Permanent residents would still be able to buy residences so long as they had lived in New Zealand for more than a year, he said, while other resident visa holders would have to go to the country's investment office for approval.
Those on temporary visas, which encompassed the booming international student market, would not be allowed to buy housing.
Some government figures show the number of home sales including foreigners is only around 3 percent, though Labour has criticised that data and says it excludes many types of owners, including those who purchase property through trusts.
The ban would not apply to Australians, and the government was negotiating with Singapore, whose free trade agreement with New Zealand allows foreign ownership, on whether Singaporeans could also get an exemption, Twyford said.
The politically sensitive housing crunch has seen prices rise more than 50 percent nationally in the last decade. In the city of Auckland, prices have almost doubled in that period.
This year price growth has eased off as bank lending restrictions kicked in, giving a sigh of relief to the Reserve Bank of New Zealand which had been alarmed at the financial stability risk.
Data this month showed another upward burst in house prices, which economists say is partly down to people trying to get in ahead of the foreign buyer restrictions and Labour's plans to widen taxes on investors next year.
(Reporting by Charlotte Greenfield; Editing by Simon Cameron-Moore)