Associate minister of finance David Parker said the ban would mean housing would become more affordable for locals, and supply would increase.
“We think the market for New Zealand homes and farms should be set by New Zealand buyers, not overseas buyers,” said Parker in an interview with the Guardian.
View VIDEO of Bill banning sale of homes to foreigners attacked in New Zealand parliament
“That is to benefit New Zealanders who have their shoulder to the wheel of the New Zealand economy, pay tax here, have families here. We don’t think they should be outbid by wealthier people from overseas.”
In a speech to parliament on Wednesday he said: “We should not be tenants in our own land.”
Only a quarter of adults in New Zealand own their own home, compared with half in 1991, and in the last five years homeless figures have increased, with some New Zealanders forced to live in cars, garages and under bridges.
A report by the Economist in 2017 found New Zealand had the most unaffordable house prices in the world, with prices in Auckland climbing 75% in the last four years, although the market has cooled in recent months.
The ban applies to all nationalities, except buyers from Singapore and Australia.
Parker said in the last economic quarter 10% of homes in the popular Queenstown Lakes District (where PayPal co-founder Peter Thiel owns a multi-million dollar home) and 20% of homes in Auckland central were bought by foreigners.
Read more at The Guardian