New Zealand Prime Minister Jacinda Ardern has said a ban on foreign speculators buying existing homes would begin in early 2018, but the restrictions would not apply to Australians.
Ms Ardern campaigned in the recent New Zealand election to restrict foreign buyers to reduce demand, while the country tackles what her Labour party says is a housing crisis left unresolved by the previous National administration.
"We are determined to make it easier for Kiwis to buy their first home, so we are stopping foreign speculators buying houses and driving up prices," she said.
"Kiwis should not be outbid like this."
The politically-sensitive housing crunch in New Zealand has seen prices rise more than 50% nationally in the last decade.
In the city of Auckland, prices have almost doubled in that period.
The country’s central bank sees fast-rising prices as a major economic risk.
Ms Ardern said the ban would not apply to Australians, given New Zealanders are exempt from home ownership restrictions in neighbouring Australia, where many New Zealanders live.
Ms Ardern told reporters that legislation would be introduced in parliament before Christmas.
The restrictions were being fast-tracked so that the Labour party would not have to renegotiate foreign investment provisions in the Trans Pacific Partnership (TPP) deal, after a long series of talks to revive the agreement since the United States pulled out in January.
The TPP currently requires its 11 member states to give foreign investors equal treatment to locals unless there are specific exemptions.
New Zealand had no such grounds for an outright ban on overseas investment in housing, but its Overseas Investment Act is exempt from the trade deal.
By adding housing to that legislation, Labour will be able to move ahead with the ban without having to request any changes to the TPP when ministers meet on the sidelines of an Asia-Pacific Economic Cooperation meeting in Vietnam next week to finalise the agreement.
Ms Ardern said that New Zealand would instead focus on renegotiating rules allowing investors to sue member countries included in the TPP, though she acknowledged it would be difficult to get large changes so late in negotiations.
Some government figures show the number of home sales including foreigners is only around 3%, though Labour has criticised that data and says it excludes many types of owners, including those who purchase property through trusts.
"It is very important that we preserve these rights for New Zealand," Trade Minister David Parker said.