How does it work in Australia?
Knight Frank Australia head of residential research Michelle Ciesielski said since the late 1970s in Australia most non-residents needed to gain approval from the Foreign Investment Review board.
Ciesielski said non-residents must buy a new property that is added to the housing stock, not an established dwelling unless they invested more than A$5m into the Australian economy.
In 2015, "following community pressure around housing affordability" foreign buyers were also asked to pay compulsory application fees that start from A$5500. On top of this a stamp duty surcharge of between 3 per cent and 8 per cent, depending on state, applied.
"We are not witnessing as much offshore inquiries as in the past, but they are still present, just not as active."
Former National and Act Party leader Don Brash said Australia's "experiment" on banning foreign buyers could indicate this was not the solution to the housing crisis.
Brash who was once the Governor of the Reserve Bank of New Zealand from 1988 to 2002 said affordability was "one of the biggest issues facing the country".
"The increase in inequality is driven by housing, if housing issues were resolved a lot of the other issues would disappear."
He said loosening restrictions on urban planning rules, red tape around building consents, enabling faster builds and cheaper building supplies were other ways that could improve affordability.
Will a ban on foreign buyers make the market more affordable?
CoreLogic senior analyst Nick Goodall said given Australian banks based here had already restricted lending to buyers without a local income, further moves to restrict foreign ownership were unlikely to make a big difference.
He said other measures such as the bright-line test, that would impose income tax on any gain from residential land purchased and sold within two years, the healthy homes act and moves to improve tenants' rights were more likely to deter property speculators.
In terms of the rental market Property Investors Federation president Andrew King doubted the ban would change much.
"In terms of reducing prices, the property market is coming off that high anyway.
"It's debatable how much of an effect foreign buyers are having, the vast majority that are buying are still Kiwis.
"It could reduce some demand, but it really is a question of how much?"
Trade Me head of property Nigel Jeffries estimated the policy would only reduce sales to foreign buyers by about 3000 per year.
He said a tougher challenge for the Government may be to try to reduce the purchase of property through foreign sourced funds.
"The New Zealand tax-resident who has business interests in other parts of the world including Asia...that's a much harder thing to try and reduce."
How many foreign buyers are there?
Real estate agent Ollie Wall, from Graham Wall Real Estate, said there were not as many foreign buyers snapping up properties as the public thought.
"We sell properties to a lot of what would be considered foreigners, 99 per cent of them have New Zealand passports."
Land Information New Zealand showed that in April to June 2017, 3 per cent of property transfers involved overseas tax resident buyers.
Wall said such a policy further limiting foreign buyers could also limit the positive impact they had on the economy, for example if they established a business and hired local staff.
He added if a cooler market was the idea behind the foreign buyers policy that had already been achieved.
"It has been achieved by the previous government through traditional ways and loan-to-value restrictions. It's sort of flogging a dead horse."
How will the policy be implemented?
In terms of its implementation Massey University associate professor from the school of people, environment and planning Grant Duncan said there would always be grey areas that could make such a policy challenging.
"One thing I heard, was it okay if someone gets approval to buy a farm and there happens to be an existing residential house. How does that fit?
"Who counts as a foreigner? You might be a foreign buyer, but you lend some money to a family member who has permanent residence.
"Those are the questions this new Government has to grapple with and make clear to the public."
