There's still some wiggle room for foreigners to get into the housing market in New Zealand.

Labour will introduce legislation early next year banning non-residents and citizens from purchasing existing homes, with the exception of Australians.

Minister for Economic Development, Trade and Export Growth David Parker told Mike Hosking they won't stop foreigners buying land and building on it.

"We've always said what we want to do is increase supply cause we've got a shortage of housing in New Zealand, so yes, we are exempting people who are buying land to build a house to on sell or let."

Property experts have said that the move is a good one for supply and demand but won't fix the price problem at all.

Parker disagrees and said foreign buyers have pushed prices up by pouring more money into the market.

"I have got absolutely no doubt that it does have an effect on the marginal price. Extra demand always does, that's economics 101.

"There could be absolutely no doubt when things are running hot and you've got extra money pouring into your market that it does have an effect on the marginal price," he said.

LISTEN TO DAVID PARKER TALK TO MIKE HOSKING ABOVE