One real estate agency describes the Government ban on foreign home ownership as an "overreaction".

As of early next year, non-New Zealand residents and citizens will be banned from buying existing homes.

If foreigners want to get into the housing market, they'll have to buy land and build.

Harcourts CEO Chris Kennedy, said foreign buyers only make up about three percent of the market - and this Government is creating a sensitive, residential land issue.

"If you look at what the Reserve Bank put in place in the last 18 months...that's had an impact of slowing the market right down," he said.

"I just think it sounds like a little bit of grandstanding on behalf of the political parties and a degree of xenophobia, if I can put that out there.

"At the end of the day who's going to police it? Who's actually going to find out whether the party buying residential land is actually of foreign ownership or a New Zealand citizen?"

LISTEN ABOVE AS CHRIS KENNEDY SPEAKS WITH MIKE HOSKING