New Zealand's parliament on Wednesday passed a law banning many non-resident foreigners from buying existing homes in the country.

The bill aims to stop New Zealanders being outbid by wealthy foreign buyers.

Read more: Airbnb on collision course with EU

The passage of the law sees one of Prime Minister Jacinda Ardern's election promises come to fruition, after she vowed to clamp down on house price growth and homelessness during her election campaign.

"This is a significant milestone and demonstrates this government's commitment to making the dream of home ownership a reality for more New Zealanders," Associate Finance Minister David Parker said.

Housing prices doubled

Over the past decade, the average house price has increased more than 60 percent nationwide and has almost doubled in New Zealand's largest city, Auckland.

According to the Real Estate Institute of New Zealand, median house prices fell 1.8 percent to NZ$550,000 (€318,100; $360,550) in July from the previous month, but were still 6.2 percent higher compared to the same time last year.

Read more: What comes next for Berlin's building squatters?

The government relaxed the proposed ban a little in June to allow non-residents to own up to 60 percent of units in large, newly built apartment buildings, but they will no longer be able to buy existing homes.

Official figures suggest that the overall level of foreign home buying was relatively low, accounting for about 3 percent of property transfers nationwide.

The majority of overseas buyers are from China and Australia, according to Statistics New Zealand, but Australians won't be subject to the ban.

New Zealand has seen increasingly high levels of migration over the past few years. In 2017, there were 71,100 non-New Zealanders in the country, with Australia making up 20 percent, the United Kingdom 12 percent and China 10 percent.

IMF warns against ban

In July, the International Monetary Fund called on the government to reconsider the ban, warning it could discourage foreign direct investment needed to build new homes in the country.

Read more: Germany's empty refugee shelters: Sensible backup, or waste of money?

The New Zealand government has also been negotiating with Singapore on whether to grant an exemption — Singapore has a free trade agreement with New Zealand that allows foreign ownership.

law/kms (dpa, Reuters)