A ban on foreign residents buying homes in New Zealand has been passed into law, but Australians have been given a free pass.

The policy was one of the major promises by Jacinda Ardern’s Labour Party during last year’s New Zealand election and was pitched as the previous government struggled to put a lid on skyrocketing house prices in parts of the country.

It sets rules roughly in line with Australia’s and prevents overseas residents from buying existing residential property.

MPs voted through the bill on Wednesday afternoon.

The policy was one of the 2017 election pledges made by Labour. Photo: Getty

Rampant house price growth in recent years has been a hotly debated issue in NZ politics, with the country’s biggest city, Auckland, and the resort town of Queenstown in particular becoming increasingly unaffordable for average families.

Although Auckland’s market has cooled this year, prices almost doubled in the decade that preceded and went up 60 per cent across NZ during that time.

Meanwhile, Queenstown has become the most unaffordable part of the country and the one with the highest rate of foreign ownership, as rich-listers snap up holiday homes around its pristine lakes and picturesque mountains.

But while Aussies make up the second-largest group of foreign home buyers in New Zealand – after Chinese residents – trans-Tasman trade arrangements mean they will be exempt from the ban, along with residents of Singapore.

Jacinda Ardern took back her seat at the head of the Cabinet table on August 6. Photo: AAP

The government has argued that while it welcomes overseas investment into new housing, the bill is designed to keep property speculators out of the market to give Kiwis a better shot at buying homes.

“(We’re) ensuring that the prices of New Zealand homes are set on the domestic rather than international market,” Trade Minister David Parker told parliament on Wednesday.

The change is not without its detractors.

The International Monetary Fund last month called on MPs to reconsider the ban, saying it was unlikely to help curb house prices but could discourage investments.

ANZ economists in June said they only expected the policy to dampen prices “temporarily and by a small amount”, although they admitted a lack of historical data threw into question predictions.

And the opposition centre-right National Party’s housing spokeswoman, Judith Collins, on Wednesday accused the government of diverting blame to foreigners.

“It is a bill to try and cynically blame foreigners – particularly those with Chinese-sounding names – for a government that has no other policy in which to actually improve and increase house ownership in New Zealand,” Ms Collins told the house.

Official figures this year showed about three per cent of homes sold across NZ in the first quarter were bought by foreigners, but in Auckland that figure was 19 per cent.

Economists say low interest rates and high migration, combined with supply issues, have underpinned price growth.