Banning foreign buyers not a 'silver bullet' solution - expert

A property expert says while banning foreign home buyers is a step in right direction, it's not a "silver bullet" solution.

The Government wants to ban foreign home buyers from taking up existing dwellings by early 2018. Under the policy, foreign investors will still be able to build new dwellings.

Property Institute CEO Ashley Church told the AM Show on Wednesday a redirection of funds into construction is a "really good policy" that would have been helpful years ago.

"Having said that, I'm not sure the impact of foreign investment over the last few years has been as large as perhaps some commentators had indicated.

"While this is going to be useful, I'm not sure that the numbers are going to be sufficiently great that it's going to make any great impact on the market over the next few years."

By definition, a foreign investor cannot live in a property they build here themselves, as they would still not have residency.

"That means they're building dwellings to be rental accommodation and that's actually really good for the country," Mr Church says.

"It increases the supply for Kiwis.

"I certainly don't see it coming in and being the silver bullet that's going to solve the entire problem. But it's certainly one of a suite of things that will certainly help that deficit of property over the next few years.

When quizzed on whether Housing Minister Phil Twyford's goal of building 100,00 homes in ten years is viable, Mr Church says "right now, no".

"There are some real issues at the moment around the availability of labour to do it. We simply don't have it right now.

"And in terms of the ability to build that number of homes within the current land stock, we would have some real difficulties. But I have confidence that work is being put in place to make that happen.

"[But] you would expect in the first few years of that policy it's going to be slower and ramp up as capacity ramps up.

Ms Church says he doubts the $2 billion set aside for the project will be enough - but "has confidence" that will be dealt with in time.