Nearly all foreigners have been banned from buying most Kiwi homes in a bid to crack down on overseas speculators.

The Government's legislation passed its final hurdle to become law on Wednesday night with the support of Labour, New Zealand First and the Greens.

Associate finance minister David Parker told Parliament the move brought the country closer to restoring the "great New Zealand dream of home ownership".

New Zealanders had a "birth right" to buy homes in a market shaped by Kiwis, he said.

"If you've got the right to live in New Zealand permanently, you've got the right to buy here," Mr Parker told Parliament.

"But otherwise, it's not a right. It's a privilege."

International buyers were driving up house prices in some areas.

"In a recent quarter, 20 percent of the homes sold in central Auckland were sold to overseas buyers.

"There can be a debate as to how much the effect is on price. There can be no doubt that there is an effect."

The legislation was tweaked on its way to becoming law to still allow foreigners to buy new apartments in large multi-storey developments.

Australian and Singapore citizens will also be exempt from the ban because of their countries' free trade deals with New Zealand.

National housing spokesperson Judith Collins said the legislation was nothing more than an attempt to justify some of the government's policies and decision.

She said the bill would never have gone ahead under former Labour prime ministers Helen Clark or David Lange.

"David Lange would have been turning in his grave. He would've been appalled at people who attacked someone else just on the basis of their name.

"This is a bill without principle. It is a bill to try cynically blame foreigners, particularly those with Chinese sounding names."