The New Zealand parliament has passed legislation to ban most overseas buyers from purchasing existing homes.

It's part of the efforts to tackle a housing shortage and a decline in the number of people owning their own homes.

It passed through its third reading by 63 votes to 57.

Under the legislation, there will be some exemptions to the new overseas bans - including for people who intend to invest in large-scale apartment developments.

There are also allowances for Australian and Singapore residents, due to free trade measures.

Associate finance minister David Parker called the passing of the legislation a significant milestone.

He observed: "This Government believes that New Zealanders should not be outbid by wealthier foreign buyers.

"Whether it’s a beautiful lakeside or oceanfront estate, or a modest suburban house, this law ensures that the market for our homes is set in New Zealand not on the international market."

Prime Minister Jacinda Ardern has said the new laws will be "in the best interest of New Zealanders and home buyers in New Zealand".

The country's Labour-led government says the legislation also contains measures to build more social housing.

The bill will come into force once it receives Royal assent from New Zealand's governor-general.