Some wealthy foreigners will be allowed to buy a luxury home in New Zealand once more, with the coalition government confirming a new exemption to the foreign buyers' ban.

The announcement ends months of negotiations between National and New Zealand First - given the latter helped introduce the ban with Labour in 2018.

Under the change - unveiled by Prime Minister Christopher Luxon this afternoon - holders of so-called "golden visas" will be able to buy or build one home worth at least $5 million.

"This change navigates a path between those who do not want foreign ownership opened up, and the desire to attract high net worth investors by deepening their connection to our country to help grow the economy," Luxon said.

"Globally, New Zealand has a deserved reputation as a great place to live and we want to grow our economy. By opening our door just a little to allow significant investors to own a home, we will help attract more of those who want to contribute to the community and country."

In a post on social media website X, NZ First leader Winston Peters said the government had ensured tight restrictions around the policy including excluding the sale of rural, farm and sensitive land.

Peters said the $5m threshold excluded more than 99 percent of New Zealand homes on the market, "protecting the vast majority from sale to foreigners".

"This is a common sense move that provides a balance between protecting New Zealand's housing market supply and affordability, and ensuring we allow people who are wanting to invest millions of dollars into our economy to rightly be able to own a home and live in it when they are here."

The foreign buyers ban on housing remains. However, as we signalled months ago, we have agreed that holders of a current existing Residence Class ‘Active Investor Plus Residence Visa’ holders, who are investing millions of dollars into our economy, should be able to own a home.…

Foreign buyers have been largely locked out of the housing market since 2018, when the Labour-NZ First coalition imposed a ban amid rising concerns about affordability. Exceptions have been made for Australians and Singaporeans under trade deals.

The new exemption is connected to the government's Active Investor Plus, or "golden visa", programme which includes two pathways to residency, requiring either a minimum investment of $5m over three years in higher-risk ventures, or $10m over five years at a lower-risk threshold.

Latest Immigration New Zealand data shows there have been 267 golden visa applications, covering 862 people, representing a potential minimum investment of $1.6 billion. About 40 percent of applicants are from the United States.

Luxon said the number of applications had since risen to more than 300, with a potential value of $1.8b.

National campaigned in 2023 on letting foreigners buy homes worth more than $2m subject to a 15 percent tax, but was forced to abandon that plan during coalition negotiations with NZ First.

Luxon has since conceded National set its $2m property price threshold "too low".

The two parties have since been locked in negotiations over the issue.

In October, NZ First leader Winston Peters told NewstalkZB he would consider changes for the "right person with the right investment," but it would need to be far more than "a lousy $20 million".

In July, a spokesperson for Peters said the investment threshold would need to be "substantial" and changes would need to create jobs and benefit the wider economy without disrupting the housing market.