When it was reported in 2017 that the tech billionaire Peter Thiel had bought a 477-acre farm in New Zealand two years earlier for around $10 million under his New Zealand-registered company, Second Star, the deal rankled locals and politicians alike. Many wondered whether Mr. Thiel, a German-born naturalized American, had received special treatment so he could avoid the Overseas Investment Act of 2005, which required foreign buyers to seek official permission to buy “sensitive land” in New Zealand.

As it turned out, Mr. Thiel had quietly obtained New Zealand citizenship in 2011, spurring widespread belief that he had not fulfilled the necessary prerequisites for naturalization. The controversy made him the face of a growing worry in the country: that wealthy foreign investors were inflating home prices and pushing native, first-time buyers out of the market.

According to the Real Estate Institute of New Zealand, housing prices there rose by nearly 65 percent between December 2008 and December 2018, with the median home price in the country’s largest city, Auckland, almost doubling in that period. At the beginning of 2017, Statistics NZ, New Zealand’s official data agency, reported that just 63.2 percent of New Zealanders lived in their own homes — the lowest rate since 1951.

So last August, prime minister Jacinda Ardern, made good on her Labour Party campaign promise to amend the Overseas Investment Act by designating all existing residential land “sensitive” — effectively banning foreigners from buying any existing homes in the country.