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New Zealand Institute of Economic Research deputy chief executive John Ballingall said the ban would not be permitted under the current Trans Pacific Partnership (TPP) text.
Nor was a ban possible under the Korea-New Zealand FTA, the provisions of which also now applied to the China FTA.
New Zealand's long-cherished bipartisan trade policy had been damaged in recent years through debates about the TPP.
NZIER was calling for a return to bipartisan trade policies.
New Zealanders' living standards depended on foreign trade and investment and support for trade deals was needed from both sides of the political spectrum, Mr Ballingall said.
''It's not correct to say the Labour Party is anti-trade. It has expressed strong support for New Zealand's aspirations to get FTA deals with the European Union, United Kingdom and Pacific Alliance. That is encouraging.''
However, Labour's position on TPP rested on the issue of whether New Zealand should be able to ban existing house sales to foreigners.
Mr Ballingall said it was not possible for any New Zealand government to ban sales to investors from those countries without breaching FTA commitments.
Any such ban would risk blow-back in the form of retaliatory trade or investment measures, which would be damaging to Kiwi businesses.
''It is worth remembering only 3% of house purchases are by foreign tax residents so a ban would be unlikely to have any material impact on house prices. Why put New Zealand's access to overseas markets at risk for such an uncertain outcome?''
Even if restricting foreign investment into housing was seen as a good idea, alternatives to outright bans were more likely to be allowed by FTAs. Areas such as high stamp duties could be usefully explored by Labour, he said.
There would be a price to pay if FTA partners agreed to New Zealand having the ability to ban house sales.
''There are no free lunches in any trade negotiations. It could mean slower tariff reductions on our key exports or tighter restrictions of New Zealand's investments.''
It was unrealistic to think New Zealand could pick and choose which parts of existing FTAs to abide by and which it did not, Mr Ballingall said.
Trade Minister Todd McClay said Labour needed to explain its plans to renegotiate the Korean FTA which was worth billions to New Zealand's economy and supported thousands of jobs.
Labour leader Jacinda Ardern said she wanted to renegotiate the FTA with South Korea.
''This is another example of ill-thought-out and vague Labour policy, made up on the hoof. It's simply not good enough for Jacinda Ardern to put the economic fortunes of New Zealand at risk, along with thousands of jobs and businesses.''
However, Ms Ardern was confident the Government of South Korea would change its FTA to allow a ban on foreign buyers of existing homes, which a Labour-led government would pass into law by Christmas.