The Labour Party is being told it will not be able to change parts of the TPP deal it does not like.

Photo: RNZ / Diego Opatowski

The newly-signed agreement prohibits current and future governments from blocking foreign investment in most forms of property by citizens of signatory states.

This clashes with Labour Party policy, which is that people from overseas should be allowed to buy property only if they plan to live here permanently, or build a new house rather than buy an old one. The party has promised legislative change if it assumes office.

At present, foreigners can buy any property in New Zealand unless it is sensitive land or some other category that comes under the control of the Overseas Investment Office. The TPP would cement this open-door policy for property buyers from signatory nations.

Labour Party finance spokesman Grant Robertson said he would not be bound by this provision. "We want to reserve the right to legislate in the best interests of New Zealanders," he said.

"We think it is in the best interests of New Zealanders to give all of us a fair go at buying our own home and if that requires passing legislation to limit overseas buyers from purchasing land and housing, then we want to be able to go ahead."

But Auckland University associate professor of law Treasa Dunworth said it would not be able to do so.

"Treaties are signed and ratified by New Zealand, the state, rather than any particular government," she said. "The whole idea of a treaty is to have certainty around legal relationships, so you can't have treaties coming to an end simply because a government loses power and a new government comes in.

Prof Dunworth said it might be possible to withdraw from the treaty altogether, in which case there might be penalties for non-compliance, but the details were not yet clear.

Mr Robertson said house prices were sky high relative to incomes in New Zealand, especially in Auckland, and that made it hard for young people to get a foot on the property ladder.

The party has long blamed overseas interests for this, saying foreign buyers boost the demand for houses and hence their price, and Mr Robertson said his party was determined to do something about it.

"We will take a good look at the agreement and we are reserving the right to review and renegotiate. There is always the scope to review [these agreements].

"There are consequences if we make a law, if that goes against the agreement. We have to look at all those and balance them up."

Photo: RNZ / Alexander Robertson

Economic Development Minister Steven Joyce dismissed Labour's objection to the TPP provision.

He said he was not sure whether New Zealand tried to negotiate out of that provision, as Australia had, but told Morning Report that would not have achieved a great deal.

"If you're going to welcome investment in housing ... let's say somebody buys an existing house, they buy it off a New Zealander, a New Zealander goes off and builds a new houses - what's the crime?"

Mr Joyce said the real housing solution was supply, which was now at the highest level in a decade.

Photo: RNZ / Alexander Robertson

New Zealand First has also long beaten the Auckland housing drum, accusing foreign investors of driving up prices with incessant demand for investment properties.

The party's leader, Winston Peters, has criticised the TPP, which he said limited democratic controls on government activities.

"This deal was never about trade, it is about the right of big international corporates to ignore their own government and ours and carry on as though democracy and people's right to express their opinions at election time does not matter at all," he said.

"They are foreclosing on what it means to be a New Zealander or for that matter any other country's citizen."

The Productivity Commission, which has investigated house prices, has said it was not just foreigners that are pushing up house prices - it was New Zealanders returning from overseas or not going in the first place.

The commission said that restrictions on the supply of land and local council red tape also contributed to high house prices.