The boss of an Auckland-based Chinese law firm says Chinese buyers will get around the ban by banks on foreign lending.
Royal Reed also disputes the Government's claims that Chinese buyers aren't pushing up the housing market, saying the figures on offshore buyers are unreliable.
"There is a phrase in China that is called '上有政策，下有对策' which when you translate it is saying 'when the Government has a policy we have a way around it'."
Ms Reed was born in Taiwan but has spent most of her life in New Zealand, and is now practising as Mandarin-speaking lawyer dealing with Chinese clients.
She says Chinese are used to their own Government's stringent policies, and "consider non-compliance as a first option for any newly introduced policy", preferring to find a practical way around it.
Land Information New Zealand's data for January to March showed 3 percent of buyers were "foreign tax residents" but that didn't capture temporary workers, student visas, businesses and trusts.
Ms Reed says this shows the Government hasn't gathered anywhere near enough data to have an intelligent discussion about offshore buyers, and the 3 percent figure could really be far higher.
"There is not enough questions in our current transactions system to allow us to know who really owns the property and how the funding of the property really comes about."
Prime Minister John Key concedes the data is in its infancy, but he's confident it's accurate.
"It's about six months old so we'll gather more information over time."
Mr Key says the Government's working on cracking down on offshore buyers.
"What's happening now is we're quite rigorous in what we're demanding. They have to have a New Zealand bank account, they have to have a New Zealand IRD number.
"There may well be other ways people are trying to circumvent the system, I'm not aware of any but you can never say never in life."
He says the data shows the number of foreign buyers with no connection to New Zealand is quite small, that doesn't mean there aren't people in New Zealand who have a New Zealand connection either working or studying here.
Ms Reed says the banks' ban will result on more arrangements with locals being used to front loans, which is already happening in New Zealand.
"It's very common someone would take a piece of real estate up to China and talk about how wonderful it is and the potential involved, and over a dinner table of ten people we will decide 'yeah, this is such a good idea we can all do it, or if you do it, I'll do the next one.'
"Then you have this very amicable hopeful bunch of investors who are trusting this 27-year-old, who has identified this lovely property in the school zone that any one of them could benefit from in the future. So for practical reasons and for ease of management they may put it in this lovely young person's name."
Ms Reed says this often results in unclear, trust-based arrangements which can fall over if the young person has used the property to mortgage against or has sold the property and run away.
"Messy situations start from the fact we don't know enough about who owns this property."
She makes it clear that her views aren't politically motivated -- and says she's not attacking the Government because she concedes it's not an easy fix.
"Even if you want to push through the law just for fixing the Chinese investors or any Russian investors if you like to call us the evil two, then there will be many of us who are also equally uncomfortable.
"There are cases against local doctors who can't explain their cash deposits, they are doctors, you'd think they're not the same as the dodgy Chinese who have just landed."
She says a policy that required property buyers to disclose the source of their funding would make a few New Zealanders squirm.
"Property is always a toy of the rich and the rich do not talk very much.
"So you don't ask them 'where did the money come from?' because that's highly offensive in any culture."
Ms Reed says she wanted to speak up to shed light on what's happening in the offshore property market because the Government's systems are naive and trusting.
"That's where we've let ourselves down, we have trusted for so long hoping everyone that comes in is a clone of a Kiwi average reasonable person."
John Key says he believes the banks may have made the decision to ban lending to foreign buyers following discussions with the Reserve Bank.
"I'm not aware of that but maybe that's been the driving factor.
"But ultimately banks have responsibilities under their registration to know the source of their funds and that the funds are clean."