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New Zealand housing market debate descends into race row

WELLINGTON, July 14 (Xinhua) -- New Zealand's main opposition Labor Party is struggling to contain a spiraling race row after releasing figures showing an allegedly disproportionate number of ethnic Chinese buying homes in Auckland's overheated housing market.

Labor Party housing spokesperson Phil Twyford at the weekend released data from an unnamed real estate firm, which allegedly showed people with Chinese surnames accounted for 39.5 percent of the company's buyers in Auckland over a three-month period.

This was compared with 2013 Census data showing ethnic Chinese residents or citizens accounted for just 9 percent of the population in New Zealand's biggest city.

The city's ethnic European population, which stood at 56 percent of the total in the Census figures, accounted for just 40. 7 percent of house buyers.

Twyford was attempting to demonstrate that overseas speculators were ramping up Auckland home prices in light of the government's long-held refusal to set up a foreign buyers register.

However, the figures provoked a flurry of attacks, denouncing the Labor Party as "racist," with critics saying the data failed to distinguish between overseas Chinese and ethnic Chinese residents and citizens.

The official Race Relations Commissioner, Susan Devoy, joined the row on Monday, issuing a statement accusing Labor of "dumbing down complex economic woes" with "half-baked data."

Economic Development Minister Steven Joyce told Radio New Zealand on Tuesday the Labor Party would pay at the polling booths for taking "a cheap political shot at an ethnic group."

Joyce said measures announced by the government earlier this year, requiring overseas property buyers to apply for a tax number and open a New Zealand bank account, would start collecting credible data on overseas buyers in October.

Labor Party leader Andrew Little stood by the figures on Tuesday and demanded the government set up a foreign buyers register that was open to public scrutiny.

Little said there was no guarantee that information collected from New Zealand's tax authority would be available in a way that allowed public scrutiny.

"A register would provide a searchable and up-to-date database which would inform the market and public debate. Without one, the government will simply pick and choose data to support its false claim foreign speculators only account for 1 percent of all house sales," Little said in a statement.

"The government must also assure New Zealanders non-resident foreign buyers purchasing properties through companies or trusts will be required to disclose overseas interest in accordance with the Overseas Investment Act, which has a 25-percent threshold," he said.

"Kiwi families who are struggling to buy their own home want to know the impact offshore speculators are having on skyrocketing Auckland house prices. They are sick and tired of losing homes at auction to higher bidders down the end of a telephone line in another country."

However, the Labor Party had undermined its argument by effectively renouncing a capital gains tax on investment property after losing heavily in last year's general election, said the Green Party, the second largest opposition party.

"We need to stop property sales to non-resident foreign buyers, but we also need a capital gains tax to dampen domestic speculation," Green Party co-leader Metiria Turei said in a statement Tuesday.

"By backing away from a capital gains tax, Labor is becoming part of the problem, rather than part of the solution," said Turei.

"By stopping non-resident foreign buyers but retaining tax incentives that encourage Kiwis to lock up their savings in property, Labor is just displacing one problem with another."

House prices in Auckland, home to a quarter of New Zealand's population, have reportedly risen by 26 percent over the last 12 months to a median price of 755,000 NZ dollars (504,264 U.S. dollars).

The Reserve Bank of New Zealand has repeatedly warned that Auckland's overheating housing market is a risk to the country's financial stability and has implemented mortgage lending restrictions to curb demand.

However, the government has resisted calls to act against speculators or to collect information on overseas buyers who were commonly blamed for driving up prices.

Earlier this year it announced a two-year "bright line" test on investment property that would enable collection of a tax on capital gains of investment properties sold within two years of their purchase a move critics said was too little too late.

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