New Zealand PM criticises 'desperate' claims on Chinese investors

New Zealand Prime Minister John Key on Monday accused the opposition Labour Party of "desperate" tactics in blaming Chinese investors for rising house prices in Auckland.

Amid concerns that houses are becoming unattainable in New Zealand's largest city, Labour released data last week purporting to show that 40 percent of buyers in Auckland were Chinese.

The information was based solely on whether the surname of buyers appeared to be Chinese and critics, including Race Relations Commissioner Susan Devoy, accused Labour of scapegoating an ethnic group.

Key stopped short of calling Labour racist but said the opposition was deliberately misleading the public on the reasons for rising prices in Auckland.

"It's desperate in my view," he told Radio New Zealand.

"They know the information is wrong and misleading... they know the vast bulk of people on that list who have Chinese surnames will be either (New Zealand) residents or citizens."

The conservative leader also accused his centre-left opponents of betraying their commitment to multiculturalism with the claims about Chinese investors.

"The Labour Party that I've known for the last 13-and-a-half years that I've been in politics is the one that's talking about an open, multicultural society," he said.

"So what they did last week was so out of character and so desperate it's hard to believe they even believe it themselves."

Labour leader Andrew Little has rejected allegations of racism, saying the impact of foreign ownership in Auckland was a difficult topic that needed to be debated.

House prices in Auckland soared 26 percent to an average NZ$755,000 (US$510,000) in the year to June, while prices outside the city were steady and averaged just NZ$340,000.

The Reserve Bank moved to cool the market in May, warning a property bubble posed a significant risk to the entire economy, but demand remains strong