Property market accounts for much of the $1.3b washed here each year.

It's tempting to join the chorus of sinophiles who slapped "Adam" for suggesting Chinese speculators were building the Auckland property bubble.

But the spectre of large-scale money-laundering through cash buys in the Auckland market - which the anonymous real estate agent also raised - must be investigated.

It must not be simply swept under the carpet while the Government meanders slowly towards cracking down on the estimated $1.3 billion of "dirty money" washed through New Zealand each year.

The Chinese agent - who wrote an article in Monday's Herald and spoke with radio host Duncan Garner - painted a disturbing picture.


"Adam's" claims were evocative: "I remember seeing young couples with their hands clenched and eyes glued to the auction screen, only to find their first dream house outbid by someone screaming in Mandarin.

"And I shudder to imagine their feeling when they see the very house they missed out on back on the market within a couple of months with 200k added on top ... meanwhile, a champagne is uncorked at another New Zealand property expo in China."

This is because while the property market has been reflecting an exhilarating population growth, it is also fuelled by the widespread assumption that "the Chinese pay the most". It is irrational exuberance at its worst.

Personally, I have some sympathy with leading Chinese - including Arthur Loo, whom I know well through the Metropolis body corporate committee - who decried "Adam's" lack of guts in making anonymous claims that undermined the character of more recent Chinese immigrants.

Many recent Chinese arrivals are outstanding contributors to the New Zealand economy.

The Herald checked "Adam's" bona fides and acceded to his request to stay anonymous. It's probably not surprising he wanted that assurance, given the fate that befell the staffer who earlier leaked sales data from a leading Auckland realtor which Labour extrapolated to claim Chinese buyers accounted for 39.5 per cent of recent Auckland house sales.

Increased demand and domestic speculation are key drivers of the escalation of Auckland house prices.

But it is no secret that foreign investment has played a major role, nor that Auckland real estate agents have made small fortunes through commissions on selling choice properties to well-heeled international buyers.


As Christie's International Real Estate's recent survey points out: "A strong economy, magnificent natural beauty and a friendly image are key selling points for New Zealand's foreign real-estate buyers ... Add to that the country's property laws - which do not include a stamp duty, capital gains tax or visa requirements - and the result is one of the world's most attractive property markets for overseas buyers."

The tax advantages of buying choice real estate in New Zealand continue to be marketed despite the "bright line" rule of last October, which slaps a quasi capital gains tax on gains from the sale of properties held for less than two years.

Christie's did not talk about New Zealand's lax approach to money-laundering rules. But anyone in the know is aware of this.

"Adam" suggested as much when he was reported as saying: "A good proportion of Chinese, they come here with bags and bags of cash. I am dealing with a lot of foreign buyers and many of them come here to buy property, to live in New Zealand with an intention for education or business, but some of them come here for investment purposes."

In fact, the trading banks blew the whistle on this abuse to the Government in early 2015 when they made it clear that many residential house sales were not being transacted via the banks. It was one of the drivers for the October 2015 crackdown which resulted in house buyers having to provide New Zealand bank accounts and IRD numbers.

These new rules have acted as a brake but they do not deter the money-launderers. Overseas cash buyers simply use a "buyer of convenience" as their local front.

The stories of impecunious Asian students owning expensive apartments in downtown Auckland are not apocryphal.

Nor is the "trading" that occurs among obviously related parties - a factor that cries out for full investigation given the tendency for "pump and dump" behaviour.

But still the Government rolls along at snail's pace.

John Key recently said it was time to roll out the second phase of the anti-money-laundering legislation, which will cover real estate agents, accountants and lawyers. "There's no question that, as a result of debate around the Panama Papers and the wider public debate globally about this issue, we're certainly trying to push part two of that through as quickly as we can," he said.

It's called prioritisation, Mr Key.