Trade Minister David Parker said the Stats NZ figures, showing one in five central Auckland houses were being sold to offshore buyers, vindicated Government plans to block people living overseas from purchasing existing New Zealand homes.
In all, just over 3 per cent of house sales in New Zealand in the first three months of the year went to non-resident, overseas-based buyers, Stats NZ said.
The rate of foreign purchases was higher in Auckland, at 7.3 per cent, and in Queenstown, at 9.7 per cent.
Within Auckland, 19 per cent of sales, or 450 properties, in the Waitemata region, which includes the Auckland CBD, inner city suburbs and Waiheke Island, were to foreign buyers.
Elsewhere, 14 per cent of sales in the Upper Harbour region, which includes Hobsonville, Whenuapai and Albany, and 10 per cent of sales in the Kaipatiki region, covering Beach Haven and Birkenhead, were to foreign buyers.
Parker said this showed foreign buyers were active in the two markets where locals faced the biggest hurdles to home ownership.
"Whether it's iconic places beside South Island lakes or properties in the most socio-economically deprived parts of Auckland, the principle is the same: New Zealanders should not be outbid by ... people who don't live here."
But Juwai.com's Law said the 504 properties bought by Chinese was a tiny fraction of the 40,431properties that changed hands during the quarter.
"Foreign buyers account for about one tenth the number of transactions as local investors. If anyone is driving up prices, it's your rich dad and uncle, not rich Chinese," she said.
She also said most Chinese home buyers were not landlord investors.
"Seventy-five per cent of our buyers in New Zealand tell us they are purchasing for their own use. A good school area is a top request for 8 per cent of them," she said.
"Foreign buying tends to be focused where there is lots of new development, making clear again that foreign investment leads to the creation of new dwellings. That's vital in a market with a housing shortage."
She said New Zealand was the sixth favourite destination for Chinese property buyers behind the US, Australia, Thailand, Canada, and the UK, continuing a strong trading relationship between the countries.
China "accounts for 20 per cent of Kiwi exports, delivers $800 million a year in international student spending, and provides $1 billion a year in tourist spending besides funding the construction of new housing", she said.
Real Estate Institute of New Zealand chief executive Bindi Norwell said the figures showed the ban was not necessary and could reduce the supply of new housing by drying up investment.
She said a closer look at the 19 per cent of sales in the Waitemata region, for instance, showed it would roughly equate to 85 property sales in the March quarter.
"Even if these 85 properties were sold to local buyers or investors, it is still unlikely to significantly impact the overall market," she said.
