Patel said people were free to decide who they wanted to live with, but such explicit discrimination was concerning.
"It's disappointing that it happens in a country like New Zealand."
Patel said ads of this nature were rare in New Zealand, but had the potential to damage race relations.
He did not believe TradeMe could prevent such ads from being listed.
"It's hard for them to probably monitor everything."
Patel said he would raise the ad at the association's executive committee meeting in Wellington on November 10.
The man who listed the ad, who went by the name Alistair, said he had several reasons for writing the ad.
"The honest answer is that the majority of them either don't speak English very well, and I've had problems with communication in the past, where I've tried to tell them that they're doing something wrong and they don't understand."
He said these communication problems weren't just an "Indian or Asian thing".
He acknowledged having issues with some, but not all Indian people.
"The other thing is, the Indians in particular are quite arrogant. And I've had a lot of people come and look. It's not a full racist thing. I've had phone calls from Indians and talked to them and said, 'Yep, you're fine, you can come and look at the place.' But I don't want to waste people's time.
"I don't want to get people turning up and not being able to speak English, or people who cook curry every night. I don't want to come home to a house that smells..."
Alistair, who declined to give his full name, said he would consider letting Asian or Indian people who spoke English move in.
He said he'd filled the rooms advertised for the Addington flat, and some Indians and Asians still applied to become flatmates.
Alistair admitted receiving some criticism. "I had one from a German lady who was quite upset that I put that until I told her I had a German flatmate. I told her what the issue was and she was quite happy and ended up coming to look at the flat."
He said he'd had plenty of experience with various flatmates from different backgrounds.
He was happy to talk to people who found the ad offensive.
"If people l have an issue with it and they ring me and talk to me that's fine."
Alistair also didn't want smokers, or people with pets.
The ad also said all flatmates must be working, and ideally aged 20-30.
The ad was removed shortly after NZME News Service called Alistair.
"On the face of it, it sounds like this would have crossed the line." a TradeMe spokesman said.
"If anyone has concerns about a listing we encourage them to hit the Community watch button (on every listing) so our team can take a look."
He said TradeMe would consider its legal position, based on the Human Rights Act, but would also "make a call based on the TradeMe community's reaction."
In April 2012, TradeMe removed a rental property listing from a Fiji-Indian landlord who described his ideal tenants as "European"
Landlords or agents who discriminated against people on the basis of race, age, sex, sexual orientation, family status or disability risked breaking the law, the Human Rights Commission said on its website.
However, the situation was more nuanced for what the Commission called "shared residential situations."
"Where a person wishes to share their own accommodation with someone else, the unlawful discrimination provisions do not apply," the Commission added.
"This exception was designed to cover flatting or boarding arrangements, not commercial accommodation providers."
The Commission said prior case law showed a "common sense approach" had to be applied when defining these situations.
An upset member of the public alerted the Herald on Sunday to the ad.
Some readers quickly suggested racial discrimination of various kinds might be common in ads for flatmates.
TradeMe currently had an ad for a property in Mt Roskill, Auckland, saying only an "Indian or Asian male" would be welcome.
A listing currently on TradeMe seeking flatmates for a Mangere Bridge house said only Indians were welcome.
"Please I am not meant to be racist here by writing Indians only," the TradeMe user wrote on the listing for the four-bedroom house. "I am Indian and I believe Indians will be more comfortable with us."
In Fenton Park, Rotorua, one TradeMe listing was even more specific.
The advertiser wanted an "Indian vegetarian girl" only for a room in the two-bedroom unit.
