The Department of Internal Affairs is warning would-be home buyers not to take part in an online auction for a Christchurch house.
The couple selling the house are using an internet auction, where prospective buyers pay $100 for a ticket and place a bid between one cent and $1,000.
The four-bedroom house, which has a rated value of $594,000, will go to the lowest unique bid.
However, Debbie Despard from the Department of Internal Affairs says the auction is illegal under the 2003 Gambling Act.
Ms Despard says the auction is classed as remote interactive gambling and is therefore illegal.
She says gambling with prizes exceeding $500 can be conducted only by societies raising money for charity.
She says the Trade Me and Premier Realty websites have been told the auction is illegal, and the Real Estate Institute of New Zealand is also being contacted.
Ms Despard says she has told the auction organiser to stop the auction and refund those who have already entered.
The Real Estate Institute says it will investigate the auction only if a member of the public complains.
Institute national president Mike Elford says the matter is in the hands of the Department of Internal Affairs.