Housing market takes a breath
Queenstown's white hot housing market has cooled slightly in 2024, while the pressure on rentals has also eased.
High interest rates and restricted household spending have seen residential sales volumes reduced by about 40% since the market peak in 2021.
There's been an increase in the supply of homes for sale, and listings are taking longer to shift, according to Colliers annual Otago Property Market Review and Outlook for 2024 /25, released on Friday.
But that doesn't mean they're any cheaper.
"So far, 2024, has seen a softening and slowing phase in the market, resulting in dynamics shifting in favour of buyers," Colliers registered valuer / property consultant Heather Beard says.
"However, displaying its trademark resilience, Queenstown has bucked the national trend of value reductions and has instead displayed continued, albeit weak, value growth across the residential market."
Those continuing price increases mean Colliers now considers 'high-end' to be over $5m, because there are so many sales over $3m now it doesn't represent the top end.
Suburban life
The market also differs across suburbs. While there are not too many properties coming to market in Lake Hayes Estate or Arrowtown, there are more listings in newer subdivisions such as Hanley's Farm, perhaps indicating more highly-leveraged owners.
There's also a townhouse development boom underway as developers look to meet demand from first-time home buyers, with multiple new subdivisions offering two-to-four bedroom, terraced and semi-detached homes in the sub-$1m bracket.
In contrast, there's very little land available in the entry price range. The final two dozen-or-so of Hanley's Farm 1700 sections are now on the market (priced $550k/364sqm to $860k/1090sqm), and while there are 10 other subdivisions in the pipeline, the most progressed ones are mid-to-high value.
They include the 33.7ha Silver Creek at the top of Goldfield Heights, which is consented for 580 sections, which will be released in 15 stages over the next 10 years; Koko Ridge, a lifestyle subdivision of 37 lots, 2000sqm-4230sqm, near Lake Hayes Estate; and Hayes Creek, a consented 20-site subdivision with lifestyle blocks of 5,000-15,000sqm off Alec Robins Rd.
In the lifestyle market, listings have increased by 32%, sales volume has slowed, but prices also remain stable. Lifestyle section sales volumes in 2022/23 were the lowest since 1997, as the median price jumped 30% from $1.5m to $1.95m.
Rental market
Last winter, all the headlines were about the rental housing crisis and people living in cars, due to the lack of availability.
"That's all gone silent," Beard says. "The dynamics have eased in favour of tenants now."
Beard says on the demand side, the weaker start to the ski season and the headlines scaring renters off are both factors. In terms of supply, the likes of NZSki converting former backpacker accommodation into worker accommodation has eased shortages.
Commercial
Beard says prime retail property in town continues to perform strongly, with rental increases and a shift to high-end retail following the streetscapes project. Any vacancies are being backfilled by high-end brands. For example, global cosmetics chain Macca is taking over the Hallensteins' premises on Beach St.
"The transformation is evident in the prime retail areas, where there is nil vacancy and an influx of prestigious brands."
The office market is soft though, with 7% vacancy across 10 tenancies in early September 2024. Prime retail CBD rents are $1850 - $2400 per sqm, secondary retail is $400 to $1000, and office is $350-$500.
That's because most of the locals now prefer to work and shop in Frankton. Frankton retail rents (100-120sqm) are $500-$800, big box retail is $250-$500, and office space is the same price as the CBD - $350-$500 per sqm.
"The office and retail sectors in Frankton have reached a maturing stage, with most spaces occupied. Office space is near capacity, particularly in new A-grade buildings."
There's also been a notable rise in suburban retail, particularly hospo and convenience stores.
Industrial
There's also virtually no vacancies in Queenstown's limited industrial market, mainly around Glenda Drive and Gorge Rd, which has driven rents up.
Tenants are feeling the pinch and resisting further rises but new leases are still typically obtaining market-leading rates.
"Smaller, more affordable industrial premises have become scarce as the entry price point into Frankton has lifted and affordability for small businesses has diminished."
A Frankton workshop / warehouse rents typically for $180-$200, while an industrial office is $225-$350 and land is $1700-$2000.
Tourism
Meanwhile, Queenstown's tourism property market is "in the maturing stages of the post-Covid recovery and growth cycle", with an 11% growth in internationals coming through Queenstown Airport, offset by subdued spending and soft domestic market.
