Queenstown and Central Otago house values buck national trend - $1b worth of building consents

Queenstown and Central Otago house values appear to be bucking the national trend with house prices still rising and continued demand, especially from Australian and Auckland buyers.

Realestate.co.nz’s latest figures have Queenstown’s average ‘asking price’ for last month at $1,712,488 – a 5.7% increase compared year on year.

Central Otago’s average April ‘asking price’ was $987,485 – an increase of 12% year on year.

The average ‘asking price’ for the whole Central Otago Lakes District region last month was $1,612,812 – a whopping 17% increase compared with April 2023.

CoreLogic NZ’s latest figures show a slight dip in house values nationally, particularly in Auckland and some other main centres, but also some healthy increases in the south.

According to their stats, the average Queenstown ‘house value’ rose almost 4% for the year ending April this year to $1.78m, up from $1.712m in April last year, according to its latest figures.

In Central Otago the average ‘house value’ jumped by 6.1% to $832,000.

In comparison Auckland ‘house value’ dropped by 1.8% during that year ending April.

Economist Brad Olsen, of Infometrics, says while Queenstown prices were down by a minimal 0.1% for the first three months of this year that’s probably just a reflection of its seasonality. Central Otago values rose 3.3% for that period and the national average house price rose 0.6%.

“There’s definitely a bit of growth in the wider Otago area, even Dunedin’s values are up,” Olsen says.

There’s a lot more competition with more properties being listed on the market nationally as some people can’t manage their mortgage.

Given the strength in house prices in the Queenstown region the demand there seems to be an ongoing, healthy demand, he says.

CoreLogic NZ chief property economist Kelvin Davidson says the continued softening of house prices nationally in April reaffirms the ‘buyer’s market’, giving sellers reduced bargaining power.

Real estate sales resource queenstownrealestate.co.nz latest statistics show the median number of days to sell a house dropped from 47 in March last year to 39 in March this year while the number of sales was similar – 68 in March last year down to 67.

Some local agents say market values are holding. There are still buyers around and while they’re shopping around a bit more, they’re prepared to buy for what they perceive to be a fair price. It’s a more balanced market, and all about getting the price right. Sellers who can are holding on for their price, while those who are starting to feel the pinch of higher interest rates and rising living costs are considering their options.

Olsen says too there will likely be greater limitations on what buyers are able to offer right now.

David Reid Homes Queenstown sales manager Carolyn McIsaac says they’re not seeing any slowing off with a lot of Australians, particularly from Sydney, and Aucklanders all wanting to build locally. They deal mostly to mid-market builds worth between $1.6m to $4m – a market in which most people don’t rely on mortgages therefore they’re unaffected by rising interest rates and haven’t been deterred. “Most of them are quite gung-ho and moving forward with their builds,” she says. “The Sydneysiders are keen to one day move here and many Aucklanders are building holiday homes.” She says as soon as the new government came into power there was a big upturn in interest. Building costs have risen so those simply investing may not proceed because the numbers don’t stack up. McIsaac says they had been expecting to see a drop off “because we’re seeing it on the news” but so far it hasn’t eventuated. “Others elsewhere that we talk to in the industry have noticed it, but we seem to be bucking the trend here,” she says.

Cook Brothers Construction managing director Dave Bulling, whose company does a lot of high-end residential and commercial builds, says some in the market are being deterred by high interest rates but those with money aren’t. Demand across the board has dropped a little and while it’s definitely competitive there’s still plenty of interest, he says. ”Our tender pricing board has never been busier.” Higher interest rates do have clients more focused on reducing price though.

Alex Schultz, of G.J. Gardner Homes Queenstown, agrees there’s strong interest from northern buyers, particularly Aucklanders, who may not be moving south yet but aspire to in the future. “They’re keen to get a block and build a house,” he says. There’s still a lot of land at Hanley’s Farm that’s been purchased and isn’t yet built on. Demand there continues with a new wave of interest as each new stage is released, despite prices having increased substantially above the previous release. There’s genuine interest for the new Silver Creek subdivision above Goldfield Heights just released too. “People are looking to get an affordable site,” Schultz says. The crunch point for those building is if they have to purchase land, then get a mortgage to build and pay rent at the same time, he says.

 

Building consents continue to roll in

Just over $1billion worth of building consents was processed for the Queenstown Lakes District for the 2023 calendar year with a bumper month totalling $160m worth of consents for November alone.

While the housing market appears to be softening a bit elsewhere, already this year the district council had processed $276m worth of new applications by the end of last month. The total value of building consents last month (April) was $66m, compared with $59m in April last year, and a whopping $90m in April 2022.

Applications flattened off a little last year – down about 15% or 250 applications on the 2022 calendar year.

Queenstown Lakes District Council team leader building consent processing Hamish Humphries says they seem to have picked up again this year.

“Whether it was the election or pre-Christmas, maybe there’s a bit more confidence in the economy this year,” he says. “We have a steady stream of applications coming in whereas towards the end of last year it was all a bit unsure. People were probably holding fire in terms of lodging plans.”

November’s numbers would certainly point to renewed post-election confidence.

Just this week (ends May 11) the council received the applications for the three stages of AW Projects - 5 Mile 226 Ltd’s 226 home development at Five Mile, between Pak ‘n’ Save and Queenstown Central. The first stage will provide 95 standalone dwellings, followed by another 63 then 68 more.

“Housing is needed, and this is still a desirable destination, whether that’s for workers or holiday home purchasers,” Humphries says. “It seems like the housing market’s still growing steadily.”