Queenstown bucks property trend
Queenstown Lakes property market continues to slowly track in the opposite direction to much of New Zealand.
Home values rose by an average of 2.4% in the district for the May quarter and the average home is now worth $1.7 million.
That's 3.1% more on average than this time last year, according to the latest Quotable Value (QV) House Price Index released today.
Local QV registered valuer Greg Simpson says the Reserve Bank's latest ORC increase is having a "cooling effect" on the market, however, with fewer sales at the moment.
"There’s been strong restraint applied to the housing market from tightening credit conditions."
But there's still demand and the positive value growth.
"Queenstown Lakes District has selling prices that are above other districts and this is likely to continue given the recovery of the tourism industry and the general shortage of housing in the main centres of Queenstown and Wanaka."
Across New Zealand as a whole, home values decreased by 3.4% over the three months to the end of May 2023 – a slight improvement on the 3.5% quarterly reduction in April and the 3.9% quarterly reduction in March.
The average value now sitting at $888,930. That figure is 13.7% lower than the same time last year but still 20.2% higher than its pre-Covid-19 level.
Quotable Value (QV) operations manager James Wilson says it is still too soon to call this the bottom of the market, nationally.
"It is still very early days and sales volumes remain low across the country. We would still need a few more months of continued softening to claim conclusively that we're at the bottom of the market.
"When the market does hit bottom, we won't suddenly see values begin to increase across the board. Instead, what we’re likely to see is a bumpy landing, with some centres reaching the bottom of their descent before others. Certain locations and property types may begin to experience some growth sooner rather than later, whereas others may remain flat or continue to soften for a period."
He said areas that appealed to first-home buyers and investors would likely be the first to rise.
"One interesting trend that we have observed is the relative strength of areas that have experienced strong first-home buyer activity over the past 12-18 months. In fact, most areas of the country that have experienced positive value growth or held relatively steady over the last quarter have had average values of well below $1m. In other words, ‘first home buyer territory’.
"While investors haven’t removed themselves entirely from the market, they have continued to adopt a wait-and-see approach in many markets. However, indications that the Official Cash Rate has peaked could entice them back, with valuers and real estate agents at the ‘coal face’ of the market already reporting a small uptick in interest. Time will tell whether we do see a growing number of investors represented in sales volumes over the next few months, competing for entry level stock."
The average rate of home value decline slowed this quarter in 11 of the country’s 16 largest urban areas – including in Auckland (-2.3%), Hamilton (-2%), Christchurch (-2.5%), and Wellington (-2.6%) Wellington even dropped below the national average (-3.4%) for the first time since the downturn began.
Otherwise the quarterly rate of decline increased in Tauranga (-4%), New Plymouth (-2%), Nelson (-2.4%) and Marlborough (-4%) but only by an average of between 0.1% and 0.6% compared to last month’s index.
Wilson says there remains a high level of uncertainty within the market overall.
"There’s a generally cautious mindset out there, especially among many ‘Mum and Dad’ buyer types. While these buyers remain inactive, value levels in areas that used to be strong are likely to remain pretty weak. Strong net migration numbers may add some heat into the housing market over time, but it’s likely we’ll begin to see the impact of this on the rental market first.
"Now, as we head into winter, many eyes will turn to the election to see if any new or un-forecast policies begin to emerge that may impact certain buyer types more than others. However, history shows us that elections don’t typically have a significant impact on the housing market. Most likely, we’ll see some buyer types remain on the sidelines until the result comes in. But it looks likely we’re in for a few more bumps in the road between now and then."
