Queenstown’s unique housing-market trends
With the current state of Queenstown’s housing market, it’s no surprise that there’s an increase of first home buyers entering the market, hoping to get out of the rental rat race. While the market is hard to predict, it’s widely agreed that the New Zealand housing market is in the right position to rebound over the next 18-24 months, making the market even more appealing to first home buyers, but the Queenstown market is a tricky one to figure out, typically bucking real estate trends.
Harcourts Queenstown, at the end of July, reported that the country’s housing market is poised for a rebound in 2023, which is driven by a number of factors including demand, the RBNZ’s indication of no further ORC movement and ongoing supply shortages. They say that “By taking some proactive steps, first home buyers can position themselves for success to make home ownership a reality.”
QV, a valuation and property services company, has also recently reported that the number of first home buyers getting into a home of their own is nearing pre-Covid levels. The number of mortgages approved for first home buyers is up 30% on June of last year. It’s noted that with house prices so high, getting the deposit together remains one of the key obstacles for many first home buyers.
While it’s great to hear that the housing market appears to be improving and first home buyers are making inroads to have a place of their own, does the market down here match what we’re seeing nation-wide? Despite Aotearoa as a whole having an average drop in house prices by approximately 3.4% over the last three months, Queenstown has seen an increase of 2.4%.
Custom Mortgages recently ran a series of seminars for first home buyers across the region, which have been hugely popular. The interest rate hike over the past few years has been a blow for aspiring homeowners, and Rebeca Barnes at Custom Mortgages says that as a result, people are seeking more advice and are becoming more conscious of what the rates mean for them and their lending going forward.
“For new people getting into the market, they really won’t know any different than paying these interest rates,” says Rebeca. “Historically, they’re not as high as they have been, so it’s not necessarily something to put people off getting into the market, if they’re in a position to be able to do so. In regards to people having mortgages now and what they want to do with their lending ongoing, there are quite a few options – restructuring their lending or refinancing.
“Every first-time buyer can come from a different position, so don’t ever think that you’re completely out of the game because you don’t have a full 20% deposit. Even having a conversation can help you get into the right position that you need to be in. At least have a chat, don’t sit back and think you can’t do it – it’s not always the case.”
Rebeca has also seen an increase in people in the region downsizing or re-evaluating the property they want. Professionals real estate agency recently reported that Queenstown’s area sales numbers are subdued but remain healthy. They say that fewer homeowners are leaving the district and there’s a high cost to changing homes, which are contributing factors to low sales numbers in the region.
The Government announced five key changes to the Progressive Home Ownership scheme that will come into effect on 14 August. The changes will reach more potential first home buyers by allowing existing homes to be bought, Housing Minister Dr Megan Woods announced.
“Since the PHO scheme was launched in 2020, hundreds of eligible families who would otherwise never have been able to own their own home, have been able to do so when they find new homes to buy, or get a new house built,” says Megan.
“We’re changing this to enable people who fit the PHO criteria, to buy existing homes as well. This will increase the choice of homes, including more affordable homes, in more locations.
“We’re also increasing the PHO income cap criteria for applicants from $130,000 to $150,000, reflecting recent wage growth, and broadening the income cap exemption for intergenerational families to include larger whanau.”
The combination of rising interest rates, an increase in house pricing, lack of supply, and outside investors buying in the region are making it a perfect storm for first home buyers, and Queenstown’s market is a tricky one to navigate. Asking your bank a few questions or seeking advice from a mortgage advisor is a good place to start – you may be in a better position than you think.
