Listings aplenty but values up

Otago Daily Times

2 days ago

In the 'bubble' that is the Queenstown property market, with our population ever rising, residential values continue increasing despite it still being a buyers' market.
That's a conclusion from the Queenstown section of Colliers Otago's latest property market review and outlook that's out today.
For the second year running, the theme remains one of 'cautious optimism' despite global economic uncertainty causing many buyers to take a wait-and-see approach.
"Buyers are aware that they have the negotiating advantage and are taking longer to commit, assessing the multitude of options, and displaying high price sensitivity," the report states.
"Despite this, the Queenstown residential market maintains a gentle upward momentum with a gradual, more stable period of value growth occurring."
As an example, the mean or average dwelling price has risen year by year from $1,744,962 in 2022 to $2,035,163 this year.
Despite buyer hesitancy, sales activity is also up — in 2022 there were 486 section and dwelling sales, in '23, 490, and last year, 588.
But already this year there've been 414 sales in the first six months, including 40 of $3million-plus, of which nine have been over $5m.
As interest rates have lowered, first-home buyers, the report says, have been active in the sub-$1.5m market, and investors have also got involved as leaving money in the bank has become less attractive.
"Entry-level suburbs like Fernhill, Sunshine Bay, Hanley's Farm, Shotover Country and Frankton continued to see good demand for listings."
It also notes there've been plenty of sub-$1m off-plan listings in townhouse developments.
On the other hand, the report notes a sharp increase in section prices due to a shortage of titled, flat, entry-level land.
In February, the final Hanley's Farm sections sold with per square metre prices from $1000 for larger sites to $1400 for smaller sites.
In the same month, the first sections in neighbouring Park Ridge were priced from $1394 to $1566 per sqm for a 371sqm site.
Ironically, Jack's Point's offering better value with larger sites selling for between $1000 and $1300 per sqm, albeit at a much higher quantum level.
Mean section prices have risen from $877,867 in '24 to $1,061,925 this year.
Due to land demand, larger sites with older dwelling are being subdivided in areas like Arrowtown, Lake Hayes Estate and central Queenstown.
Colliers notes of course there are also several big subdivisions under consideration under the Fast-track Approvals Act.
"If these proceed, a renewed influx of level sites should come online in the next 18-24 months ...
"However, difficulties with infrastructure development may delay some of these projects."
Local Colliers valuation director Heather Beard says there's also an influx of rentals coming onstream from both the many home and income properties at Hanley's Farm and the completion of Frankton's Five Mile Villas.
The report refers to "some softening" in the rental market since late last year — "the median vacancy period has extended to 21 days and demand is subdued".
"The anticipated slowdown in residential construction, driven by infrastructure constraints, is likely to help alleviate the current oversupply in the rental market."
Can Arrowtown keep chains at bay?
With more international retail chains opening in Queenstown's CBD, the Colliers report says the ripple effect's reaching Arrowtown's commercial core.
Rents there have risen in the past 12 months "and further increases are expected in the short term".
"The question now is whether Arrowtown's commercial centre can retain its unique character and charm, or whether generic commercial expansion and retail chains will overtake locally owned businesses?"