Sales of both luxury homes and bare sections have slowed down markedly in Queenstown.
Local Harcourts managing director Kelvin Collins says there’d been good growth in the luxury sector earlier last year, but the clamps came on after the government’s foreign buyer ban came into effect on October 22.
Thirty-five properties sold last year for over $2.5 million – the three dearest, in Kelvin Heights, fetched $5m-plus, including a large Bay View Road home which sold for $12.5m.
However, since October 22, only one $2.5m-plus house has sold.
Collins says that could be explained by a surge in overseas transactions leading up to the ban on foreigners – except Aussies and Singaporeans – buying residential property in New Zealand, causing a lag in the market thereafter.
Alternatively, he says buyers in this sector could be holding back, awaiting a clear market direction, since the foreign buyer ban coincided with a softening in Auckland and Australian city values.
Meanwhile, there’s also been a marked drop-off in local section sales.
Last year, 157 Wakatipu sections sold compared to 265 in 2017 and 350 in 2016, while the median price range rose from $347,000, in 2017, to $599,000 last year.
And only eight sections sold last month.
That drop-off’s a reflection of a major shortage of supply, Collins says.
“We just haven’t had enough sections developed in the last two years to cater for demand.
“We need 300 a year – at the moment we’re selling about 150.
“That’s why values have been holding up.”
Despite continuing section releases at Hanley’s Farm, for example, Collins doesn’t see significantly more sections coming onstream for at least two years, by when the likes of the old Wakatipu High School site and Ladies Mile may be under development.
The drop-off in section sales has also resulted in a shortage of rental properties, pushing rents close to unaffordable levels, he notes.
He says it’s possible the foreign buyer ban is also taking residential investors out of the market since foreigners would take lower yields than Kiwis.
One area of good growth, Collins says, is in dual-income properties where a Shotover Country owner, for example, might add a two-bedroom flat above their garage to offset mortgage repayments on their three-bedroom home.
“Those houses are going for $1.2m to $1.3m.”