Rich seeking boltholes drive prices

On the rise: Arrowtown house prices PICTURE: OTAGO DAILY TIMES

Arrowtown’s housing market is “extreme”, a realtor says, and unlike anything he’s experienced in more than 20 years.

Figures released by Quotable Value last week show Arrowtown has, as of July, hit the $1 million milestone of house values, up 20.8 per cent on 12 months ago.

Richard Newman, of Ray White Real Estate, says: “It is crazy. What’s holding it up is the supply. There is no supply out here.

“Because we’ve got such a small number of sales, you only need one or two and the average sale price is a million bucks.

“It’s such a small and volatile market, so you’ve got to be very careful at how you look at those figures but, in saying that, it’s been hovering around close to the $950,000 close to $1m for just about a year now.”

Many people seeking Arrowtown houses are Auckland or Sydney residents investing in holiday homes.

“Because there are so many flights … now, it’s a breeze.

“They’re getting boltholes … It’s driven by Auckland people, friends of friends [who say] ‘we bought a house, come and live in Arrowtown, come and buy one, too’.

“It’s nice for them to put [their money] here but it’s a problem for us; for the local person.

“It is extreme and it’s gone on for longer than normal. I’ve never seen it this high or this bad for housing.”

Newman describes the rental property market in Arrowtown as “diabolical”, with people “crying out for houses”.

“I know a couple of houses [being rented for] $1000 a week, and that’s just a three-bedroom, maybe two-bathroom home.

“It’s just terrible.”

The median price for the village has now almost doubled in the five years since Queenstown’s council decided to create an urban boundary.

The council voted to adopt the independent commissioners’ recommendation on Plan Change 29 in October 2010. QV data shows in the five years since that decision was made, the Arrowtown median had increased 46.4 per cent, from $604,000 in the three months to June of that year.

Newman says demand, while still high, has dropped slightly. Instead of three or four potential buyers, there were now one or two.

The median price has dropped slightly below $1m in the last few weeks, now sitting around $959,000. A month ago it was $990,000, he says.

The lower median is attributed to three or four sales of Butel Park apartments for between $650,000 and $750,000 “but you can’t buy a house for that in Arrowtown”.

He believes one of the biggest drivers of higher Arrowtown prices is the council’s decision to create a boundary around the village, which came into force last April.

That effectively drew a ring around Arrowtown, limiting urban growth to within the existing urban zones.

“If you stop the supply and the demand’s there, the price is only going to go up,” Newman says.

“We had a higher sale price than Queenstown, which is ridiculous … and it’s all because we don’t have the land.”

Otago Daily Times