The Queenstown real estate market is heading towards light at the end of the tunnel, agents’ spokesman Kelvin Collins says.
Collins – the Real Estate Institute of New Zealand’s local spokesman – predicts the recent five-year high in residential sales volumes will continue this year.
“People are tired of sitting on the fence and will continue to make purchasing decisions over the summer.
“A shortage of new listings and good buyer demand will put pressure on prices towards the end of the year.
“There’s light at the end of the tunnel where you couldn’t see the light two years ago – and in some ways we’re almost out of the tunnel.”
There were 742 sales last year comprising 586 dwellings and 156 sections.
That compares with an average 589 residential sales over the preceding four years.
Over the last quarter of 2012 there were 160 house sales and 52 section sales – compared with 106 and 23, respectively, over the same period in 2011.
Collins points out last year’s 742 sales are still a long way off the 1200 regularly sold in the mid-2000s.
The median house price of $520,000 remained similar to 2011 and still five per cent off the mid-2000s peak.
However, “The greater sales evidence and consistency in sale prices allowed buyers and sellers to have more confidence in values and well-priced property sold quickly”, Collins says.
Collins believes the market is balanced, favouring neither buyers nor sellers.
“There’s no reason why the level of sales occurring now won’t carry on for another year.
“But if vendors get greedy, the market will dry up, and likewise, if the buyers try to force the market down, the market’s going to dry up.”
To date, Collins says values have only increased at the bottom and top ends of the market.
For sub-$450,000 houses, competition between first-home buyers and investors has created slight movement – “you’re talking maybe five per cent”.
There’s also been capital gain for high-end properties with an ‘X’ factor, Collins says.
“[These are] properties that have been extremely well-designed, have a good view and are well-located.”
However, he does expect some price gains for other properties towards the end of this year.
“We still have a good supply of listings and there won’t be any value growth until that tightens up.
“By the end of the year I would expect the market to be starting to favour vendors a little bit more – but that depends on the level of supply.”
Even then, the market won’t be like the heady mid-2000s when there were major capital gains, Collins says.
“That won’t occur until there’s enough margin in property sales that people can spec-build and we’re a long way off that.”
Meanwhile, Collins predicts investors this year will recognise real estate as a good investment opportunity and accept five per cent rental returns as normal.
“You couldn’t have sold on five per cent two years ago but now you can – people are saying ‘yeah, that’s probably fair, that’s all I’m going to get in the future’.”
The 52 section sales over the last quarter of 2012 don’t include 27 lots sold at the new Shotover Country subdivision. That’s because these were sold by the developer rather than through local real estate