Opposites attract

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Popular properties at high and low-end of pricing spectrum

Opposite ends of the residential market are the most active, according to a report on Queenstown property released today.

Properties priced either below $600,000 or over $1 million are selling better than those in-between, notes Colliers International valuer John Scobie.

The economy might be in rough shape, yet in its 2009 Queenstown market report, the property consultancy suggests $1m-plus properties are selling at almost double last year’s volume.

“Our records show there were 36 residential sales in 2008 of more than $1m and to June 30 this year there have already been 28 sales [in this price bracket].”

And according to the Real Estate Institute’s latest Queenstown sales report, you can add another seven to that tally in July.

Scobie also says stock costing up to $600,000 is proving popular.

“Reasonably” priced units and dwellings are attracting first-time buyers, encouraged by banks relaxing their lending criteria and purchasers feeling that values aren’t going to drop any lower.

Scobie: “There are a lot of first-time buyers who are starting to get into the market for $300,000-upwards units.
“It’s become affordable for them.

“The interest rates are low and the units are at the lowest point they’ve been for quite some time, so there’s a double win for them.”

He’s referring particularly to attached units, whether in groups of two or three – or larger comp­lexes like Greenstone Apartments.

On the other hand, properties priced between $600,000 and $1m aren’t selling so well, Scobie says.

The Colliers report also states residential housing has dropped 10 to 15 per cent in price since 2007, and sections even further.

“Market indicators suggest that the current cycle of value declines will bottom out towards the end of 2009.”

Queenstown won’t be helped by a construction slowdown and increased unemployment, but Colliers suggests a “residential-led recovery” will start next year.

The rate of recovery will depend on easier availability of credit from banks, and on interest and ex­­change rates remaining low, it says.

“Only when those factors improve to a point where substantial sales activity recommences will values begin to recover.”

Going by the last four decades, when the gaps between peaks or troughs averaged seven to nine years – sales volumes peaked in 1978, 1987, 1994 and 2003 – the next peak would be due about 2010-2012.

“However, we consider that the events of the 2008 credit crunch will result in a longer recovery phase and anticipate that we will be looking more towards 2015-2016 as the next peak of our current cycle,” the Colliers report says.

At the higher end of the market, Scobie notes there are houses under construction or that have been built recently “that are worth some pretty serious amounts of money”.

“They seem to be picked up when they are marketed.”

An example where $1m-plus sales are running hot is the extension to exclusive Millbrook Resort, near Arrowtown, called Millbrook West.

One overseas purchaser has now splashed out about $5.4m buying four sections at Ayrburn Ridge, by the first and second fairways of Millbrook’s new nine-hole golf course.

It’s understood the owner will spend upwards of $4m building a house there.

The purchase takes resales at Millbrook after 11 months this financial year to a record $23.36m, of which $10.53m has sold at Millbrook West.

Seven out of the eight Millbrook West sites resold this financial year also fetched higher values – original prices were about $1.25m each.