Queenstown property turned the corner in mid-2012 and has now entered a growth phase, according to an annual market review.
Property services company Colliers International – which releases its review tomorrow – says the key drivers are a buoyant tourism sector, a significant rise in residential sales volumes and renewed building activity.
“The market is returning to equilibrium and in some areas a seller’s market is emerging,” the review says.
It notes monthly residential sales rose from an average 48 in 2011 to 61 last year and 67 so far this year.
“The lower price segment for residential dwellings and units (up to $550,000) has been the most active, accounting for 52 per cent of total residential sales.
“First-home buyers have been more active largely due to lower funding costs, higher bank loan to equity ratios and in some cases the ability to draw on KiwiSaver funds to assist in paying the deposit.”
The review also notes a rise in the mid-value market – $550,000 to $1.05 million – from about 26 per cent of sales in 2011 to about 38 per cent last year.
“The current historic low interest rates on offer are stimulating activity with a rise in first-home buyers and investors.
“The market has truly reached the bottom of the cycle and we expect price growth over the next 12 months.”
The review says there’s no shortage of sections.
“We estimate an existing stock of 700 vacant sites currently in the market with a further 800 sites expected to be developed over the next five years.”
The review suggests there’ll be a pick-up in building consents during the next three years due to the number of vacant sites purchased in the past two years.
Last year there were 221 dwelling consents issued compared with a 20-year average of 297 per year.
But the review predicts some rise in the value of dwellings as construction costs increase due to the Christchurch rebuild.
Local Colliers consultant John Scobie says: “We’re seeing even some builders starting to do spec houses which we haven’t seen for quite some time.”
In other sectors, the review highlights an increase in the sale of managed apartments.
Volumes dropped from a peak of 209 in 2006 to only 36 in 2011 but shot back to 78 last year.
“The apartment market is proving most attractive to overseas buyers, particularly Australian investors, who identify the benefit of investing while the market is off its recent peak.”
The review, however, doesn’t expect much capital growth in this over-supplied sector during the short to medium term.
It also notes a number of owners are exiting management agreements and renting out their units as residential apartments “due to the more consistent and generally higher returns offered from residential tenancies”.
The rural lifestyle market has also rebounded with good section and dwelling sales, the review says.
Forty-eight lifestyle homes sold last year for a median price of $1,375,000.
Thirteen of those sales were $2m-plus including a record $7m for White Shadows on Hunter Road, $6.05m and $5.5m for two Arrowtown-Lake Hayes Rd properties and $4.1m for another one on Hunter Rd.
The review also refers to a number of $5m-plus high-end residential/lifestyle dwellings planned, under way or recently completed. Recent high-end Queenstown sales include $6.4m for Ekara Lodge at The Peak, on Queenstown Hill, $3.35m for a modernised 1960s home and adjacent vacant site on Park Street and $1.8m for two combined sites by the start of the Queenstown Hill walking track.