Queenstown is in a “perfect storm” of housing supply and demand, posting one of the largest annual increases in property values across the country.
Just as Auckland created a “halo effect” in recent months, as its high prices forced buyers out to regional destinations, Queenstown’s ballooning prices seem to have similarly made other Central Otago towns more attractive to buyers.
Nationally, the Quotable Value price index for April has the national price up 12 per cent on a year ago at $568,000.
Auckland is up 16.5 per cent at $942,760, Queenstown up 17.8 per cent at $842,600 and Dunedin up 9 per cent at $317,700.
The average value of Central Otago was up 13.5 per cent at $366,400.
QV national spokeswoman Andrea Rush says growth is spreading to nearby centres such as Wanaka, Cromwell and Clyde as people looked beyond Queenstown for more affordable housing.
“There is strong growth occurring in Central Otago, with the Queenstown market experiencing a perfect storm between a massive shortage of tourist accommodation and rental accommodation for people living in the town, as well as huge demand for homes, holiday homes and investment property.”
Central Otago and Clutha districts are both up more than 5 per cent during the past three months.
“Meanwhile, it appears investors have also returned to the Invercargill market and values are on the rise there, too,” Rush says.
National property values are now 37 per cent above the previous market peak of late 2007.
Home values increased in all the main centres and many of the regional centres during April, as the promise of continued record low interest rates provided confidence in the housing sector.
Of the 100 areas covered by QV, only the Buller and Grey districts showed annual price declines, while 45 per cent of the 100 areas posted double-figure gains of up to 27 per cent, enjoyed by southwest Hamilton.
ASB economist Kim Mundy says while housing would influence the Reserve Bank’s willingness to cut the interest-driving official cash rate, there is a growing likelihood the bank would “ratchet up” its lending restrictions to dampen the housing impact of still-lower interest rates.
She expects the Reserve Bank to cut the OCR by a further 25 basis points next month and in August from its present 2.25 per cent record low.
Otago Daily Times