Queenstown Lakes looks likely to be the next part of New Zealand to soon have average house values of $1 million or more, after Auckland reached the million-dollar milestone last month.
QV data released yesterday showed Queenstown Lakes average house prices rose 27.2 per cent to $930,154 in the year ended August.
Queenstown realtor Kelvin Collins, the boss of Highland Real Estate-Harcourts, says the market continues to rise. In the past three months, average house prices have risen by 6.3 per cent, stronger than the Auckland quarterly rise of 6.1 per cent.
Queenstown Lakes average home prices are now up 35.3 per cent since the 2007 market peak and Central Otago prices are nearly 25 per cent higher.
Collins predicts it would be another 18 months before the stressed market would start to show signs of easing prices, when Jack’s Point sections hit the market.
Until then, he wouldn’t be surprised to see the average house price slip above $1m.
There were more sales at the higher-than-$1 million mark than below $700,000 in Queenstown Lakes, he says.
People in the lower price bracket can’t afford to sell and buy a more expensive house, so they are
As Queenstown Lakes house prices rise, people there are being forced to Cromwell.
Instead of paying $800,000 for a house, through the Kawarau Gorge they can buy a family home for about $500,000.
Cromwell people, meanwhile, are moving to Alexandra for a bargain – where they can buy a home for $350,000, with people being more prepared to commute to their jobs from their more affordable houses.
Central Otago average house prices rose 19.4 per cent to $395,861.
In Queenstown Lakes, no one is building houses at the cheaper end of the market, Collins says.
A house being built in Mosgiel for about $600,000 is costing up to $900,000 in Queenstown Lakes.
The soaring population growth is putting pressure on house prices. Queenstown Airport’s staff numbers rose last year from 350 people to 500, adding 150 people to those already wanting houses.
The retail complex at Frankton Flat employed about 1000 people. People are paying whatever they could afford to get into a house, Collins says.
Asked who was buying the houses at the top of the market, Collins says tradespeople, those in the construction industry and middle managers.
People in the service industries can’t afford to buy but most of them are happy to flat for about six months to a year, have a good time and move on.
But the pressure on the housing market has sent rentals rising 20 per cent in the past year.
Queenstown Lakes has not yet had the second home or lifestyle home surge in buying, which is probably helping to keep prices down, Collins says.
But as people continue to do well around New Zealand and overseas, they would still want to come to Queenstown.
Low interest rates are the new normal and home prices have adjusted to a new level of affordability, he says.
People are trying to buy better quality houses instead of buying something needing $5000 a year of maintenance. The extra $5000 is going towards higher mortgage repayments.
The Auckland house price market increased 15.9 per cent year-on-year, QV data released yesterday shows, pushing average values of houses in the Auckland region above $1 million.
Auckland values are now 85.5 per cent higher than the previous peak of 2007.
Otago Daily Times