Soaring house prices in Queenstown have the resort nipping at Auckland’s heels.
New figures from state-owned valuer Quotable Value show average values in the Queenstown Lakes district climbed 27 per cent in the past 12 months to $910,974.
The district is gaining on New Zealand’s biggest city, where average values rose 16 per cent to $992,207.
That is despite a building boom in the resort that yesterday prompted the government and Queenstown’s council to increase its housing accord targets by nearly 50 per cent over the next two years.
Harcourts Queenstown managing director Kelvin Collins says the continuing rise in house values is a function of supply and demand.
Demand is largely being driven by population growth rather than investors or overseas buyers, Collins says.
New retail development in Frankton generated about 1000 new jobs last year, bringing about double that number of new residents into the resort.
As the building industry expands its workforce to cope with the extra demand for housing, the growth becomes self-perpetuating.
The market would reach equilibrium in about 18 months, he predicts, when titles for the first stage of the Hanley’s Farm subdivision are issued, and apartment developments in Frankton came on stream.
“But in the foreseeable future, there’s no solution to the problem.”
Collins says the construction of multi-level apartment buildings close to town could help stabilise values, but conservative developers, a lack of suitable land and tight bank-lending means it is yet to happen.
Angst about rising house prices is more muted in Queenstown than in Auckland because people expect the resort to be more expensive, he says.
“We live in a pretty special part of the world, so we can’t expect property to be cheap.”
Queenstown Lakes Community Housing Trust boss Julie Scott says the entry-level price of a new home in the resort is $700,000-$800,000.
That’s causing the trust’s waiting list to keep growing.
Although council zoning changes and gifts of land from special housing area developers are positive moves, the council could do more, Scott says.
“Maybe it’s time to have another look at some plan changes that never got through, such as Arrowtown South.”
She’s also disappointed by the council’s decision to drop a proposal to hike rates on landbankers.
Scott doubts whether home owners in the resort will be pleased by the QV figures.
They still have to pay their mortgages, and would have to leave Queenstown to realise capital gains.
A joint statement from Housing Minister Nick Smith and Queenstown mayor Vanessa van Uden yesterday said housing accord targets would go from 950 to 1400 for its last two years.
Smith says the seven SHAs the government approved for the resort are contributing to a rapid increase in the number of consents issued for new sections and dwellings.
In fact, the targets are being comfortably exceeded because of a construction boom, before SHAs approved to date begin to take effect.
By April 30, the council had issued 956 consents for new sections and dwellings - well ahead of the accord’s original year two target of 800 by September this year.
When signed in October 2014, the housing accord had a three-year target of 1300 new homes by September next year: 350 in 2015, 450 in 2016 and 500 in 2017.
The revised target of 1400 for the remaining two years of the accord raises the three-year target by 35 per cent to 1750.
Otago Daily Times