Queenstown’s real estate market should snap out of a five-year trough late this year, agents’ spokesperson Kelvin Collins says.
Collins – spokesman for the local branch of the Real Estate Institute of New Zealand – predicts confidence will return to the market, but not before another tough six months.
Queenstown was coming out of a five-year consolidation phase, the longest it’s ever experienced, Collins says – “but that followed the longest period of growth we’ve ever had, 2001 to 2007”.
“I think people are just starting to think, it’s time to move on and make some decisions.
“I think towards the end of the year they’ll have more confidence to buy and we’ll see a rise in sales volume.”
People’s confidence has been knocked during the past three years, Collins says.
“As a country we haven’t felt very good about the economic situation and every time we start getting a bit of a lift we get a kick in the arse from Europe or from somewhere else.
“Buying a house is a big decision – in times of uncertainty, you hold back.
“Hopefully, Europe sorts itself out, nobody pushes a button in Korea to let a bomb off and everything’s going to settle down.
“We’re getting to a phase where I think people are getting tired of living with the in-laws or tired of flatting with 10 people, and they’re going to start buying again.”
House-buying demand would also come from the Wakatipu’s annual four per cent population growth, Collins believes.
“That’s about 700 or 800 people a year coming to the region. On that basis, we need 250 to 300 houses every year to cater for that demand.”
With 10,000 properties in the Wakatipu, there should be 1000 transactions a year, Collins believes.
Instead, only about 580 houses and sections sold last year, he says.
Already, first-home buyers were becoming more active.
Collins: “If you look at the median house price, that’s been relatively low, and that’s an indication that the bottom end of the market has been more active than the middle to upper end.”
Queenstown’s Resort Property Rentals, in its pre-Christmas newsletter, noted that rental properties are increasingly being snapped up by first-home buyers looking to live in them.
“If this trend continues it could mean less rental stock is available, pushing prices up,” the newsletter says.
Collins says at the top end of the market, ‘X’ factor properties have been attracting multiple offers and there’s been a lift in values.
Otherwise, Collins doesn’t believe prices will rise till there’s first been a lift in activity.
Come next year and 2014, he suggests there’ll also be an increase in local building costs due to price pressure from the rebuilding of quake-hit Christchurch.
“You may not get a tradesman here to build, so therefore we’ll have a shortage of stock and that will push existing property up.”
Collins notes the lift in section buying at Jack’s Point.
But he also believes the market would welcome the proposed 730-section Shotover Country subdivision, near Lake Hayes Estate.