By PHILIP CHANDLER
Despite continuing Covid-19-induced uncertainty, Queenstown’s residential property market’s proving to be remarkably resilient.
That’s the key finding from Colliers International’s just-released ‘Otago Market Review and Outlook 2020/21’.
The firm’s local registered valuer/property consultant Heather Beard says: ‘‘In the short term, reliance on domestic travel and related spending levels, plus a tightening on funding, will likely continue to create a degree of uncertainty in the property market.
‘‘However, the Queenstown property market has proved to be remarkably resilient with current market sentiment and council population growth projections showing confidence in Queenstown’s longer-term prospects.’’
The government’s $85 million investment in local ‘shovel-ready’ CBD projects is seen as a ‘‘silver lining’’ that’ll assist in Queenstown’s recovery and further growth once international borders reopen.
Local-based Colliers Otago managing director James O’Hagan says an expected downturn in the housing market didn’t materialise, at least not to the extent predicted.
‘‘Sales volumes are down for the year due to periods of inactivity, but market transactions have been picking up significantly post-lockdown.
‘‘The market has been buoyed by low interest rates and pent-up demand, particularly from first-home buyers, holiday home investors and people relocating for lifestyle reasons.’’
There appear to be almost two markets at the moment — the sub-$1.5m market where there’s been ‘‘a consolidation’’ of property values, and the higher end, where there’s strong growth.
Beard: ‘‘In the $800,000 to $1.2m value range, we’re not going to see too much more value appreciation in the short term.
‘‘We are seeing a bit more risk in the home-and-income market, which is generally in that $1m-$1.2m value range where people are locked into longer-term interest rates at higher levels and they’ve had their rentals decreased.’’
Short-term rentals had decreased with the drop in tourism, ‘‘but then all the Airbnb rentals entering the long-term market has seen an increase in supply there, which has decreased the rentals’’.
There’d also been lower demand due to transient workers leaving Queenstown.
The report says median weekly Queenstown Lakes rent in the six months to the end of September was $545.85, down from $646.67 in the six months to the end of March.
Beard says banks are imposing ‘‘some tighter lending restrictions in the Queenstown region compared to other regions — it’s just viewed as a riskier area’’.
However, that varies bank to bank and day by day — ‘‘it sounds like they are reassessing that pretty regularly’’.
The report also notes the end of the mortgage holiday scheme in March will affect about 12 per cent of Queenstown mortgages.
On the other hand, values in the $1.5m-plus sector are holding, with strong demand, while continued growth’s expected in the high-end market as expats return and the Overseas Investment Office approves ‘boltholes’ for foreign buyers.
Between June and last month there’d been 20 sales over $3m, the report notes.
CBD tenancy deals tapering off
Covid-related rental abatements have been common in Queenstown’s CBD, the Colliers report states.
‘‘Over the last couple of months, we’ve seen some deals where there’ll be an incentive, so you might go for a three-year lease term but you get three or six months rent-free at the beginning,’’ Beard says.
‘‘But the day we went to print, we saw a really strong lease come through at pre-Covid levels with no incentive.
‘‘A lot of landlords gave discounts over the lockdown period, and some are still going on, but most seem to be tapering off by the end of the year.’’
Frankton retail has ‘‘relative rental affordability’’ compared to Queenstown’s CBD, the report says, but there’d been ‘‘some consolidation of premises’’.