By LUCY WORMALD
Queenstown house prices are bucking the national trend.
As residential property prices tumble across New Zealand, the Queenstown Lakes is dancing to the beat of its own drum, with values increasing.
But one property consultant warns that bubble may burst.
According to the latest data from the Real Estate Institute of New Zealand, prices have held strong in Queenstown — up 41.5% year-on-year when compared to May last year, reaching a record median of $1.5 million.
Over the Crown Range, Wanaka’s median house price increased 74.2% year-on-year to $1,700,500.
Colliers Queenstown sales consultant James O’Hagan says the reason the region’s bucking the national trend comes down to supply and demand.
‘‘Some of those [value decrease] issues are relevant to markets like Dunedin and Wellington … but as a sub-market of NZ, Queenstown is a very different market with different dynamics — we are far more exposed to more discretionary income spending and lifestyle spending.’’
He says the supply and demand challenge for people wanting to live in Queenstown means house prices in the region aren’t seeing the easing of pressure other markets are experiencing around the country.
The resort’s housing shortage, coupled with the return of international travellers and a strong buyer market from Australia’s east coast, is increasing demand and sees people prepared to pay premium value prices, O’Hagan says.
Further, Queenstown remains an ‘‘aspirational place’’ to live in terms of lifestyle and geography, and has historically been a strong capital growth market place.
While the residential market in Queenstown isn’t seeing a price drop, there has been a shift towards buyers taking their time in purchasing.
‘‘What’s happening as an effect of that is that sales are taking longer to achieve and there are maybe more conditions associated with them … whereas those factors weren’t necessarily in play last year when people understood that, the way the market was moving, they needed to act with urgency,’’ O’Hagan says.
The latest QV House Price Index similarly shows Queenstown’s home values increased more this quarter than any other main centre in NZ.
Between March and the end of May this year, the average home value in Queenstown increased 4.5% on the previous quarter to $1,666,755.
However, QV property consultant Greg Simpson says while Queenstown appears to be the exception to a general downward trend across other main centres, the rate of growth for home values has in fact slowed in the region.
He suspects due to the adverse effects of lockdowns, the resort’s ‘‘probably not as far along in the cycle as most other main centres’’, and expects residential market activity will slow, and prices will likely fall, as they have elsewhere.
Simpson also expects rising interest rates and tightening credit conditions to have a cooling effect on Queenstown’s housing market soon.