What’s happening in the Queenstown apartment market?
Five months into 2017, there are some clear trends in evidence around Queenstown apartment sales which give us a good picture of the market for this year.
Starting with sales numbers – January-May 2017 the number of apartment sales transacted is DOWN 24% on the same period for 2016. This can be attributed in a large part to listing volumes also being significantly down, however in addition the increased bank lending restrictions are hindering the sales process (more on that later).
Onto apartment sale prices - January-May 2017 apartment sale prices are UP 16% on the same period for 2016. This goes in line with the decreased listing volume – less available properties means more competition for the ones which are on the market, pushing prices up.
And finally days to sell - January-May 2017 apartment days to sell are DOWN 40% on the same period for 2016. That’s a huge change in market dynamics and is enabling apartment sellers to make fast moves.
Economic indicators are pointing to this being the peak in the property cycle. Whilst we’re not anticipating a significant slowdown anytime soon, we are expecting to see prices flattening. Essentially, we see the current market as experiencing a plateau for these reasons:
What’s speeding the market up?
- High tourism growth – generating solid returns for apartment owners
- Low numbers of listings coming to the market generating competition among buyers
- Massive construction activity, both residential and commercial
- Development of enhanced (and much needed) infrastructure
What’s slowing the market down?
- Toughened bank lending – offshore buyers are finding it increasingly hard to secure mortgages due in part to the tight restrictions instigated by money laundering fears. Apartment lending has always been under tough scrutiny but is even harder now when the banks are preferring new residential build loans over anything else
- Inability to sustain the levels of growth seen in 2016 – a ceiling seems to have been reached
- Fears of a global slowdown and media reporting of a ‘property bubble’
Things to be aware of
- There are currently a large number of apartments which may be released onto the market in the next 12 to 24 months once some remedial work is carried out on leaky issues. It’s good to be aware of it, as supply and demand economics dictate that IF the market does get flooded with listings, prices may well be negatively impacted
- Developers are back – developers from the pre-GFC days and also new individuals and consortiums are paying often premium prices for sites suited to new developments. There are a huge number of resource consent applications either approved or up for approval with Queenstown Lakes District Council
WANTED by hoamz apartment buyers
Following on from the market changes above, we have buyers literally lining up for units and apartments in Queenstown. Complexes close to the town and lake and showing good returns (anything with a 5%+ return is seen as very attractive) are the most in-demand but we’re getting strong traction on those further afield too. If you’ve been holding off, waiting for the market to peak, we strongly recommend you get in touch today for an appraisal of what yours could sell for now – we may already have the buyer waiting.