Queenstown, Central Otago lead steady growth
Median house price increases across Otago's townships and Dunedin's suburbs may have eased into single figures for the first quarter of 2016, but "critical shortages'' and high prices persist around Queenstown, overflowing into other Central Otago towns.
Eighteen of the 27 towns and suburbs are showing more than double-figure percentage gains since the height of the last property boom in October 2007.
Arrowtown and Frankton are each up more than 30% since the October 2007 peak.
March median prices are at, respectively, $934,350 and $724,950 and first-home buyers and renters are coming under increasing pressure.
In data released by Quotable Value, national spokeswoman Andrea Rush said she expected continued upward pressure on the residential property market around Central Otago and Queenstown, and the supply of homes, investment property and holiday accommodation to be unable to meet continued high demand.
"Demand is being driven by strong tourism, continued record-high net migration and a growing awareness of Queenstown as a desirable location to purchase property in the global property market,'' she said.
Around Queenstown Lakes area, the post-peak gains remained higher.
Queenstown, Wanaka and Albert Town were in a range of 16.7%-19.4%.
However, the highest post-peak gains were Fernhill, up 26.5% since 2007; Arrowtown, up 33.3%; and Frankton, up 36.4%.
Ms Rush said with tourism booming, Queenstown was becoming increasingly well known around the world as a global holiday location.
"There's increasing demand for holiday homes from foreigners looking to invest in holiday apartments, homes or lifestyle properties after visiting the resort. Reportedly, up to a third of the homes in Queenstown are empty, as they are used for holidays,'' Ms Rush said.
In terms of the owner-occupier local market, the lower end of the market had the largest value rises.
The growth was now pushing into the mid-level and upper price brackets.
"The more affordable end of the market has been the main beneficiary of the value growth, and entry-level homes have risen by as much as 30% over the past 18 months.
"For an entry-level home in Queenstown, a buyer is now looking at needing over $700,000,'' Ms Rush said.
Fernhill was showing a "whopping 8% increase'' over the first quarter of 2016 and even Arrowtown was showing growth of 4.8%.
The median there was pushing $1 million, at $944,900, she said.
She understood more people were squeezing into the remaining rental properties around Queenstown, and there were reports of very high numbers of tenants living in flats.
Ms Rush said NZ Ski had to lease the former single working men's chalets, built for the Clyde dam project in Cromwell, to provide accommodation for between 500 and 700 ski season staff.
In the Central Otago-Waitaki area, Cromwell, Oamaru, Oamaru north and South Hill are all up on 2007 peak prices by between 10% and 14%.
Across Dunedin, the north Dunedin area outstrips any other for post-peak gains, up 25.4% since 2007.
Andersons Bay, Dunedin central, Fairfield, Green Island, Maori Hill, Northeast Valley and Wakari all had gains in a range of 12%-16%.
QV's Dunedin registered valuer, Duncan Jack, said Dunedin suburbs' rates of growth were much more moderate than those of many Central Otago and Queenstown Lakes district suburbs.
"However, compared with previous quarters for Dunedin, the rate of growth is marginally higher, if anything, than it has been, which is indicative of the steady growth pattern in home values across the city.''
The Dunedin market outlook in the short to medium term remained positive.
Strong buyer demand was still prevalent and agents were reporting strong inquiry levels, Mr Jack said.
The recent halo effect from Auckland's rapid rate of growth in home values did not appear to be having a greater-than-normal influence on the Otago market.
"However, we do continue to see demand from out-of-town investors in the Dunedin market and also from some movers choosing to relocate to Dunedin for the more affordable housing and different lifestyle the city provides,'' Mr Jack said.
Ms Rush said the demand for not only housing, but rental homes and holiday accommodation, that had led to the "critical shortage'' of Queenstown housing offered no immediate letup.
"With continued record-low interest rates, a lack of taxes on property investment compared with other countries around the world and strong investor demand, it is likely that home values will continue to rise in the regions,'' Ms Rush said.
She was seeing a country-wide trend, where home buyers and some investors were increasingly being priced out of the main centres, so looked to regional towns within commuting distance for more affordable homes or rental properties.
"It's likely that this rate of growth will continue during 2016 unless some of the measures the Government has been discussing are introduced, such as a land tax for foreign investors or a debt-to-income ratio,'' Ms Rush said.