The evolution of the Queenstown rental market image 1

The evolution of the Queenstown rental market

Queenstown rental property - a update for 2022

Wednesday 13 Apr 2022

It came as no surprise that Queenstown’s residential rental market suffered a significant downturn in the wake of the initial 2020 Covid lockdowns. Uncertainty, job losses and a decrease in demand for Queenstown’s primary tourism industry led to an approximately 20% fall in rental prices. Two years on, we take a dive into the current rental market and offer insight into what 2022 may bring investors and tenants.

Relocation, relocation, relocation

From late 2021 there’s been evidence of a subtle change in demand in Queenstown’s rental market – higher end, luxury properties are sought-after by tenants as an influx of management-level workers move to town. Following the extended Auckland lockdown last year, relocation became the trending topic for property management companies, as new-to-town tenants opted to rent quality homes whilst planning their next move or looking to build. Queenstown property management company, Pure Property, cites a desire to escape NZ’s main cities, opportunities to work remotely and a decreased appetite for commuting as reasons for the high volume of enquiry they are receiving on premium rental offerings. Landlords have also in many cases chosen to retain long-term tenants for quality properties, opting for the security of predictable income and minimal outgoings over the flexibility and fluctuating returns of short-term letting. This situation may evolve further as tourism starts to escalate later this year.

Seasonal demand

Queenstown’s traditional seasonal demand is expected to be challenged this year by a lack of supply as borders open and tourism and hospitality workers return to town to cater to the visitor market. The past two years have seen a number of former rental properties shift into first home buyer ownership, leaving a reduced volume of rental stock for seasonal tenancies. Many landlords took advantage of 2021’s burgeoning prices to sell their asset, often seeing a property removed from the rental pool on a permanent basis. Government regulations, including the Healthy Homes Act, have placed pressure on owners of older rental homes to upgrade their properties.

These pressures have seen relatively modest increases in median rental price for Queenstown over the last 6-12 months. Pure Property Business Manager, Mark Blake, anticipates a gradual increase through to the end of 2022 as demand for rental property grows following the expected uptick in tourism. A major shift around in tenancies (tenants choosing to move from older stock to more modern homes) after the 2020 lockdowns was followed by a protracted period of stability, with tenants choosing to stay in properties for longer terms. Residential landlords have in many cases seen the value of solid occupancy over significant rental hikes, preferring incremental increases over the risks of a vacant asset. Periodic tenancies are also proving popular, offering flexibility to both owners and tenants who may be reluctant to commit to fixed terms after the volatility of the last two years. 

Looking forward through 2022, the rental market is expected to showcase extremely low vacancy levels as demand for homes increases through the year. Population growth projections support a steady increase in residents, leading to rents rising at a comparatively manageable level for tenants whilst still adding value for landlords. For more information on the rental market, please contact your Colliers Sales Consultant or Pure Property.

Article by

Sue 2

Sue Charlesworth

Sales Consultant

Queenstown Office

Category tags