Queenstown property market update - October 2020

October 2020 - Queenstown real estate update

As the market evolves in the ‘new normal’, it’s impossible, as a member of a well-known real estate team, to meet people without being asked ‘what’s happening in the property market?’. The simple answer to that is ‘a lot’. The doomsday economic predictions of 6-7 months ago seem like part of history now, with the market rebounding after lockdown better and stronger than before.

This level of activity defies mainstream thinking, so it’s worth taking a moment to understand more about the factors underpinning the strength of the market. Queenstown is a little different to other NZ centres – the downturn in international tourism was expected to have an immediate flow-on effect to the property market. In reality, the domestic visitor market has offered a surprisingly large (Destination Queenstown reports a 34% increase in domestic spend) boost to this key economic sector, which in turn has helped prop up the local economy. Whilst there was an initial reduction in prices, the last few months have seen a return to pre-covid levels, with prices supported by low stock levels and a high level of buyer activity often leading to multiple offers.

Interest rates remain at record lows, with further cuts expected over the coming months. These have combined with government support packages to ease the burden on businesses, allowing them to retain staff and subsequently support property owners, alongside bank flexibility on mortgage repayments and wage subsidies, to cushion the impact of the economic changes.  

Comparing July-Sept 2019 to July-Sept 2020, the property numbers are clear – both volume of sales and median price are stronger than the same period last year.

Who’s buying Queenstown real estate?

Contrary to reports from much of the country, Queenstown property sales are reported to be largely from locals, investors and second/third home buyers opting to put money into property. For many people, the inability to spend on foreign holidays and imported luxury goods, and limited returns on deposits, has brought forward plans to purchase a holiday home in our resort town. Expat buyers in the process of moving back to NZ are utilising the newly-awakened appetite for working-from-home to purchase a home in a desirable destination rather than finding themselves tied to city living.

First home buyers in Queenstown have not seen the upswing apparent in other areas, due in part to the LVR restrictions being tighter in the district. Opportunist buyers seeking a bargain are, in general, finding themselves disappointed by the strength of the market.

The prestige, rural and lifestyle property markets are in high demand – a recent Colliers auction for a 0.8ha block with a home near Arrowtown attracted unprecedented interest, leading to the auction being brought forward and a fantastic result for the sellers. Looking at properties priced in excess of $2 million, July to September 2019 saw 17 sales, whereas the same period this year saw 23 sales. Appetite for the higher end of the property market has grown despite the economic turbulence.