Central Otago/Lakes has long been a sought-after region for those wanting to relish its world-class mix of beauty and lifestyle.
Lifestyle opportunities and growth
With increased flexibility to work remotely, Central Otago/Lakes has seen more people moving to the region to take advantage of its lifestyle. With a ski season and a relatively warm summer climate, and a plethora of adventures whichever season you prefer, it has wide appeal.
Central Otago/Lakes region has been actively planning for growth for a long period of time. The Grow Well Whaiora Partnership between the Queenstown Lakes District Council, Kāi Tahu and the Government developed the Queenstown Lakes Spatial Plan — a long-term framework to ensure social, environmental and economic prosperity. The plan will see development occur primarily around existing urban areas of Queenstown and Wanaka, but growth could also happen in smaller surrounding towns such as Hāwea, Luggate and Kingston. This is offering a wider range of property types and price points for those who choose to live or invest in the region.
Affordability
Queenstown and Wanaka are popular and well-known as expensive areas to live due to their proximity to lakes, lifestyle offerings and spacious sections.
However, Queenstown saw a 22.1% decrease in its median house price this April when compared to this time last year — $950,000 down from $1,220,000 in April 2021. Wanaka’s median price decreased 43.3% year-on-year to $635,000. Wanaka’s median price has much to do with the new development site Riverside Residence which offers affordable townhouses — increasing the volume of property sold at the more affordable end of the property market.
Of the 58 sales in Wanaka this April, 24 were townhouse purchases from Riverside Residence between the $400,000 to $700,000 price point. The median price excluding these sales would have been $1,115,000.
As the region grows, Wanaka and Queenstown continue to have good uptake in residential developments like Riverside Residence which provide smaller sites and newer homes. Other subdivisions include Northlake and Hikuwai in Wanaka, and Bridesdale Farm and Hanleys Farm in Queenstown.
Residential house prices are more affordable in the suburbs further from town, as well as in residential subdivisions. Cromwell’s Wooing Tree Estate is another new up and coming development an hour away from Queenstown. It offers smaller houses on smaller sites — ideal for those wanting to live in the Central Otago/Lakes region but unable to afford upper-end properties in central locations.
Buyer pools
Owner-occupiers are the most active buyer segment in Central Otago/Lakes although finance continues to be challenging for many purchasers across all sectors.
First home buyers in the region are scarce — particularly with tightened lending conditions making it difficult to secure finance, and the challenges now imposed by LVRs and rising interest rates.
Anecdotally, unless first home buyers have support from the bank of mum and dad, they tend to be priced out of all but the outer suburbs.
Investors have taken a step back from the market due to new tax legislation, despite rents increasing. The lack of rental properties is making it difficult for prospective tenants.
Central Otago/Lakes current market dynamics
Reflecting the trend across the country, buyer enquiry has decreased across the market, however open home attendance has been solid for upper-end, well-marketed property. Confidence remains in the higher end of the market where buyers are choosing to purchase for lifestyle and are not as impacted by finance restrictions.
In Queenstown, sales counts decreased by 10.9%. According to agents in the area, fear of missing out (FOMO) has been replaced with a fear of overpaying (FOOP). With fewer buyers in the market, there is less competition, not as much urgency and vendors have become more realistic in their expectations. Auctions continue to receive satisfactory results for vendors and the clearance rate in the area is generally higher than the national average.
A feeling of uncertainty lingers in the market around further rises to interest rates and inflation, and what it may mean for those looking to purchase or sell. Agents are hopeful that the Central Otago/Lakes region may see some more overseas buyers now that borders are open but are also aware that some Kiwis will leave New Zealand after two years of COVID hibernation or due to the rising cost of living.
Since the beginning of the year, real estate professionals in the region have worked hard with vendors to ensure their expectations represent the current market conditions and to help them reach an effective sale.
April and May are typically a quieter time in the market due to the Easter and ANZAC public holidays and school holidays along with the transition between summer ending and the ski season beginning. According to agents, it may be a challenging time to give buyers the confidence to purchase, and sellers the rationale to meet the market.
Pace of Dunedin market eases
Dunedin’s median sale price remained steady at $640,000 — an easing of price growth. Owner occupiers remain the most dominant buyer pool as investors and first home buyers take a step back from the market due to tax legislation, tightened lending criteria and rising interest rates. According to agents in Dunedin, some vendors still have high expectations for sale prices and are needing regular communication with agents to understand the change in market sentiment. April’s public holidays and school holidays disrupted an already slowing market which saw a lower level of attendance at both open homes and auction rooms.