Queenstown holds its own in tricky property market

Sunday, 24 November 2024

Queenstown buyers are attracted by the great outdoors and magnificent views. This view is from a property with development potential at 46 Man Street. It is listed for the first time in 40 years by NZ Sotheby’s International Realty.

Largely immune from market vagaries, Queenstown is seeing an increasing number of properties bought by cashed-up buyers.

When you bore down into the detail provided by CoreLogic NZ figures, it’s clear the Queenstown-Lakes District remains a “prestige” market for both Kiwi and offshore buyers.

This property at 6 Caldwell Lane, Lake Hayes, has an RV of $7.5 million. It is marketed by Walker & Co.

CoreLogic’s latest Pain & Gain report for Q3, 2024 shows that nationwide the proportion of properties being resold at a loss climbed to 9.8% in the September quarter, the highest level since Q2 2015, up from 8.2% in the previous quarter. And the median resale profit nationwide fell to $269,000 in Q3, down sharply from $305,000 in the previous quarter.

Queenstown, however, continued to outperform, with only 2.5% of resales made at a loss, and a substantial median profit of $464,500.

This house at 5 Edinburgh Rd, Queenstown sold for $6.3m in September.

CoreLogic chief property economist Kelvin Davidson says Queenstown has been “pretty resilient” right through the post-Covid period. “Compared to the post-Covid peak of late 2021-early 2022, Queenstown median property values are down 7%, but Auckland is down 23% and Wellington is down around 24-25%.

Recent sales confirm there is a strong presence of wealthy buyers. Just this week, for example, NZ Sotheby’s International Realty’s (NZSIR) “sold” list included two properties over $6m. One, at 5 Edinburgh Drive, Queenstown fetched $6.3m, and another, at 142 Littles Rd, Dalefield went for $6.2m, while 1-3 Highlands Close in Queenstown sold for $4.078m.

And it’s these views that are sought-after.

“In the past couple of years in Queenstown-Lakes, we have seen a rise in activity from multiple property owners buying their next one without a mortgage,” Davidson says. “We don’t categorically know where these people are based, but these wealthier buyers, possibly from out of town, have become a stronger presence, and are probably either looking at renting these properties or using them as holiday homes.

“Mortgaged investors have slid back a bit, however, as rental returns aren’t taking a big enough slice off the mortgage.”

Davidson says the figures also show some of the cash buyers are “new to market”, which means their names are not on other property titles in New Zealand. “Some of them may be foreign buyers, from Australia and Singapore - investors not using a mortgage. This group has became more important [in percentage terms] since 2022.

“In 2022, the market share in Queenstown-Lakes by ‘multiple property owners – cash’ and ‘new-to-market’ buyers was 30%. This year that share is 35%. It has stepped up another notch. This figure does not include locals moving who may be cash buyers.

This property 26 Flynn Lane, Arrowtown is listed for sale with Walker & Co, with offers invited over $2.2m. The median property value in Arrowtown is $2,460,600.

And while first home buyers take the dominant share of the market in our big cities, in Queenstown their share is lower at 17%.

Mark Harris, managing director of NZSIR, says the firm has noticed an 80% increase in year-on-year overseas visitors to its website from countries including Australia, Singapore and the USA.

Originally two separate cottages, this beautifully restored home sits on a former mining reserve beside the Arrow River. It is listed with Bayleys.

Myles Green of NZSIR Queenstown, who listed the Edinburgh Drive home, says the property was bought by a party from Sydney who wanted a “quintessential lock-and-leave holiday home”.

“Queenstown hill is always popular with Australians in the eastern states, and Aucklanders. These people usually know Queenstown quite well and they keep a close eye on the market. Thanks to the direct flights, they visit often.

“Queenstown is a four seasons town and the skiing has always been a drawcard. They come here for that, and end up spending a summer here and enjoying that time just as much if not more. They’re here for the great outdoors, the mountains and beautiful scenery, the biking and hiking as well as the skiing. And they also love the cosmopolitan nature of the town.

There are great views of the mountains from the apartment.

A dual key apartment, B2-315/16 Mountain Ash Drive, Frankton, Queenstown, is listed with Remax Revolution for $735,000.

“There are typically only a few of these type of listings at any one time and what is available does turn over at a reasonably steady rate.”

The latest Real Estate Institute of NZ (REINZ) report notes there has been more engagement through open homes and mortgage applications in the region.

“These all suggest positive signs for market recovery through the summer, although local agents cautiously predict the second quarter of 2025 will be where significant changes may happen.”

Current CoreLogic median property values for the five key Queenstown areas are $1,647,150 for Queenstown, $1,766,200 for Lower Shotover, $1,548,700 for Arthurs Point, $2,010,050 for Jacks Point, and $2,469,600 for Arrowtown.

However, there are properties available in Queenstown for a lot less. Ketan Patel of Remax Revolution is selling a dual-key apartment in Mountain Ash Drive, Frankton for $735,000.

For that money you get “two-for-one”, a studio and a one-bedroom apartment under a single title, plus two basement car parks and “picturesque views of the Kawerau River and Remarkables”.

There is an obvious appeal for investors and people living out of town who love the idea of a lock-and-leave holiday home. The two apartments are currently rented for $950 weekly (total), and Patel says the rent price is expected to increase.