A strongly performing economy, which has lead to job creation, low interest rates, the attraction of the area’s lifestyle advantages and increasing amenity have seen Queenstown’s population expand rapidly over recent years with further significant growth forecast.
Recent years have also seen a marked change in occupation trends within the town. Traditionally Queenstown’s population would vary significantly on a seasonal basis, peaking during the ski season and falling either side of it. Recently however Queenstown has become a year round tourism destination which has seen the fluctuations in population becoming far less pronounced. As the town grows it also generates more non tourism based jobs as there is a need for a larger service sector.
The above factors have combined to put pressure on the availability of housing, both for rental and owner occupation, forcing up rental and capital values and driving an increase in section sales and development activity.
The latest Census figures show that Queenstown’s population has reached 28,224, an increase of 5,268 people or 22.9% since 2006. the rate of growth eclipses that registered in both the Auckland Region, 8.5%, and of New Zealand as a whole, which grew by 5.3% over the same time period. Population growth across the Country has accelerated over the last year due to record breaking migration levels to New Zealand of over 50,000 people in 2014. While Auckland is the main recipient of immigrants the last two years has seen Central Otago attract far more long term migrants than has been the case over recent years. With the region having a net gain of 1,475 people in the year to January 2015 compared with 42 in the 12 months to January 2013.
While these record levels of migration will not be maintained over the long term Queenstown Lakes District is picked to have the fastest population growth between 2013 and 2043. Projections published by Statistics New Zealand are for between 1.2% and 2.3% annual growth for the area until 2043 which while lower than the 3% annual growth recorded for the 2006-2013 Census period will still run ahead of the national average.
Catering for the influx of residents and tourists alike, Queenstown Airport continues its strong performance with December international passenger numbers 34.4% higher than the corresponding period last year. Total passenger numbers were up 16.3% with an increased summer flight schedule, with as many as eight international flights per day, and the addition of Jetstar’s Gold Coast service, making access to the resort town progressively accessible. With the busiest and most lucrative summer on record in Queenstown, immigration rules were relaxed in a trial temporary move. Until June 2015 employers will no longer be required to check whether eligible New Zealand workers could fill vacancies in the resort which appears to be no longer just a winter season resort town.The development sector is responding to this uplift in demand, and between 2006 and 2013, development of dwellings has kept pace with the population growth. The total number of dwellings in Queenstown Lakes District has increased by 23.8% taking the total to 15,975, a total which includes both occupied and holiday homes. The rate of construction has been maintained post Census with numerous new housing developments underway, which we will dicuss in further detail later.
Demonstrating a continued economic recovery, the level of building consents has had a marked increase since mid 2013 and continues to climb to the highest levels seen since the Global Financial Crisis (GFC) in 2008. Building consent numbers peaked at 171 in the Queenstown District in the June 2014 quarter, and lulled slightly at the December 2014 year end, to 161 consents. Since June 2013 where consents near doubled from the quarter prior, building consent numbers have been comfortably above the long term average number of 114.
Queenstown Median Price Hot Spots
Unsurprisingly the rising population and demand for housing in Queenstown has put pressure on housing stock and, in turn, both rental and capital values. As stated above the population make-up of stable residents has increased noticably which has led to far less ‘churn’ within the rental market. The result is that residential rental agencies are reporting a real shortage of properties for rent with no vacancy. This has put landlords in a strong negotiating position with tenants now typically being locked in for longer term leases, usually twelve months, with rental prices up 10-15% over the past 2 years, in a similar pattern to the Auckland rental market.
The latests residential sales statistics published by the Real Estate Institute of New Zealand (REINZ) show that the residential property market in Queenstown continues to perform strongly. Over the period between December 2011 and December 2014 the median sales price has increased by 15.9% from $448,750 to $520,000. The median price reached its peak in the September 2014 quarter at $546,500 and 68 days to sell.
Sales volumes have been climbing steadily since the low of 2008, when the impact of the GFC and New Zealand’s recession was at its greatest. During the 2008 calendar year REINZ recorded only 630 sales across the Queenstown region. Sales activity climbed steadily from this point with 901 sales being recorded in 2013. The 2014 figure falls slightly short of the 2013 figure, which is likely down to the Reserve Bank of New Zealand’s (RBNZ) loan to value ration (LVR) restrictions being implemented in October 2013 but also a shortage of listings being brought to market. Weeks to sell inventory currently sits at 46.9 weeks, which is historically low when the long term average is 86.6 weeks to sell all stock. The cause of this is sales numbers are up with 119 sales in January 2015, and total new listings are lower at 233, resulting in total inventory being about 500 less properties than usually is on the market in the region.
Days on the market figure bottomed out in the December quarter of 2013 with homes taking on average 56 days to sell. This stretched out to 71 days to sell in the final quarter of 2014, with the long term average in Queenstown being 63 days on the market.
While the relatively small number of sales recorded in Queenstown tend to make quarterly medians volatile, as illustrated in the table above, save fluctuations the median has trended upwards since mid 2013 after a plateau since 2008, reaching $520,000 in the December quarter of 2014.
Glenorchy, a settlement to the north west of Queenstown on the shores of Lake Wakatipu, experienced a 40.5% median increase from 2013 to 2014, with affluent Queenstown peninsular suburb Kelvin Heights growing 31% in twelve months.
Queenstown central also saw significant increases in its median sale price from $450,000 in 2013 to $533,000 in 2014, an 18.4% increase. Fringe suburb Fernhill increased from $450,000 to $465,000 in 2014 and new development areas Lake Hayes and Jacks Point rose just over 2% in the past twelve months.
Unsurprisingly the housing shortage has resulted in a significant lift in section sales with purchasers looking to secure sites for new homes. The sales are occurring across all value bands. Agency reports advise of a noticeable lift in section sales within the exclusive Jacks Point development where 40 sections have sold since August last year, with the majority of buyers coming from Queenstown and neighbouring regions. Entry level sections are available from $200,000 to $340,000 for between 500m² and nearly 2000m² sites, with room for only 1,300 homes when the development is completed.
Among a number of new residential developments in the Queenstown area, Bridesdale Farm in its initial release weekend, had 60 of its total 147 sections sold pre title, with titles expected in 14 months time. Bridesdale Farm is designed to have a proportion of affordable homes as outlined in the governments Housing Accord. With strict design guidelines, purchasers can choose from nine different architecturally designed plans for the sites, each site is allocated a garden plot in the Bridesdale Farm Garden area. All sites are approximately 500m², and will be on freehold titles with no body corporate fees. Shotover Country is another affordable new residential development neighbouring Bridesdale Farm. This was sold directly by the developer with no design guidelines and most purchasers being first home buyers. Sections in Shotover Country start from 500m² fetching above $200,000 and when completed the development will house 700-900 dwellings.