The Wanaka residential market experienced unprecedented value growth over the first half of the year with median values eclipsing previous records. The regional median lifted by 16.9% in the March quarter, which was followed by a further growth of 8.4% in the June quarter, reaching a new record of $840,000. When compared with the June quarter of 2015 values have lifted by $190,000 or 29.2%.
Sales activity has also held at high levels with Real Estate Institute of New Zealand (REINZ) having recorded 280 sales over the opening six months of the year, maintaining its record high transaction volume levels witnessed over the recent years.
The ongoing strength of the market is also illustrated by the acceleration in the sales rate with the average days in which it takes to sell a property falling to 50 days, over the three months to June 2016, down from 55 days in the opening quarter of 2016. This figure was 64 days in the same quarter a year earlier.
The Wanaka residential market is driven by both the permanent local population, currently being bolstered by strong population growth, and the holiday home market. Wanaka’s population growth is amongst the fastest in the country with the usually resident population increasing a remarkable 28.4% between the census of 2006 and 2013 to 6,471, a rate of growth almost six times that of the entire country. On the other hand, the ratio of unoccupied dwellings to total dwellings in Wanaka which was 38.4% in the 2006 census, largely reflecting the share of holiday homes, remained almost unchanged at 38.7% in the 2013 census. The fact that the holiday home sector has maintained its relative share of the total inventory despite the rapid population growth suggests that demand for vacation homes in Wanaka is increasing at a similar rate and is an equally important factor in driving growth in the Wanaka market.
Wanaka is a charming resort township located alongside Lake Wanaka and embraced by the Southern Alps. It offers a perfect combination of outdoor adventures, cafés, restaurants and a relaxed lakeside environment that appeal to a wide range of visitor segments. Wanaka’s increased exposure coupled with New Zealand’s booming tourism has led to local economic growth and job creation, which in turn contributed to the growing population in addition to the increasing number of retirees in Wanaka.
While the above demand-side factors put an upward pressure on residential property prices, the supply response has, to date, been limited, resulting in tightening market conditions. In addition to the national construction resource pressures, due to the rebuilding in Canterbury and heightened construction activity in Auckland, the lack of appropriately priced accommodation for tradesman in Wanaka is a further impediment to stepping up construction.
Median price of residential sections up 32%
The tightening of residential market conditions is also reflected in section prices. Residential section prices recorded significant price growth over the last year and the median price climbed by 32% or $90,000 in the June 2016 quarter compared to the same quarter a year earlier, reaching $370,000. In terms of sales volume, the latest figures released by the Real Estate Institute of New Zealand (REINZ) indicate that the number of transactions recorded in the twelve months to June 2016 was four times greater than that recorded in 2011, the bottom of the last cycle.
Agency feedback indicates an even sharper increase in the price and sales volume, as the data does not include all “off the plan sales”. Once titles are issued full data will become available which will show an even greater lift in sales activity. Agency reports suggest that Wanaka has an estimated total pipeline of sections of 3,000 which is theoretically enough to meet its housing needs over many years. However this is not being fully reflected on the ground in terms of construction activity due to a shortage in construction resources, which often delays the commencement of the building process. As a result the current tight conditions are likely to prevail for sometime longer. More importantly, despite the sizeable pipeline of sections, there remains a shortage of good quality land within a number of the towns more favoured localities. Overall therefore, given the region’s population growth, tight market conditions look set to persist for some time while there will remain upward pressure on values, particularly within the most popular areas.
Sales Hot Spots – Wanaka Residential Properties