Over the last twelve months New Zealand has seen strong net migration, an improving labour market, and the Canterbury rebuild driving a robust domestic economy. Despite the strong economic backdrop, a lack of inflation in the economy led the Reserve Bank of New Zealand (RBNZ) to cut interest rates in July by 25 basis points to 3%. This saw local banks competing to offer the lowest mortgage interest rates seen in recent years.
Population growth in New Zealand has been bolstered by record levels of migration which has, in part driven significant population growth in Wanaka. New residents are drawn to the town due to its great mixture of outdoor adventures, restaurants, top facilities, unique events and laid back lifestyle. According to Statistics New Zealand the population in Wanaka grew 28.4% between the census of 2006 and 2013 to 6,471, a rate of growth well ahead of the entire country, where for the same period population increased 5.3%. The Queenstown Lakes region is predicted to be the fastest growth region in the country, with mid range projections that the population will hit 50,600 people by 2043, equating to a 70% increase.
Wanaka’s location alongside Lake Wanaka being the gateway to Mt Aspiring National Park, its proximity to top ski fields among other outdoor adventure sports, coupled with its laid back lifestyle leads the town to be an aspirational location for homebuyers.
The residential median price for Wanaka continues to hold at high levels in the quarter to June 2015. The median stood at $648,000 according to the Real Estate Institute of New Zealand (REINZ), this equates to a $73,000 or 12.7% increase from the same period a year earlier. After a post global financial crisis (GFC) lull, sales volumes picked up again at the start of 2012 and have been steadily trending upwards since, with the peak in sales each year being the traditional summer holiday season from January – March. Residential home sale volumes have increased slightly, up 3.47% with 64 sales in the three months to June 2015, compared with 59 sold in the same period twelve months prior.
Section sales in Wanaka are undoubtedly on the increase, although the median price for sections has been relatively stable following a decline in both prices and sales volumes post GFC. Apart from the final quarter of 2011 where the median price hit $577,500 which was caused by very small numbers of sales transactions affecting the median, sales of sections have generally been between $275,000 – $295,000 for a number of years since 2008. Sections sell from a low of $175,000 for a 400m² site and progressively increase depending on size, location and views.
The evidence of untitled ready to build on sections is now very real within the Wanaka real estate market. New developments are coming to the market with the likes of the Alpha Ridge series, Kirimoko Park Stage 3 and the soon to be released Peak View Heights project all of which will be sold pending title. All of these developments are receiving a large amount of enquiry and contracts being entered into.
The Kirimoko Park development has only a small number of titled sections available with Stage 3 titles (yet to be released) not due for an estimated 9 months.
Due to the shortage of homes for sale there is increased demand for sections with sales reaching record levels for both titled and untitled lots, some of which could be 12 – 18 months before titles are issued.
When comparing percentage of sales in price brackets for Wanaka in the pie charts pictured, for 2010 and 2015 to date, the change is highly visible. In 2010 almost 70% of all sales were under $600,000, compared with only 41% now. The $400,000 to $600,000 price bracket continues to be the largest bracket in which property is being sold in, reducing slightly, with 46% in 2010 down to 33% of sales currently, but the gaps opening up are obviously in the higher value sales brackets. Most notably the $600,000 – $800,000 bracket has doubled in size over five years. Sales above $600,000 now constitute nearly 60% of total sales concluded in Wanaka following continued competition for property due to a booming population in the area, with a number of residential developments underway to cater for this demand.