otagoharcourtsotago.co.nz/wp-content/uploads/2018/07/... · economic growth. the property market...

With you all the way.

OtagoMarket Report

edition number two

2018

Highland Real Estate Group LtdLicensed Agent REAA 2008

VOT E D N E W Z E A L A N D ’ S M O ST T R UST E D B RA N D S I X Y E A RS R U N N I N G

OVERVIEWActivity in Otago’s residential property market in mid-2018 has been influenced by several factors, including the new residential tenancy laws for landlords, upcoming changes to the Overseas Investment Amendment Bill and the traditional winter lull. The lack of supply across the region has been amplified amid market uncertainty, causing reluctance amongst sellers to bring their property to market. Demand has endured the scarcity of inventory and remained high, driving sale prices towards seller expectations and for some regions, record high median dwelling prices.

The Overseas Investment Amendment Bill (OIA) is causing market hesitation as Labour seek to make changes which could see foreign buyers pushed out of the market to make property more affordable for New Zealanders. In a poll last year by the Property Institute, New Zealanders ranked foreign buyers as the biggest determinant of housing prices – however recent data shows foreign buyers accounted for only 3.3 per cent of buyers in the March quarter. Despite expectations the reorient of policies will not affect much of Otago - Queenstown and Wanaka are predicted to feel the impact due to their heightened foreign home ownership. Queenstown is both the most unaffordable place to live in New Zealand and has the highest rate of foreign home ownership at 9.7 per cent. The proposed OIA has caused foreign backers of developments to pull out of some deals, though recommendations have been issued by the Finance and Expenditure Committee which could offer some exemptions.

Labour’s Kiwibuild programme officially started July 1st 2018 – a Cabinet paper released to Newshub, outlines that if the houses are delivered in proportion to each region’s need, 2,229 will be built in Queenstown Lakes and 851 built in Dunedin.

In contrast to the common perception that winter is a slow time to sell, there’s unlikely to be a better time to test the market as you’ll join the trend of rising values in Otago and benefit from strong buyer interest with very little competition.

OTAGO MARKET REPORT edition no.22018

We use median values rather than average values in line with REINZ’s recommendations. This is because one anomalous figure can skew the average value whereas the median “mid-point” value is less subject to irregularities. Medians are a more accurate reflection of the property market.

PROPERTY MARKET

OVERVIEW

Otago region median house prices compared with New Zealand

• Government policy uncertainty restricting property supply

• Queenstown Lakes and Dunedin could benefit from KiwiBuild homes

• Chance to achieve premium price during the winter period

Source REINZ

Critical lack of supply has long been the concern in Queenstown, demand remains strong and still far outweighs stock levels. The ratio of buyers to sellers further drives up the values, with the median dwelling price remaining one of the highest in the country at $917,000.

A booming tourism industry and increasing permanent population, neither of which look to be slowing down, are also credited with driving sale prices towards seller expectations. Commercial and residential construction continue to bring permanent residents in to town to live and work, adding to the pressure on accommodation and infrastructure.

AirBnB listings have been singled out as contributing to affordability issues, “whole house” AirBnB listings in

Queenstown make up 14% of the total housing stock. To alleviate shortages and rising prices, a number of hotels have been built or are under construction in the area.

Large commercial projects are gaining attention in Frankton, with big names heading to the retail parks.

Marking a major milestone in Queenstown’s largest housing development, building has started in Hanley’s Farm. Projected to have 1750 sections, huge interest has been expressed due to the “latent demand for sections of all types and configurations” in Queenstown.

View online at www.harcourtsotago.co.nz

QUEENSTOWN MARKET

3

The Statistics

$917,000$577,500$800

MEDIANDWELLING PRICE

MEDIANSECTION PRICE

MEDIANWEEKLY RENT

OUTLOOK FOR THE REST OF 2018

WHERE ARE OUR BUYERS FROM?

Median sale prices have been calculated from Jan- June 2018Source REINZ

VOLUME OF SALES

NU

MBE

R O

F SA

LES

6 MONTHLY 2008- 2018 SOURCE REINZ

JUN

-08

DEC-

08

JUN

-09

DEC-

09

JUN

-10

DEC-

10

JUN

-11

DEC-

11

JUN

-12

DEC-

12

JUN

-13

DEC-

13

JUN

-14

DEC-

14

JUN

-15

DEC-

15

JUN

-16

DEC-

16

JUN

-17

DEC-

17

JUN

-18

0

100

200

300

400

500

600

SECTIONSDWELLINGS

More than

2 MILLION passengers passed through theQueenstown airport in the last

12 months

• Booming tourism industry increases pressure on accommodation• AirBnB listings make up 14% of the total housing stock• Building started at Queenstown’s largest housing development

NORTHISLAND

OVERSEAS

LOCAL

REST OF

SOUTH ISLAND


Wanaka continues to see strong economic growth. The property market remains buoyant, producing a higher volume of written sales in May 2018 in contrast to the same month of 2017. The May median sales price has also increased slightly year-on-year from $860,000 to $865,000 but the median dwelling price in June is slightly lower due to a number of sales in Cardona.

Record low temperatures have kick started a busy winter period as international and national visitors converge on the resort town to take advantage of the renowned ski fields. Tourism growth is positive and accommodation sectors are thriving owing to the increase in visitor numbers.

The Queenstown Lakes District Council have approved a proposal for a special housing area at Lake Hawea and a commercial development in the heart of Wanaka’s central business district, high-

profile Helwick Street. The Precinct is expected to open early 2019 and offers space for boutique shopping, hospitality and commercial offices.

The growth of Wanaka is apparent; in June an establishment board of trustees was announced for the new Wanaka South School and the new public pool opened, all exciting products of a growing town with a bright future and a growing population.


WANAKA MARKET


• Economic factors keeping market strong• Residential and commercial developments• Positive outlook for growing town

The Statistics

$832,000$282,608$625


MEDIANSECTION PRICE

MEDIANWEEKLY RENT


Median sale prices have been calculated from Jan - June 2018Source REINZ

6 MONTHLY 2008 - 2018 SOURCE REINZ

JUN

-08

DEC-

08

JUN

-09

DEC-

09

JUN

-10

DEC-

10

JUN

-11

DEC-

11

JUN

-12

DEC-

12

JUN

-13

DEC-

13

JUN

-14

DEC-

14

JUN

-15

DEC-

15

JUN

-16

DEC-

16

JUN

-17

DEC-

17

JUN

-18

VOLUME OF SALES

0

50

100

150

200

250

300

350

400

SECTIONSDWELLINGS

NU

MBE

R O

F SA

LES

Cardrona Alpine Resort & John Darby have formed a partnership

that means a combined Cardrona-Soho Ski Area. It will be the largest

single ski area in New Zealand with 900ha of skiable terrain.

LOCALREST OF

SOUTH ISLAND

NORTHISLAND

OVERSEAS

The Central Otago market is in a positive upbeat mode with the shortage of listings the key challenge facing the growing number of motivated buyers. Values are still rising, the median price in Cromwell has surged from $565,000 to $600,000, in the January to June 2018 period. Alexandra increased from $411,000 to $433,000 during the same period.

Cromwell has benefitted from a large number of quality subdivisions and Alexandra is following suit by beginning to identify opportunities for new subdivisions. A developer is releasing opportunities at Bridge Hill and later in the year, a new release of The Pines is expected. “It is as if someone has turned the lights back on for Alexandra,” said Harcourts manager John Petre.

Central Otago is unlikely to be affected by the Overseas Investment Bill as there appears to be a trend of residents from neighbouring regions relocating to Cromwell for the lifestyle and more affordable homes.

CROMWELL & ALEXANDRA


CROMWELL

ALEXANDRA

5

CENTRAL OTAGO MARKET


The Statistics

$600,000$285,000$470


MEDIANSECTION PRICE

MEDIANWEEKLY RENT

CROMWELL OUTLOOKFOR THE REST OF 2018


$433,000$133,500$380


MEDIANSECTION PRICE

MEDIANWEEKLY RENT


ALEXANDRA OUTLOOKFOR THE REST OF 2018

0

100

200

300

400

500

NU

MBE

R O

F SA

LES


JUN

-08

DEC-

08

JUN

-09

DEC-

09

JUN

-10

DEC-

10

JUN

-11

DEC-

11

JUN

-12

DEC-

12

JUN

-13

DEC-

13

JUN

-14

DEC-

14

JUN

-15

DEC-

15

JUN

-16

DEC-

16

JUN

-17

DEC-

17

JUN

-18

VOLUME OF SALES SECTIONSDWELLINGS

• Surge in median dwelling price• Developments are giving Alexandra a boost• Residents from neighbouring regions are relocating to Cromwell

OVERSEAS

REST OFSOUTHISLAND

NORTH ISLAND

LOCAL

OVERSEAS

NORTH ISLAND

REST OFSOUTHISLAND

LOCAL

are found in the Cromwell basin, including many of its premier pinot noir plantings.

Dunedin’s shortage of available property is holding back sale volumes despite strong demand across all sectors. Listings reduced considerably over winter, putting further pressure on price. The median dwelling price reached $409,000 in May, showing that high buyer demand continues to push sale prices to new record levels for the city.

The winter months traditionally represent a slowdown of available stock, but this season is similar to the period surrounding the 2017 election. There is uncertainty due to evolving government policy around affordable homes and foreign ownership rules. Although neither policies are expected to have much effect on the Dunedin market, the media reporting creates a degree of confusion.

Buyer demand is fuelled by access to Kiwi-Saver funds for first home buyers, and continued strong interest from investors. While tighter controls around

insulation and quality of rental property comes into effect, those choosing to bow out of the market are finding no lack of qualified buyers eager to invest in the fast-growing market.

Projects such as the new hospital are expected to create over 1,000 jobs, bringing an enormous economic benefit to the city, but will also increase pressure for rental accommodation.

Auction remains an excellent way of achieving top sale prices by bringing buyers into competition for available homes. 2018 has seen Harcourts Dunedin achieve a 94% sold rate, with 83% of these being sold under the hammer at auction.

The outlook for 2018 is a market with strong buyer demand and greater listing activity in the spring months. However, the market changes are not expected to alleviate rising median values as the call for property is simply too strong.



DUNEDIN MARKET


The Statistics

$385,000$190,000$380


MEDIANSECTION PRICE

MEDIANWEEKLY RENT




JUN

-08

DEC-

08

JUN

-09

DEC-

09

JUN

-10

DEC-

10

JUN

-11

DEC-

11

JUN

-12

DEC-

12

JUN

-13

DEC-

13

JUN

-14

DEC-

14

JUN

-15

DEC-

15

JUN

-16

DEC-

16

JUN

-17

DEC-

17

JUN

-18

0

300

600

1200

900

1500 VOLUME OF SALESSECTIONSDWELLINGS

NU

MBE

R O

F SA

LES

The recently announced new Hospital build is expected to create over 1000 jobs. It will occupy the former Cadbury factory site, as well as another entire city block to the north. The build cost is estimated at $1.5 billion.

• Demand increasing faster than availability• Continued strong interest from investors• Positive outlook for the Dunedin property market

LOCAL

NORTH ISLANDO

VERSEAS

REST OFSOUTH ISLAND

We have seen growing confidence in South Otago which is reflected in the rise of written sales in the area and investments that are set to revitalise the region.

Growth in South Otago has seen the median house price increase by 9 per cent, going from $202,000 to $220,000 in the January to June 2018 period. The region experienced an increase in sales volume, though demand remains greater than property inventory.

First home buyers are prevalent in the area owing to the community lifestyle and relative affordability compared to Central Otago or cities further north. As demand grows, multi-offers have become key in achieving premium results for sellers.

There is increasing demand for holiday homes on the Otago coastline, and there has been good enquiry for sections from local residents looking to upgrade and build their dream home. New developments are a breath of fresh

air in Balclutha, promoting economic growth through commercial and residential subdivisions. The interest in the developments are testament to the rising confidence in the area, taking the town forward.

The Statistics

MEDIAN DWELLING PRICE

MEDIANSECTION PRICE


MEDIAN WEEKLY RENT


SECTIONSDWELLINGS

7

SOUTH OTAGO MARKET

$232,500$80,000$295


• Growing confidence in the area• First home buyers look for lifestyle and affordability• New developments revitalise the region


JUN

-08

DEC-

08

JUN

-09

DEC-

09

JUN

-10

DEC-

10

JUN

-11

DEC-

11

JUN

-12

DEC-

12

JUN

-13

DEC-

13

JUN

-14

DEC-

14

JUN

-15

DEC-

15

JUN

-16

DEC-

16

JUN

-17

DEC

-17

JUN

-18

0

50

100

150

200VOLUME OF SALES

NU

MBE

R O

F SA

LES


LOCAL

REST OFSOUTH ISLAND

This quaint cottage was built in the 1860s as a stopping place for miners heading to the Tuapeka

Goldfields. It has been restored by the South Otago Historical Society

and was re-opened on 30 May 1970. Distance from Milton: 12kms

southwest.In the rural market, winter has

been a quiet season for farmers – sheep and beef prices have

stayed strong. Many rural owners are busy feeding and preparing

breeding stock for spring, which is always a busy time of year.

HIGHLAND REAL ESTATE GROUP LTD LICENSED AGENT REAA 2008

Dunedin Balclutha Queenstown Wanaka Cromwell AlexandraThe team behind Otago.

Six offices. One company.

otagoharcourtsotago.co.nz/wp-content/uploads/2018/07/... · economic growth. the property market...

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