Auckland & Queenstown Real Estate

June Steady For Queenstown Property Sales, And Good News Ahead

Date: July 27th, 2014

According to Colliers International’s June Quarter research, investors’ confidence is still at a net positive of 25%. As the New Zealand economy keeps performing well, with an expected 3.7% growth through to the end of 2014, and consumer confidence still resilient, it was no surprise to economists when the Reserve Bank of New Zealand increased the official cash rate to 3.5% this month.

However Reserve Bank Governor Graeme Wheeler was reasonably open about a foreseeable pause in interest rate hikes, as both the inflation and the economy are now running at a controlled pace.

This can be considered as good news for the property market, and some are taking even more comfort in the fact that the pause in interest hikes is likely to last until March 2015.

Add to this the following statement from the Reserve Bank Governor: “the level of the New Zealand dollar is unjustified and unsustainable and there is potential for a significant fall” (excerpt from www.interest.co.nz), and we could see conditions becoming increasingly favourable for non-resident property investors in the next few months.

June is traditionally a quiet month for Real Estate Sales but June 2014 was on par with last year, recording 42 residential sales compared to 44 12 months ago. The median sale price is on the increase, at $645,000 compared with $517,500 in June 2013.

The total value of real estate sold this far in 2014 is very similar to the same period last year, at 203.7m compared to 206m.

Average asking prices remain bullish in the high population growth areas, with Queenstown increasing 10.5% to $669,486 and Auckland 6.9% to 732,240 in June.

In summary, as inflation remains below maximum target and the threat of fast interest rate increase disappears, investors are remaining confident. If you are an overseas investor, no doubt you will be watching with particular interest how soon and how far the New Zealand dollar will fall.

Posted in: Statistics

Property News for Queenstown In April 2014

Date: May 20th, 2014

We are experiencing another game of 2 halves in Queenstown for April 2014, with the number of sales remaining subdued for the 2nd month whilst prices remain strong, according to local and regional statistics. As noted by REINZ CEO Helen O’Sullivan, first home buyers are less active in the market which is expected as the effects of new LVR rules deepen, but “the number of investors is on the increase with the number of section sales also up noticeably” (Excerpt) – On the good news front the Reserve Bank has indicated this month that the LVR rules are likely to be eased toward the end of this year, which could see a new surge of activity in first home purchases. Wait and see!

In a similar trend to what we observed last month, the main contrast is between a comparatively low number of residential sales in April 2014, with 39 sales versus 58 in April 2014, and the total value of sales for this year so far, with $138m compared to $136.4m for the same period last year and $127.9m the previous year.

Even more interesting is the median price comparison, also lower with $545,000 in April 2014 versus $566,000 in April 2013.This can only happen when high end investors make a number of top value property purchases, a typical factor in the Queenstown market. Generally prices are still on the increase, by over 7% in Central Otago and 5% in Queenstown in March 14 Compared to March 2013 (Source-REINZ) and a similar trend in April 2014.

The number of days to sell a dwelling was 38 in April 2013, a substantial improvement compared to 50 days to sell in April 2013. Once again you would not expect properties to sell faster when the number of sales has decreased, but this actually makes sense when you know that investors are still active and not restricted by their need to raise the required capital.

Overall the 6 months to April 2014 also remain subdued with a total of 286 sales versus 329 last year. The period of 12 months to April has delivered 577 sales confirming a decrease compared to 606 sales in the 12 months to April 2013.
In summary for Queenstown, sellers remain confident in their asking prices and investors reflect that buoyant feeling by making fast decisions, whilst entry level property bears the brunt of current regulatory conditions.

Posted in: Statistics

Queenstown Property News for March 2014 – More Fluctuations

Date: May 9th, 2014

Highly noticeable growth in tourism this year is already fueling renewed interest shown by small to medium investors for tourism accommodation in Queenstown. According to the latest Queenstown RTO (Regional Tourism Operation) report “Total visits by travelers to Queenstown are forecast to rise from 1.887 million in 2009 to 2.129 million in 2016. An increase of 12.8% (242,000) or 1.7% p.a.”
What does this mean for residential sales in Queenstown? It can be argued that housing sales locally are still going through fluctuations that are not always confirming the general trend – as was the case in March 14. However, values have reached a new record high nationally, “driven by renewed seller confidence in the major centers” according to the realestate.co.nz March report. Queenstown is no different, despite the number of residential sales being more subdued in March.
So now to the numbers: Residential housing sales took a backseat in March with 42 compared to March 2013 that saw 58 sales. Surprisingly we are also below the 5 year average of 47 and the 10 year average of 50.
Despite the above we have seen values stay strong with the median sale price much higher than a year ago, at $663,500. Bear in mind this is also reflecting the ongoing effects of the new LVR rules, that is expected to keep some of the entry level buyers on the sideline for a while.
The average length of time required to sell a house is also up in March 2014, with 52 days required to sell, as opposed to 43 days in March 2013. Remember also that March saw the first increase in the OCR after a very long period at 2.5%. This may have put some buyers on a holding pattern, whilst assessing effects on mortgage rates and seeking out the best deals offered by mortgage providers.
Once again the total value of sales since the start of this year confirms a higher value in sales in general, with $112.2m compared to 97.9 million for the same period last year, this is despite ducking under the number of sales for the past six months, at 298 sales compared to 326 sales for the same period last year.
Indeed on the basis that supply and demand conditions are still tipping in favour of buyers we could see the number of sales rebounding in April. So watch that space when the numbers come out.

Posted in: Statistics

Property Sale Figures For Queenstown In February 2014

Date: March 25th, 2014

The January 14 rebound is followed by an almost even performance in February 2014 with 57 sales compared to last year’s 61 sales. February sales remain slightly above the 5 year average of 52 and also above the ten year average of 55. No big movement either in the average time it took to sell a dwelling, with 38 days in Feb 2014 compared to 34 days in Feb 2013.
The median sales price however, tells a different story at $630,000 versus the February 13 result of $540,000. So what is happening behind the scenes that gives these numbers any sense at all?..2 things:
1. Apartment investment has rebounded with renewed buyer interest in high quality lake front units with a better prospect of returns. These apartments are typically fetching $650,000 or more.
2. Looking at the value of sales so far for 2014, reaching 80.0m, we have a big jump compared to last year’s $57.3m and the previous year’s $61.1m. Clearly the return of demand for first homes, which we observed in January, is now slowing down, in favour of renewed interest for much higher priced properties. Sales in the $450,000 to $650,000 range are on the decline again, and sales above $1m have popped up in a variety of locations in the district.
The main observation here is that sellers in the range between 450k and 650k, traditionally the busiest part of the market, are either seeking a premium sale or choosing to hold on to their properties. This is responsible for the slowing down in sales despite the ongoing high demand and short supply in this sector of the market. In turn this is applying extra pressure on rental prices, and one would believe that ‘something will have to give’.
The 12 months leading to Feb 2014 have seen 615 sales, still tracking well compared to the 586 sales for the 12 months to Feb 2013 and 482 for the previous year.
Section sales remain even and still buoyant with 20 sales in February. This could be where first home buyers are choosing to invest, with a large part of the sections fetching as little as $180k.
In conclusion, as the market swings between the dominance of first home buyers and a different part of the market from month to month, the only reliable trend is that the market remains buoyant, reflecting increased confidence in the New Zealand economy.

Posted in: Statistics

Queenstown Property Sale Figures Rebound Strongly In January 2014

Date: March 7th, 2014

Following what was largely described as a slow-down in the second half of 2013 after a promising first half, 2014 started with a hiss and a roar. From August to December 2013, real estate commentators saw in most indicators, including a 16% drop it the number of residential sales compared to the last five months of 2012, the result of uncertainty generated by the new LVR (loan-to-value-ratio) rules.
With January 2014 reaching 54 residential sales for the district compared to 34 in January 2012, the question marks that overshadowed late 2013 have now been erased. With the five and ten year averages for January at 36 and 49 respectively there are even more reasons to regard January sales as an encouraging sign.
As commented by local spokesman for REINZ Kevin Collins, first home buyers may have been waiting to see if the LVR rules were going to have a lasting impact on the market. Some may have expected values to start heading south.
However, as we reminded you in our article last month, strong population growth for our district is likely to keep the pressure on demand, resulting in values holding their ground.
Other indicators confirm the sense of urgency that buyers are showing, with the average time to sell a property dropping to 39 days in January 2014 compared to 57 in January 2013. Understandably, some buyers will be keen to access fixed interest rates at the currently “reasonable” level, before the inevitable rise.
The median sales price remains below the $550 mark, at $512,500 compared to $562,500 in January 2013. Once again it is noticeable that a huge part of the purchasing activity is at entry level, with no less than 19 unit titled dwellings sold in January, and over 85% of them sold below $450,000.
The 6 months average is still strong at 280 sales compared to 287 for the same period last year and 222 the year before. The 12 months average has rebounded with January, showing a positive trend with 619 sales compared to the 585 sales of last year or the 460 sales generated in the previous year.
Please note that these numbers do not include sales generated by the developers themselves. Shotover Country subdivision and 22 Hallenstein Street are 2 good examples where substantial sales activity has occurred.
And finally a big jump in the overall value of properties sold in January with 40.9 M, almost double last years $21.4 M and $27.1M for the previous January. This is a good reminder that added to the numerous entry level sales, a few sales above 1.5M make a huge difference on a monthly basis.

Posted in: Statistics

Property Sale Figures For December 13 Reveal Strong Apartment Purchases

Date: March 6th, 2014

Anyone looking for a clear trend in the last three months of 2013 would have noticed fast changes indicating that tendencies in this market are short lived. With 52 residential sales in December 13 compared to 54 for the same month last year in Queenstown and Arrowtown combined, it is confirmed that the buoyancy of our real estate market in 2013 slightly lost momentum towards the end of the year.
Real estate commentators including Kevin Collins, Queenstown Area spokesman for the real Estate Institute of New Zealand, converge to say that sales figures were affected by the new Reserve Bank LVR rules, a restriction that mostly affects first home buyers.
In November 13 the increase in median sale price to $642,500 pointed to the departure from the market of a number of first home buyers purchasing at entry level below or around the 500k mark.
So it was quite a surprise to see the median sale price dipping again in December 2013 to $517,500. This was due to a sudden increase in investors purchasing one and two bedroom managed apartments, representing 25% of the sales for that month. Institute spokesman Kevin Collins commented that (Excerpt) “This reflected stronger demand from buyers with discretionary funds looking for an investment, but also the flexibility to use them for a few weeks every year”.
It will be interesting to observe whether a resurgence in interest for apartments will remain over the next few months.
The 6 months to December 2013 saw a slight drop in sales at 273 compared to 285 for the same period in 2013, but is still well ahead of the figure of 219 for the previous year. The 12 months leading to December 13 still shows a positive year with 597 sales compared to 586 to December last year and 455 to December 2012, despite a slight drop in sales in the last 2 months.
Time to sell a property in December 13 has increased substantially with 66 days compared to 49 days in December 2012, once again probably a result of first home buyers being less present on the market.
Section sales have been subdued in December with 3 sections only compared to 13 on the previous month. Please note here that such small numbers can see great variations from one month to the next due to the niche nature of our Queenstown market.
With 25% of purchases at the lower end of the market, below 500k and 8 sales of properties above the $1M mark, the good news is that all levels of investors are represented in December sales.
Total value of residential sales in 2013 was $376.6m similar, to 2012, with $377.4m in 2012 and still well ahead of 2011 with $285.9m.
As the year wraps up with marginal increases in residential property sales (2.8%) and in overall sales value (4%), the natural question to ask is ‘what has 2014 got in store for the real estate market in Queenstown?’… The fundamentals are looking evenly split: On one hand you could predict a year of political and economic uncertainty with upcoming elections as well as promised increases in interest rates combined with the high New Zealand Dollar, a slow-down in the Australian economy and the ongoing effects of the new Loan to Value Ratio rules. On the other hand with the latest census results in 2013 revealing a whopping 23% increase in population for The Queenstown lakes District, to 28,224 residents, compared to the Otago region at 4.5% only, supply is highly unlikely to catch up with ever increasing demand. Add to this NZ’s economic growth forecasts ranging from 2.9 to 3.5% form 2014, buyer confidence could also be on the rise. Will that be sufficient to sustain the buoyant real estate market that we know for the lakes District? Wait and see…

Posted in: Statistics

Real Estate Sales Figures For November 13 In Queenstown – Is The Trend Established?

Date: January 28th, 2014

In earlier articles we commented that new Reserve Bank LVR rules could make the Queenstown Property market swing in favour of investors, with first home buyers becoming more cautious and some even choosing to keep renting as they save towards the now required 20% deposit. With 40 residential sales in Queenstown for November compared to 60 in November 2012, combined with a shift in median prices from around $500k in August 2013 to $642,500 in November, the least we can say is that the October tendency has continued through November. Anecdotal evidence also indicates that first home buyers are less active than they were during our winter months.

Is this a positive sign for investors? With Queenstown still heading population growth for the whole of New Zealand it would be logical to predict at least some upward pressure on weekly rents, and shortage of supply of rental properties, both factors to be considered as favourable if you are looking to invest in Queenstown.

At 43 days compared to 37 days in November last year, the time required to complete a sale is also possibly showing a more cautious market.
Sales for the 6 months leading to November 2013 are slightly lower than sales for the same period last year at 265 compared to 272. Sales for the 12 months leading to Nov 2013 are still up, at 600 compared to 565 for the same period last year.
As for the overall value of real estate sales for this year, it has slightly increased, with $341.5M to this point, compared to 336M last year.

REINZ warns in their monthly press release analysing monthly figures for November that “further data is required before we can determine this is the beginning of a trend, as short term effects from a change of pace in sales at certain price points, or a seasonal effect arising from an increase in the number of higher value properties brought to market at this time of the year”(excerpt) , which of course can be even more acute in a small place like Queenstown.

Our source for this month’s statistics is REINZ monthly report.

Posted in: Statistics