Property Sale Figures For December 13 Reveal Strong Apartment Purchases

Date: 6th March 2014 by Tim Medland

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