The buyers of Queenstown property are often more than anywhere in New Zealand, linked in to the impact of the global economic climate. My clients in this market have been forecasting a global correction to potentially occur anywhere onwards from mid-winter in New Zealand.
Factors affecting Australian and expat buyers currently are the exchange rates. New Zealand’s economic situation is outpacing that of Australia, affecting the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate. Some clients are electing to gain a mortgage rather than transfer their cash to New Zealand and be cash buyers. The Australian economy is on a much weaker trajectory than New Zealand, driven by the housing market. This is reflected in the positioning of the Australian dollar relative to the New Zealand dollar, with the market anticipating that bad news for Australia relative to NZ will continue, alongside a building political risk premium closer to the Federal elections.
The run of global economic data has been softer, banks have raised concern about the external outlook and this is reflected in the patterns of buyers in the Queenstown market. Buyers are acting cautiously, and this is having an impact on the prices overall. Quality properties in sought after locations are selling, well and fast, but anything that doesn’t tick multiple boxes is sitting on the market for prolonged periods. Vendors are needing to be realistic and meet the current market conditions if they want a sale. This is considerable better news for buyers that the escalating market that saw properties being snapped up at often unrealistic prices for the past few years.
The other positive news for buyers are the latest ultra-low deals being created by the bank’s mortgage wars. Five Kiwi banks are offering home loan rates of 3.99% or lower as a mortgage war for new customers flares up again. Westpac has become the latest to offer a two-year 3.99% fixed home loan, joining ASB, TSB and Kiwibank in offering the ultra-low deal. HSBC had earlier this month also launched a two-year special rate of 3.69%, the lowest-ever fixed home loan rate by any bank in New Zealand. Rates in Australia are even cheaper, and it can often be easier for Australian clients to borrow in Australia and take some prudent advice on the timing of transferring their money. New Zealand banks traditionally won’t lend to off shore lenders, but non-bank lenders are still options that can be provided through local mortgage brokers that I work with.
You may have heard that The Reserve Bank of New Zealand left its official cash rate/OCR unchanged at a record low of 1.75% at its March 2019 meeting, as widely expected. Policymakers said that given the weaker global economic outlook, in particular among some key trading partners including Australia, Europe, and China, and reduced momentum in domestic spending, the more likely direction of the next OCR move is down, so watch this space.
There are considerable differences too between the Wanaka and Queenstown property market for the type of stock available. Wanaka has an abundance of sections as options, whereas in the Queenstown property market there is a real shortage of land. The other significant difference is in the significant number of units and apartments that Queenstown has to offer, and these properties just don’t feature hugely in the style of property in the Wanaka property market.
So – are we finally seeing a buyers market – times have turned in most other areas of the country, hopefully, we have and its time to get out there and buy. buy, buy.