The market seems to be in a really interesting phase at the moment.
At a time when the real estate cycle should in theory be levelling out, the prices seem to be teetering and trying to decide whether to level out for a period or continue on a slower hike upwards. Many factors are affecting this scenario, the most significant of which is the supply versus demand equation and this is the case on both sides of the hill. The sales volumes have levelled out, but this is a reflection, I think, of the numbers of properties available.
Any reasonable stock is under offer virtually as soon as it comes to the market, at a great price for the vendors. Other properties are tending to sit for quite a while. Modern properties, particularly newer builds are proving most popular for their advantages of low maintenance, easy care and warmth.
Properties under $1 million are being snapped up with multiple competing parties inflating their prices in some instances.
There has been a recent flurry of expat and foreign couples about. Some, no doubt keen to buy before the new foreign buyer’s legislation comes in this December. This has driven demand particularly for the properties in and around the $1 million mark.
The 2018 median house price in our region is now $1,152, 500, as compared to five years ago when it was $600,000. Many New Zealand holiday home buyers are getting in now in case the market doesn’t slow down, commenting that they should have done it three years ago and ruing the fact that they didn’t do it.
At the premium end of the market a few properties have sold at and above valuation to buyers living overseas.
Lifestyle properties which have a desirable aspect or particular quality are being snapped up and often at a premium. It is hard for buyers looking in this area of the market anywhere within the region.
Statistically the sales figures indicate that, like Auckland, our buyers have a proportion from offshore larger than the rest of the country, with 9% being foreigner buyers.
Many buyers in both Wanaka and Queenstown are relocating from Auckland and Australia for lifestyle reasons. Families with parents being able to work remotely and with better commuting ability, the frequency and cost of flights improving and the prices in Auckland and Sydney making it a financially wise decision to cash up real estate in these cities.
Investors are confident and interest rates are low.
Some buyers have a good ear for commentary on the financial markets. They’re hearing of a potential global economic slow down and the affect that this may have on the property market. They’re also aware of the possible impact of any changes to the ability for foreigners to invest in New Zealand. Both of which may impact on future property liquidity. Having said this, the views, mountains and lifestyle aren’t going to go away and nor are the tourists, which are driving the local economy.
Although build costs have increased substantially and tradespeople are booked out, building is for some buyers, a viable and appealing option.
So with values at historic highs, many potential buyers waiting for stock to improve and to see what the pending legislation for foreign buyers does to the market, it is tricky to say for sure where the market will track in the coming months when we come out of this traditionally quiet period.