Underlying economic conditions affecting the Wanaka property market

Property values are driven by the underlying economic conditions in both the national and global economy.

In the past 12 months the overall economic activity within our NZ economy showed an upward trend with a forecast GDP growth to 2017 of 1%. The NZ economy is being positively influenced by strong population growth, increased construction and tourism rises. On the flip side climatic factors had a negative impact on the rural sector and combined with the dairy sector downturn, the export incomes of NZ were reduced. There are flow on affects from the down turn of the dairy sector related to the investment into farm related goods and the easing of dairy related land prices. However there are signs that the NZ economy is diversifying to a wider range of export goods and services.

Tourism has given a considerable boost to the economy with international visitor expenditure (including airfares) overtaking dairy as our top export earner last year. Strong tourism demand is boosting the regional economies.

Supply and demand factors have an effect on prices. Net migration into our country continues to reach record highs, with over 65,000 net migrants over the past year boosting population growth.

An influx of activity in the residential market coupled with significant increases in values across many regions has been fuelled by a property supply shortage.

Long term fixed interest rates rose in early 2014 then fell significantly in late 2014 and these have continued to trend downwards throughout 2015 and into early 2016. Low interest rates fuel property buying, both for residential purposes and speculative.

Statistics indicate a rise in employment growth and this is expected to continue over the coming years. The latest Quarterly Survey of Business Opinion shows that employers are finding it harder to recruit skilled workers.

Property markets remain buoyant when there is a positive mood about the economy. The Reserve Bank of New Zealand is working to boost inflation utilising monetary policy measures. The dropping of petrol prices is being offset by the continued growth in the NZ economy. It is expected that the lower New Zealand dollar will increase the price of imported goods and support a lift in headline inflation back within the Reserve Bank’s target, with the 2% mid-point target being reached early in 2018.

Local factors affecting the Wanaka housing market

The Wanaka property market is currently in a very strong phase. Sales volumes are high and values across all sectors of the market are increasing. There is an acute shortage of listings across all brackets of the market and this is placing pressure on the values.

There is strong population growth across the entire region which is creating a shortage of rental accommodation, particularly for families.

The entry level sector is being affected by not only first home buyers but by holiday home buyers and investors into the rental market.

Recent section sales in new sub divisions have exceeded expectations. Sections are selling without titles in the Northlake, Timsfield and Luggate areas. There are virtually no titled sections available for purchase.

Residential construction is in a strong phase and set to continue due to the numbers of sections sold in the past 12 months.

The Three Parks Development will see commercial construction begin at unprecedented levels for our town. The town planning involved in the development of this area has been significant.

Prime residential and lifestyle properties remain highly sought after, with many buyers lured by Wanaka’s popularity as a lifestyle destination. Buyers have been active in the $2m-$4m price bracket, with interest and activity also evident in top-tier properties in excess of $4m.

A dramatic growth in visitor numbers over the past 18-24 months has seen local accommodation and tourist related businesses and the retailers in general, benefit.

There has been a success in the lifestyle retirement sector of the market sending the signals to the aging end of the population that Wanaka is a destination for retirement.

Projections are that both population growth and visitor numbers are set to increase.

The demand for titled sections is expected to continue to exceed supply until new subdivisions release new areas onto the market. Areas of Northlake, Ruby Ridge, Luggate and Hawea are due to release sections over the coming years.

There is no sign of an easing in the demand for rental accommodation.

This influx of activity in our local market is a reflection of what is occurring nationally. This region is also affected by the international buyers being attracted into our region for lifestyle reasons. These buyers are offering competition and increasing the demand for the lower number of properties that are coming onto our local market, at the moment.