It’s no secret property sales continue to slow as listings surge across the country. But there’s one corner of New Zealand that isn’t quite feeling the pinch like the rest of us, and while it may not be booming, Bayleys Queenstown Executive Director Stacy Coburn says there’s still a lot of keen buyers.

“We've been quite fortunate that certain sectors of the market have been quite buoyant. First time home buyers have come back, and we have markets like the Hanleys Farm development doing really well, which is its own tiny little ecosystem.”

“Even so, it's certainly still been tough. We aren't quite bucking the trend as we’re still dealing with lower sales volumes, but certainly it’s not as soft as other parts of the country.”

Coburn says the total number of sales for the region across March this year was 75, compared with 93 for the same time last year. Listing stock levels peaked at around 420 over the last few months but have since come back down to around 387.

“I suspect that by the time we hit July and with the return of the bright line test and tax deductibility that there’ll be more market confidence. So I think we are going to see a spike in listings with respect to vendors and investors trying to take advantage of that.”

Bayleys Queenstown Residential Sales Manager Dee Mcquillan has seen the slowdown firsthand but agrees it’s not all doom and gloom.

“When we compare our sales to this time last year, we definitely had higher rates last year. But I do think we're performing a little better than elsewhere throughout New Zealand.”

“It takes a bit to get buyers across the line, but at least we've got buyers to deal with who have a strong appetite to transact in this current market, which is good, given we've come out of high inflation levels and higher interest rates.”

SO WHAT’S THE SECRET?

Coburn says it’s obvious why Queenstown is so appealing to potential buyers.

“Firstly, it’s hard to ignore the picturesque scenery right on your doorstep. It’s got a smaller population so there’s way less traffic as well.”

He believes the covid pandemic was also a big driver for many Kiwis.

“Things were really put into perspective for a lot of people. What became really important to a lot of them was a balance of lifestyle. The covid lockdowns also showed an ability to work from home, or work from anywhere.”

“So we’ve had quite an influx from up north and Auckland who have relocated permanently to Queenstown.”

That influx has significantly boosted the local population, with the region’s growth rate being nearly double the national average.

“That is really driving things to a degree. There’s also talk about reviewing the Overseas Investment Amendment Act to open up to buyers outside of Australia and Singapore which will also push things along.”

THE SPILLOVER EFFECT

With an influx of people coming into Queenstown and the area still experiencing a steady stream of sales, Coburn says surrounding locations are also seeing the benefits.

“There’s definitely a spillover going into areas like Cromwell. The market there is a little short of buyers, but a lot of listings are coming. There has been an increase in price, but you can still get a great bang for your buck.”

“A lot of people who couldn’t afford Queenstown have moved to Cromwell. Cromwell will then eventually push into Clyde.”

Wanaka is also benefiting even though prices there are relatively high. Dee McQuillan says the areas surrounding Queenstown also offer plenty of viable options for first home buyers.

“If those buyers are finding it difficult to get on the property ladder in Queenstown, then they might look further afield, purchase elsewhere and then commute to work.”

WHAT ABOUT THE RENTAL MARKET?

With more investors looking to dive into the market, there’s hope for a boost in rental stock, but Dee McQuillan says being a tourist town things become tricky when properties are used for Air BnB.

“Our residential property management team have said that it's not so much that there's a shortage of overall properties, it's just that they're not available for long term rent.”

Bayleys Central Otago Property Management General Manager Richard Hoskins says Trade Me rental listing numbers have been bouncing between 50 to 60.

“That’s quite a lot compared with what we’ve had over the past 12 to 18 months. It got down to a low of seven in June last year, so that gives you an idea of the kind of demand there was.”

Hoskin believes the region has moved on from the so-called ‘rental crisis’ but is now faced with a ‘rental pricing crisis’.

“A lot of rentals aren’t moving as quickly because of the expectations the owners have around per week rental prices.”

“If you’ve got a three-bedroom property that’s renting for anywhere between $1100 and $1300 that’s a lot of money per family per week.”

He says, as a result many are choosing to break their lease early.

“A lot of our current tenants that may have a 12-month lease or rental agreement, are breaking it now for a variety of reasons. They’re either going to a cheaper property or leaving Queenstown altogether. We're seeing a lot of those all of a sudden, and it must come down to the cost of living.”

It also means the spillover happening to those purchasing property is happening to the rental market too.

“Cromwell is only 40 minutes from Queenstown and continues to grow. It’s a great location for people wanting to live in Central Otago, but don’t have the budget for Wanaka or Queenstown.

CAN THE AREA KEEP UP WITH DEMAND?

But while a local population boost might be good for the property market, it only works if the city’s infrastructure works too.

With some roading issues and the widely reported cryptosporidium outbreak, Coburn says signs of pressure are already seeping through.

“We’ve got to get on top of sewage and water quality to allow for that capacity.”

He also believes the turnaround time for new developments is contributing to the ongoing issues.

“That is going to curtail the ability for developers to actually come on stream, because of the turnaround time they need for infrastructure.”

“It's also put a lot of pressure on those developers and key stakeholders to have the money to actually properly provide further amenities above what the council can do.”

Richard Hoskin agrees that the current growth is exceeding the number of available buildings, properties and the current upgrades to infrastructure.

“The obvious thing like they do in the rest of the world, is you build up rather than out. But that's not such a favored option here in Queenstown.”

“I think it’s important to ask the question - do we want to keep up with growth? There’s only so much land in Queenstown. Do we want to become high density, and have high density building areas like other parts of New Zealand?”

Hoskin expects population growth will continue to climb and says enabling infrastructure to catch up needs to be a priority for the future of the area.