Queenstown’s property value dip has now fully reversed, according to the latest data from CoreLogic, and senior property economist Kelvin Davidson says ongoing supply and demand issues are driving the region’s expensive prices.
Hit hard by the lack of international tourists, Queenstown was New Zealand’s only region to see a “noticeable drop” in its property values after lockdown. That fall has now been completely regained, and Davidson says that another dip is unlikely, unless the tourism sector struggles particularly hard over the summer period.
“There is still a shortage of properties, and I don’t think there are enough houses there yet to comfortably accommodate the population,” Davidson told NZ Adviser.
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“Not many people are selling their houses either, so any buyer out there is facing a pretty limited choice. Both of these things tend to support property values.”
“At the same time, you’ve got low mortgage rates, and of course Queenstown has its natural appeal,” he continued. “People will take the opportunity to buy property there when they can, so I think there’s definitely a good base of demand - and it’s still an expensive market.”
Queenstown’s prices peaked in May 2020 at an average of $1.22 million, and dropped by 7% over the next three months to $1.13 million in August. The current average value is $1.21 million, which represents a small rise of 0.3% on the same time last year.
Davidson says that despite an absence of tourists, the demand to buy and own property in Queenstown has likely not been significantly affected by COVID-19. Looking ahead, he says that while prices may “moderate a bit” if the tourism sector doesn’t regain its confidence, the most likely scenario is an ongoing “easing upwards.”
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“Values are back up to where they were pre-COVID, so an average of $1.2 million, which makes it the most expensive district in the country,” Davidson said.
“A lot of people are talking about how they’re facing a ‘loss summer’ of tourism, as this is ordinarily the time where a lot of tourism and hospitality businesses would be making their money - so we’ve still got to get through the next couple of months, and if things go worse than anticipated and we see more job losses, that could start to affect confidence.”
“We could see property values moderate a bit,” he added. “But I think most of the signs say that businesses are clinging on and keeping people on where they can, so my central assumption is that prices won’t fall.
“I think they’ll stay pretty flat or edge upwards a little bit, but there is that possibility that they could turn down if we see the tourism sector taking a bigger hit.”