A year ago, Mr Stanley said, it was possible to build a home at, for example, Shotover Country for $550,000 — assuming a 10% deposit, total repayments, which includes principal, interest, rates and insurance, were about $650 a week.
"In terms of people [financially] over-extending, it’s actually more likely to be those people that are having to rent because they’ve been unable to satisfy a bank they could service a mortgage at these higher prices."
The high purchase prices are being driven by a high demand and a lack of supply.
While last month’s median house sale price for the district dropped to $796,000 from a high of $910,000 in July, it has risen by almost a quarter of a million dollars in the last 12 months (from $553,250 in August 2015).
Queenstown real estate figures released this week show 76 houses were sold in Queenstown and Arrowtown last month, compared with 40 in August 2015.
In the year to date, the total value of residential housing sales is $528.3million, from $351.2million for the corresponding period last year.
Mr Pullar suspected the majority of the buyers at Shotover Country, for example, in the last year were "not necessarily first-home buyers in Queenstown, and more likely Auckland investors, after properties that gave better returns".
What was happening now was people were over-extending just to pay rents of up to $800 a week.
"There isn’t necessarily a formal assessment of their ability to afford the [payments], so they may end up being very extended by this situation.‘
"That’s a concern."
Mr Stanley said some banks had capped lending on investment properties at 60%, meaning an investor needed either a 40% deposit, or to use a lot of equity in a property they already owned.
But places like Queenstown were an attractive investment proposition and, when combined with a rapidly expanding population and a shortage of supply, it was renters and those wanting to purchase their first home who were being hit the hardest.
A debt-to-income ratio, flagged as another possible measure to help with the rapidly rising prices, could disproportionately impact first home buyers because prices were well above what they would be allowed to borrow, given the lower local salaries.
Other measures put in place by the Government, such as the KiwiSaver HomeStart grant, were well-meaning, but, ultimately of little assistance.
Among the criteria for eligibility was a contribution to KiwiSaver — $1000 a year for each person who contributed for five years was available for a new purchase; it was "double that" for a new build.
"So, that’s up to $20,000 of a deposit that you get as a grant ... for a new build," Mr Stanley said.
"That all sounds fantastic ... but where it’s just quite frustrating and where it doesn’t work is that each region has a cap on how much that property can cost."
Queenstown’s cap on a new build was $550,000 — difficult to achieve at present, with sections getting up towards $300,000.
"It is a most interesting conundrum," Mr Pullar said.
"It’s not an easy problem to fix.
"The cap really needs to be raised to $650,000, in line with Auckland."
While future developments — primarily Hanley’s Farm, near Jacks Point, a 1750-lot subdivision — might provide a "glimmer of hope", Mr Pullar believed more sections priced around $200,000 were needed to enable people to meet the criteria under HomeStart and satisfy the banks the mortgage required was affordable.
Mr Stanley said there was "definitely a disparity" in Wakatipu in terms of incomes versus property prices, but hoped some of the measures already in place might help.
"It will be interesting to see what happens with investors, but that will take time for property prices to at least slow down — they may level off, they might even dip, who knows?
"But it is a very tough position to be in if you’re a first-home buyer."
