New figures from Quotable Value show average values in the district climbed 32.2% in the past 12 months to $1,000,205. That is only slightly less than the $1,051,387 average value in New Zealand’s largest city, where values rose 12.8% in the past year, but well above the $624,675 average value nationwide, which rose 12.4%.
Harcourts Queenstown managing director Kelvin Collins said he did not expect residential values to hit the million-dollar mark so soon.
He said the market had been stressed by a "frenzy" of demand earlier in the year from new residents arriving to take up retail jobs in Frankton Flats.
The surge in values had been supported by an increasing confidence that low mortgage interest rates were a "new normal" and unlikely to rise for some time.
A tightening of loan-to-value restrictions by the Reserve Bank in October — requiring minimum 40% deposits on property investments — was having no effect as investors were not driving the market, Mr Collins said.
"The people buying these properties need somewhere to live."
He did not expect the district’s house values to surpass Auckland’s. Auckland values were slowing, the local market had "settled" in the past couple of months and he expected values to stabilise in the next two years as more titled sections came onstream.
"We’re now at a stage where I don’t think there’s too much more upswing left.
"It can’t move much further because it comes down to the affordability of servicing debt."
House values would not fall unless more multilevel apartments were built, but cautious developers, a lack of suitable land and tight bank lending continued to discourage that activity, he said.
Queenstown businesswoman Tracy Pool and her husband have their Lake Hayes Estate property on the market for $1.45million.
Mrs Pool said they were in their early 50s with two grown-up children, and did not need the space of the four-bedroom house and two-bedroom cottage.
The "buoyant" market made her confident of getting a good price. Unlike several friends of the same age who had sold and left the district to reap their capital gains, they would buy into the same market, Mrs Pool said.
"If you’re selling to up and move out, perfect timing, but if you’re staying in town and buying, not so great."
Another seller, Queenstown lawyer Phil Wilson, said the million-dollar milestone did not mean much to vendors like him who were staying in town.
Although he expected values to stabilise, they would continue rising because the area was sought after, he believed.
"We’re seeing a lot of overseas clients buying property here, and the access to Queenstown — being a three-hour flight from the east coast of Australia — makes a big difference."
Queenstown Lakes Community Housing Trust executive officer Julie Scott said soaring values were making the trust’s work increasingly difficult.
It had recently assisted its 100th household into affordable housing, and was aiming to help another 100 households within the next two years.
But the typical price of an entry-level home in the resort had climbed from about $450,000 to $700,000 in the past few years, putting the trust’s shared ownership scheme increasingly out of reach of the families on its waiting list.
That waiting list was growing month by month; 385 households were now eligible for help.
"The demand for affordable housing is intensifying as the property market becomes more out of reach for first-home buyers, and the lack of rental properties exacerbates the problem."
