Tourism keeping Queenstown property prices high

John Scobie.
John Scobie.
History shows Queenstown should be bracing for an economic slump, but an expert says ''unprecedented'' tourist numbers are keeping property prices at a peak.

Colliers International released its 2018-19 property market review today, outlining its forecast for the area. It shows the market has reached a ''cyclical peak'' - but said unprecedented growth in the tourism sector was keeping it there, and there were no signs of prices dropping off any time soon.

Meanwhile, there was hope for renters, as oversupply in some areas could curb prices.

Colliers expected property values in Queenstown to remain at high levels in the short term, but warned some affordable newer subdivisions were at risk of ''price correction''.

According to Colliers Queenstown valuation director John Scobie, that was referring to places like Shotover Country.

But he said homeowners should not worry their house values were about to bottom out.

He said while economic downturns tended to happen about every 10 years, and Queenstown was due for one now, signs were still positive.

''People think we're overpriced and there's a fall coming, but there seems to be no signs there that something's going to break.

''There's nothing suggesting it's going to drop off rapidly.''

Building costs had increased significantly over the past year, which, coupled with the high cost of land, was causing some buyers to seek turn-key solutions or look to existing housing stock, he said.

As for the rental market, the number of people moving out of town for cheaper housing might force prices down a bit, as there would be less demand. But they would not drop significantly.

With visitor accommodation, Mr Scobie said it would be a balancing act between providing enough accommodation and the Queenstown Lakes District Council's push to crack down on Airbnbs.

Visitor accommodation was at a premium, occupancy rates averaging 71.2% over the past year.

New hotel development was under way but while this ought to ease pressure, it took some time to bring a hotel to market. Meanwhile, about 14% of the resort's housing stock was being used for Airbnbs.

Guests at Airbnbs injected almost $90 million into the district's economy in 2017, according to a Deloitte report.

The council wants to reduce short-term lets in some neighbourhoods from 90 days to 28 days. ''Theoretically'' that could boost rental availability, but policing it would be the key, Mr Scobie said.

The Government's proposed Overseas Investment Amendment Bill did spark ''a bit of a rush'' of foreign investors buying property, but he was unsure if that was still the case.

-By Daisy Hudson

Comments

It's time to admit that houses in Lakes district are capital goods not consumer goods. Owning a house there pretty much equals owning a viable small business. Why would it be cheap?

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