The property services company notes the Queenstown residential market, as in most New Zealand centres, is feeling the effects of continuing high interest rates and restricted household spending.
Since 2021, sales volume has dropped about 40%, creating a buyers’ market.
However, the resort’s still bucked the national trend of reducing values, displaying "continued, albeit weak, value growth".
Colliers notes there’s been a lot of listings in newer subdivisions like Hanley’s Farm, "perhaps indicative of a greater proportion of highly-leveraged vendors".
First-home buyers have been the most active market participants — developers meeting that demand have created "a townhouse development boom" with two- to four-bedroom terraced and semi-detached townhouses in the sub-$1million price bracket.
Local Colliers registered valuer/property consultant Heather Beard says "I think historically Queenstowners have always had that preference for the stand-alone house with garden, but the reality is we’re reaching an affordability level where a big portion of the population will need to look to something smaller".
By contrast, the report states there are very few entry-level sections left, now the final stage of Hanley’s has been released.
"Section supply constraints will lead to rising land values and a greater proportion of renovations as opposed to new-build projects."
Some large subdivisions are looming, however.
They include Homestead Bay, where Hanley’s Farm developer RCL plans 1700 to 2300 sections, 580 sections at Silver Creek, now under way above Goldfields, which will also include townhouses, apartments and worker housing, the 750-section Kingston Village, where the 217-section first stage has been consented, and up to 650 lots at Park Ridge, north of Jack’s Point.
The report states: "More recently, interest rate optimism is lifting market sentiment.
"However, with real wages still around 20% lower than in 2022, even if more affordability returns to the housing market, buyers will still be challenged until wage growth catches up."
Speaking of affordability, it’s claimed the rental market’s eased in favour of tenants.
"Several factors have contributed to this, including rents reaching an unpalatable level, a poor start to the 2024 ski season deterring seasonal workers, and negative media coverage about sky-high rents deterring renters in general from moving to Queenstown."
A number of former backpackers have also been converted into staff digs.
"This has had a flow-on effect on the local investment market, with the softer rental market affecting buyer confidence and potentially contributing to the overall slowdown in residential property sales, particularly those of home-and-income properties."
At the other end of the scale, the luxury/lifestyle market had "stagnated".
Lifestyle section sales the last two years have been the slowest since 1997, though the median sales price jumped from $1.5m to $1.95m.
The report suggests the strongest sectors are the industrial market, due to the shortage of available land, and the CBD commercial market, in particular, where there’s no vacancy in the prime area and a trend towards higher-end offerings.
However, the CBD office market had 7% vacancy across 10 tenancies early this month, whereas Frankton office space is near capacity, indicating a strong preference for locals to work and shop there as against the town centre.
Tourism, the report also notes, is in "a late recovery phase", though tourism expenditure in the year to June was 6.6% down on the same period last year.
