Otago Market Report EDITION TWO 2020
Queenstown | Wanaka | Dunedin | Cromwell | Alexandra | Balclutha
20 3-20 201 Re al E ies state A g e n c
Six offices. One team. Highland Real Estate Group Ltd Licensed Agent REAA 2008
OVERVIEW Dunedin is the ‘shining star’ in Otago, with Government investment steaming ahead in the $1.4billion hospital build and a range of other commercial projects. The city is waking up to a bright future as a technology hub and a burgeoning tourism destination.
Local buyers have increased and are more active in the market, buying both family homes and investment properties.
During the first quarter of 2020 Dunedin experienced buyer frustration due to the short supply of housing and few residential developments on the horizon. Now the city is in ‘catch up mode’ as demand continues and they continue to get more and more buyers through open homes. While the Queenstown tourism sector has some hurdles to overcome, it is bouncing back with new and ‘pivoting’ ways to do business with plenty of hotels still under development. The new Holiday Inn Express & Suites Queenstown opened earlier this month which sits under the InterContinental Hotels Group global chain and is comprised of 227 guest rooms designed for the ‘smart traveller’.
New Zealand expats are becoming more prominent in the market as they look to return home.
As we said in our previous market report, Wanaka is striding ahead with sections being titled. This time, section sales volume has superseded dwelling sales volume, the opportunity in the market may be for purchasers to build their own family homes and out of town buyers to build their dream holiday home. Cromwell is moving forward with the launch of the stunning Wooing Tree Estate development, fringed by vines and a cellar door and with access to the best of a Central Otago lifestyle.
Dunedin and provincial towns will continue their growth phase.
The Otago market has seen strong interest from vendors with listings close to normal levels for this time of year. Returning and future returning New Zealanders are feeding buyer and tenant demand, whilst first-time buyers and property investors are vying for properties. New Zealand’s success in getting on top of COVID-19 and enhancing our growing global reputation has married with record low interest rates and money saved from a decrease in overseas travel, offsetting negatives and meaning the market remains well-supported.
Wanaka is absorbing a large amount of land into sections and prices remain firm.
As economist Tony Alexander says, there is confidence and resilience in our market. With migration on the up, low debt growth, continued investment demand, a continued listings shortage and the ability for many to work from home (making lifestyle choices in Central Otago even easier and reducing business outlays) the outlook is promising.
Otago region median house prices compared with New Zealand 1.200.000 1.100.000 1.000.000 900.000 800.000
Source REINZ
700.000 600.000 500.000 400.000 300.000 200.000 100.000
0 2002
2004
Alexandra
2
2006
2008
Balclutha
Cromwell
EDITION TWO 2020 | View online at www.harcourtsotago.co.nz
2010
Dunedin
2012
Queenstown
2014
2016
Wanaka
2018
New Zealand
2020
O
OTAGO HAPPENINGS Throughout Otago there are a number of local updates or aspects to celebrate. Take a look at the most topical happenings for each region.
Queenstown Lakes District Council (QLDC) and the Queenstown Airport Corporation is reviewing plans to introduce a second jet-capable airport in Wanaka in the light of a downturn in flights due to COVID-19. Wanaka Airport plans and assessments are now being re-assessed with a decision unlikely before later this year. In the meantime Sounds Air is pushing for a scheduled air service between Wanaka and Christchurch.
D
QLDC has taken the first steps in turning the former Lakeview campground and holiday park site in central Queenstown into an extension of the CBD. Working with a consortium of Ninety Four Feet and Augusta Capital the billion-dollar plans to transform the 10ha site include a mixed-use development with housing, hotel and retail. The Dunedin-based New Zealand Centre of Digital Excellence (CODE) is forging ahead with the ongoing establishment and development of Dunedin’s video game development ecosystem and initiatives. $700,000 in grants to establish the business came from the $10million Provincial Growth fund. CODE strengthens Dunedin’s reputation as a hub for creativity and innovation. Alexandra is celebrating the establishment of a business hub which houses Industry Lane Eatery, a conference centre, Will Bike, Well South, Breen Homes and Breen Construction. It is set to become a destination for people cycling the Otago Central Rail Trail. Work is continuing on the Cromwell Masterplan although it has been disrupted by the lockdown. Planning consultants are working on drafting rural and industrial plan changes based on the Cromwell Spatial Plan document which should be ready for public notification soon.
3
EDITION TWO 2020
W
QUEENSTOWN MARKET You cannot keep a good town down. Queenstown may have had some hurdles to overcome in the past couple of months due to COVID-19, but that cannot be the sole focus of the property market due to the strong performance seen in the first quarter of 2020.
$750
$620,000
WEEKLY RENT
MEDIAN SECTION PRICE
$1,100,000 MEDIAN DWELLING PRICE
Median sale prices have been calculated from January - June 2020 Source REINZ
hunt’ for well-priced properties. At Jacks Point in particular, homes within the $1.5 to $2million bracket are seeing very strong sales. 43% of sales are still strongly local buyers, those for whom Queenstown is home and they continue to grow their portfolio.
The median dwelling price over the past six months is sitting strongly at $1.1million which is an ever so slight decrease when compared to this time last year. The median section price is up from this time last year at $620,000. We are seeing the sales volume increasing at 12.9% year on year. There is increased interest from buyers looking to buy their slice of paradise with holiday home ‘lock-nleave’ properties in the $850,000 to $1,000,000 price bracket attracting many multi offers.
During lockdown, there was a significant increase in online viewings, and enquiries have started to flow as a result. 13% of purchasers are coming from overseas. Many of those are expats from all over the world who are looking to return home and get a peg in the soil. In addition to these expats, Australian and Singaporean buyers are enquiring within the Queenstown market.
There is still a shortage of listings and that in itself is increasing prices. Although banks are offering more attractive interest rates, they are making it more involved for people to get finance. But first-time buyers who have secured a deposit are ‘on the
There has been significant interest at the top end of the market, and the only thing holding back sales is that demand has exceeded supply. Investors are still waiting in the wings and hoping prices will drop however this is currently unknown.
VOLUME OF SALES
We are delighted to have marketed and sold 27 Hackett Road in Jacks Point for $1,960,000 sight unseen via the use our digital initiatives to purchasers based in Australia. In the commercial sector, there is plenty of retail and commercial space coming onto the market which appeals to a burgeoning new sector in the tech space. But it is also opening up plenty of opportunity for existing businesses to perhaps expand into the Queenstown CBD for the first time. Confidence and resilience mean the Queenstown market is still looking positive. Queenstown is still one of the best places in the world to live, it is still an outstanding lifestyle destination, and what lockdown has proved is that people can work from anywhere in the world. Rest South Island North Island
Local Overseas
SECTIONS DWELLINGS
600
400
WHERE ARE OUR BUYERS FROM?
300 200
6 MONTHLY 2008- 2020 SOURCE REINZ
4
EDITION TWO 2020 | View online at www.harcourtsotago.co.nz
JUN-20
JUN-19
DEC-19
DEC-18
JUN-18
DEC-17
JUN-17
DEC-16
JUN-16
DEC-15
JUN-15
DEC-14
JUN-14
DEC-13
JUN-13
DEC-12
JUN-12
DEC-11
JUN-11
DEC-10
JUN-10
DEC-09
0
JUN-09
100
DEC-08
NUMBER OF SALES
500
EDITION TWO 2020
WANAKA MARKET There’s plenty of ‘armchair expert’ commentary out in the market about the effects of COVID-19, however Wanaka is quietly holding its own. Wanaka’s hospitality and accommodation outlets are benefiting from the community as they continue to support local businesses, and the growing number of Kiwi tourists including traffic from school holiday makers. Buyers who are considering purchasing a holiday home often look to Wanaka now more than ever given overseas holiday expenditure may not be touched for some time. With good equity built into principal homes and low interest rates, now is being seen as a good time to secure a mortgage and invest in a Wanaka property. It provides safe and healthy family holidays, a short-term rental option, there when you need it and provides capital gains long term. Open home numbers for well-presented and well profiled houses are very strong, even midweek. Airbnb owners are being supported by Kiwis who like the benefits of accommodation with a kitchen to
$640
$390,000
$975,000
WEEKLY RENT
MEDIAN SECTION PRICE
MEDIAN DWELLING PRICE
Median sale prices have been calculated from January - June 2020 Source REINZ
mostly self-cater whether it be a couples retreat to Wanaka or a family holiday. With a nationwide housing shortage continuing to be an issue, and expats returning, many new residents are moving to Wanaka from urban centres, seeking a lifestyle change. Our rental team is seeing a wide range of rental applications, from tradespeople to ‘remote’ business owners and employees who can work from home. Their timing is good with a range of rental properties currently available. That means sections could also be the opportunity of the future with low interest rates and a good selection of rental properties on the market, making the process of living somewhere while construction takes place and managing payments a little less daunting.
the driver behind locals trading up. There is good news for Wanaka’s Mount Aspiring College, the only high school. It has just attracted Government redevelopment funding of $33.5million, in addition to $13million already approved by the Ministry of Education. Last but not least, the new median section price isn’t an accurate picture of values or current market volumes. Some of the sale prices that have just come through in the statistics were from sections that sold off plans up to three years ago but have only now been registered as titles have been issued. Always make sure you talk to your local trusted Harcourts agent to obtain the latest property market information. Rest South Island North Island
Local Overseas
Those low interest rates could also be
VOLUME OF SALES
SECTIONS DWELLINGS
600
400 300
WHERE ARE OUR BUYERS FROM?
200
JUN-20
JUN-19
DEC-19
DEC-18
JUN-18
DEC-17
JUN-17
DEC-16
JUN-16
DEC-15
JUN-15
DEC-14
JUN-14
DEC-13
JUN-13
DEC-12
JUN-12
DEC-11
JUN-11
DEC-10
JUN-10
DEC-09
0
JUN-09
100
DEC-08
NUMBER OF SALES
500
6 MONTHLY 2008- 2020 SOURCE REINZ
5
DUNEDIN MARKET If Queenstown is the bungy capital of New Zealand, then Dunedin is claiming the title of ‘Property Bungy Capital’ with prices rebounding quickly after lockdown.
But just as bungy jumpers rebound, prices climbed back to a median value of $509,000 in June. That is because the fundamentals haven’t changed. Dunedin continues to face a severe shortage of available homes for sale, with no major subdivisions on the horizon and growing demand from buyers.
After a meteoric rise in property prices that recorded record highs in 2019, the Dunedin market has shown astounding resilience in the face of COVID-19. At the start of 2020 median values climbed to $548,000 due to a severe lack of listings for sale, with February and March showing continued confidence from buyers. As you would expect, the lockdown period resulted in median values in April dropping to $490,000 on the back of just 22 sales.
Couple this with major building projects underway and in the pipeline, and record low interest rates, we anticipate further pressure on Dunedin property values for the remainder of the year. We are seeing continued high demand from first home buyers, but realistically the Government
will need to review the KiwiSaver cap of $400,000 as quality homes below this level are fast becoming a thing of the past. Investors are adjusting their yield expectations down to 4-5% levels or risk being outbid by first home buyers. The Healthy Homes tenancy standards have seen good improvements made to a lot of older Dunedin homes, which in turn makes them even more attractive to first home buyers if they come up for sale. There is a real shortage of quality mid-range homes for sale that might suit family home buyers, continuing to cause a logjam at the entry level end of the market.
SECTIONS DWELLINGS
VOLUME OF SALES 1500
NUMBER OF SALES
1200
900
600
6 MONTHLY 2008- 2020 SOURCE REINZ
6
EDITION TWO 2020 | View online at www.harcourtsotago.co.nz
JUN-20
DEC-19
DEC-18
JUN-19
JUN-18
DEC-17
JUN-17
DEC-16
JUN-16
DEC-15
JUN-15
DEC-14
JUN-14
DEC-13
JUN-13
DEC-12
JUN-12
DEC-11
JUN-11
DEC-10
JUN-10
DEC-09
JUN-09
0
DEC-08
300
EDITION TWO 2020
DUNEDIN MARKET $450
$225,000
$515,000
WEEKLY RENT
MEDIAN SECTION PRICE
MEDIAN DWELLING PRICE Median sale prices have been calculated from January - June 2020 Source REINZ
Our buyers are still predominantly local, with 82% of Dunedin sales going to this sector, confirming the commentary above and the demand. 11% of buyers came from other parts of the South Island, and 5% from the North Island. These would predominantly be investors, although we are starting to see some people relocating to the area post lockdown. The same would be true of the 3% of offshore buyers who may well be ex-pats returning to New Zealand. We expect to see this international interest grow over the coming months with continued COVID-19 unrest offshore. Our global reach certainly takes Dunedin property further. As well as an ‘on-fire’ housing market, commercial activity is humming along very nicely. Demolition is well underway on the former Cadbury factory site,
making way for the long-awaited new hospital. This is the single biggest hospital build ever in New Zealand, costing up to $1.4 billion. Predicted to create over 1,000 jobs during the build, it’s hard to imagine where available accommodation will be found if this means more workers coming to town, putting increasing pressure on rental market availability and pricing. It is no wonder investors are flat out looking for good investment properties, particularly those that could be refurbished or remodelled to add more bedrooms. Student accommodation remains a popular investment, and there will likely be competing interest in renting these properties from tradesmen coming to town.
space, and excellent demand for warehouse space of which we still have a real shortage. Overall the outlook remains very strong. Just like the Enterprise Dunedin tourism slogan says, we’re a pretty good Plan D. Especially if D stands for ‘Darling’ of the New Zealand property market!
Rest South Island North Island
Local Overseas
WHERE ARE OUR BUYERS FROM?
Commercial property remains tightly held. We have seen some decline in Main Street retail demand, steady demand for office
7
CROMWELL MARKET Change is in the air in Cromwell with the launch of a new housing development, and major infrastructure improvements in the pipeline.
$460
$310,000
$685,000
WEEKLY RENT
MEDIAN SECTION PRICE
MEDIAN DWELLING PRICE
Median sale prices have been calculated from January - June 2020 Source REINZ
The outlook is one of cautious optimism, with a highlight being Wooing Tree Estate Development scheduled to start the 27-section stage 1A and 1B on August 1. This is a fantastic long-term show of confidence in the market by Tauranga-based developers and the local owners of Wooing Tree.
Median dwelling prices have remained consistent when compared to this time last year, while median section price has risen slightly. As expected, sales volume was limited in April/May, but it is picking up again with sales consultants reporting stronger enquiry across the board, also reflected in the value of two recent stand-out sales.
Discussions between Transit and the Wooing Tree developers are underway for a roundabout at the intersection of SH 8B and Barry Ave along with a pedestrian underpass. A much-anticipated roundabout at the intersection of State Highway 6 and 8b is also getting closer and both developments will see road speeds reduced, a great community plus.
While other regions struggle with low stock figures, Cromwell has a mix of properties available from first home to higher end, and sections including three of the first tranche of Wooing Tree Estate sections being actively marketed by our Cromwell office. Recent stand-out sales include a property which sold at an asking price of $1,880,000 in June, after being on the market for some time. Another home also sold in June at $1,548,000, just below asking price.
Before lockdown, the commercial sector was showing signs of strengthening ($400sqm not uncommon) but it has since softened. However there is continued
confidence within this market thanks to Cromwell’s strategic location and lower land costs than the surrounding regions. Buyer demand is strong, although funding is proving hard for some first home buyers. Local buyers make up 41% of the market, but this is topped by the rest of the South Island sitting at 46% who see the benefits of a Cromwell lifestyle. The outlook for Cromwell is very positive. The area remains attractive for retirees and those with young families looking to establish themselves in the property market.
Rest South Island North Island
Local
VOLUME OF SALES SECTIONS DWELLINGS
300
WHERE ARE OUR BUYERS FROM?
200 150 100 50
6 MONTHLY 2008- 2020 SOURCE REINZ
8
EDITION TWO 2020 | View online at www.harcourtsotago.co.nz
JUN-20
DEC-19
DEC-18
JUN-19
JUN-18
DEC-17
JUN-17
DEC-16
JUN-16
DEC-15
JUN-15
DEC-14
JUN-14
DEC-13
JUN-13
DEC-12
JUN-12
DEC-11
JUN-11
DEC-10
JUN-10
DEC-09
JUN-09
0
DEC-08
NUMBER OF SALES
250
EDITION TWO 2020
ALEXANDRA MARKET While tourism hotspots across Central Otago wake up to their ‘new normal’ of reduced visitor numbers, it’s a different story in Alexandra and surrounds. In 2019 the Alexandra market was 77% domestic tourism which is predicted to hold up and perhaps increase over summer, with worldrenowned cycle trails predicting record numbers. The town is progressing with steady population growth, even steadier house prices, new developments in the pipeline and strong buyer demand. The median dwelling price has risen again, following the usual autumn ‘dip’, and the good news is residential stock available has increased across all price brackets. There is currently three months’ supply for Alexandra and surrounds after understandably reduced sale volumes in March/April. First home buyers are active and are taking advantage of record low interest rates, as are investment buyers looking for a ‘better than bank rate’ return on investment.
$390
$260,000
$450,000
WEEKLY RENT
MEDIAN SECTION PRICE
MEDIAN DWELLING PRICE
Median sale prices have been calculated from January - June 2020 Source REINZ
There has been a significant increase in the availability of vacant lifestyle sections. Buyers are spoilt for choice with three new developments on the market although the availability of titled residential sections is presently limited.
attracting the majority of buyers from further afield in the South Island (68%), many buying investment properties before planning to retire later. 25% are locals buying and selling within the area, and 6% are North Island based.
A recent residential auction sale in Clyde for a 4-bed weatherboard cottage on a 2981m2 section sold at $660,000, or 26% over GV. Extensive digital marketing achieved 20,0000+ digital reach, 7000 video views, 38 enquiries and six registered bidders on auction day.
On the commercial front, the GWD Toyota new build is well underway with completion on track for the end of this year. There has been a number of business relocations within the town with lease negotiations generally showing a slight rent increase and fingers are crossed for resource consent approval for a new Countdown supermarket by the end of 2020.
Clyde, with its historic centre, boutique shops, restaurants and cinema, has a unique following. Public submissions are being called for a new Clyde subdivision for 150 residential sections between 400m2 to 800m2, and Stage One of its wastewater upgrade is due to be completed in 2021.
Rest South Island North Island
Local
Alexandra continues the trend of
VOLUME OF SALES SECTIONS DWELLINGS
300
200
WHERE ARE OUR BUYERS FROM?
150 100 50
JUN-20
DEC-19
DEC-18
JUN-19
JUN-18
DEC-17
JUN-17
DEC-16
JUN-16
DEC-15
JUN-15
DEC-14
JUN-14
DEC-13
JUN-13
DEC-12
JUN-12
DEC-11
JUN-11
DEC-10
JUN-10
DEC-09
JUN-09
0
DEC-08
NUMBER OF SALES
250
6 MONTHLY 2008- 2020 SOURCE REINZ
9
SOUTH OTAGO MARKET The South Otago property market remains strong, despite the median dwelling price decreasing slightly to $276,000 when compared to the same period last year.
$350
$74,000
WEEKLY RENT
MEDIAN SECTION PRICE
$276,000 MEDIAN DWELLING PRICE
Median sale prices have been calculated from January - June 2020 Source REINZ
predominantly local (up to 65% compared to 60% in the previous quarter). We have seen a good number of tenants take advantage of low interest rates and make a step onto the property ladder.
This is very understandable due to a low volume of sales during the nationwide lockdown period and 15 sales over April and May, meaning these figures are unlikely to truly reflect continued demand.
Standout sales include a quality 4-bedroom home on Helensbrook Road in Milton which sold for $650,000, while Balclutha witnessed the sale of a nice 3-bedroom 2-bathroom modern home on Stewart Street for $585,000. This represented a 20% increase on the level a similar home in the same development sold for in 2018. Both of these sales levels are representative of a shortage of quality homes available to suit those buyers, and we anticipate continued pressure on price for well-presented modern homes.
Another factor to take into account is that the majority of available homes for sale have been entry to mid-range level, with a shortage of quality higher-end homes available producing a downward effect on median values. First home buyers remain very active, and investors are showing continued confidence in the South Otago market, evidenced by the fact that 31% of buyers came from out of town. Buyers have remained
There are a number of brand new builds around Waihola, driven by demand from Dunedin buyers who are willing to commute and are looking for more affordable new home options as Dunedin prices continue to rise. A small subdivision in Milton is providing some land and build options which are proving popular with buyers. We have buyers looking for quality homes on lifestyle blocks, but these are few and far between at present. Overall the outlook continues to be positive and we anticipate a return to pre-lockdown median values as stock availability and volume of sales increase to more normal levels. Rest South Island North Island
Local
VOLUME OF SALES SECTIONS DWELLINGS
150
WHERE ARE OUR BUYERS FROM?
100
50
6 MONTHLY 2008- 2020 SOURCE REINZ
10
EDITION TWO 2020 | View online at www.harcourtsotago.co.nz
JUN-20
DEC-19
DEC-18
JUN-19
JUN-18
DEC-17
JUN-17
DEC-16
JUN-16
DEC-15
JUN-15
DEC-14
JUN-14
DEC-13
JUN-13
DEC-12
JUN-12
DEC-11
JUN-11
DEC-10
JUN-10
DEC-09
JUN-09
0
DEC-08
NUMBER OF SALES
200
YEARS
MOST TRUSTED BRAND
Most Trusted Real Estate Brand, 2013-2020.
THANKS, NEW ZEALAND. 20 3-20 201 Re al E ies state A g e n c
Queenstown | Wanaka | Dunedin | Cromwell | Alexandra | Balclutha *Reader’s Digest Most Trusted Brand Real Estate Agencies 2013-2020. Highland Real Estate Group Ltd Licensed Agent REAA 2008
20 3-20 201
The real estate agency of choice in Otago
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Six offices. One team. Our vast network of active buyers in the region, nationally and internationally gives you the best chance of generating maximum interest in your property. With the power of the largest real estate group in New Zealand behind us, our business is specifically set up to enable buyers and sellers from around the world to come together and mutually achieve their property ambitions.
Alexandra.
Cromwell.
Balclutha.
Queenstown.
Wanaka.
Dunedin.
03 440 2088 alexandra@harcourts.co.nz
03 441 0777 queenstown@harcourts.co.nz
www.harcourtsotago.co.nz HIGHLAND REAL ESTATE GROUP LTD LICENSED AGENT REAA 2008
03 445 1155 cromwell@harcourts.co.nz
03 443 7829 wanaka@harcourts.co.nz
03 418 1990 balclutha@harcourts.co.nz
03 477 5334 dunedin@harcourts.co.nz