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JULY 07 QUEENSTOWN RESIDENTIAL

The Central Otago Lakes District is the fastest growing area in the country, according to Census results from Statistics New Zealand (StatsNZ). Queenstown, the biggest township in the district, has been a focal point of much of the growth, and has benefited from infrastructure developments to accommodate its increasing population.

The value of residential property in Queenstown has experienced significant growth over the last five years. The median dwelling price for the March quarter 2007 in Queenstown stood at $520,000. This is 5.4 percent above the median for March quarter 2006 of $493,500 and a significant 108 percent above the March 2002 median price of $250,000.

The development of high end apartments in Queenstown over recent years has helped to boost the median sale price. When compared to the rest of the residential dwellings market, the median sale price for apartments in Queenstown has tracked as much as 59 percent higher than the median price for other residential dwellings over the last three years.

 

 

The Queenstown Lakes District economy is highly dependent on the tourism industry with 85 percent of the activity based around this sector. Because of this the property industry in the area is unique and does not necessarily always follow the trends of other geographical areas throughout New Zealand. While traditional economic factors such as the rate of migration, the state of the labour market and mortgage interest rates, play a significant part in the Queenstown residential scene, other economic indicators influence this market, where offshore residential buyers are generally more active. These include the New Zealand dollar’s exchange rate as well as tourism industry figures.

Queenstown experienced high levels of sales activity through 2003 in tandem with the nation’s property boom. The main drivers behind this were the aforementioned traditional factors such as high migration figures, the highest they have been in the last ten years, a strong labour market with decreasing levels of unemployment and low interest rates, ranging between 7.1 and 7.2 percent.

 

 

With the strong participation of offshore buyers in the Queenstown residential market, a low New Zealand dollar makes the country a more affordable investment destination, which can have a flow on effect for the property market. This is shown in the latest cycle with increased sales activity for Queenstown continuing through to mid 2005, when activity through most other areas of New Zealand had dropped off.

Driving the extended period of sales activity were strong international visitor arrival figures, which have been increasing since 1999, according to the Ministry of Tourism. High increases in the number of visitors between 6 to 12 percent from 2000 to 2005 led to the growth of sales activity in the property market. In an economy based primarily on the tourism industry, a high number of visitors promotes economic expansion through development of local infrastructure. Also fuelling the tourism market through the period of high sales activity was the New Zealand Dollar exchange rate. The exchange rate against the US Dollar averaged a modest 55 cents since 2000 to the end of 2003, remaining under 70 cents until the end of 2004. At time of printing the New Zealand Dollar exchange rate was 77.5 US cents.