Otago Market Report - With you all the way.
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
edition number two
2017
Otago
Market Report
Highland Real Estate Group Ltd
Licensed Agent REAA 2008
With you all the way.
• External factors restricting property supply
PROPERTY MARKET • Two-tier market emerging with high-end property rising in value
OVERVIEW • Long term consolidation expected
Several factors are impacting activity in Otago’s residential property market in mid-
2017, including the upcoming general election, the phase of the cycle in wider New
Zealand and a traditional winter lull. With sellers reluctant to bring property to the
market amid interest rate uncertainty, the severe lack of supply in Dunedin, Central
Otago, Queenstown and Wanaka is intensified. Moreover, demand throughout Otago
remains high and so we’re experiencing a prolonged period of sustained growth,
albeit with a steadier rate of value increase than in 2016. All reported areas except
South Otago have recorded a reduction in sales volumes in the first six months of 2017
in comparison to recent years.
Plans are in place to supply more residential land in Queenstown alongside a
simultaneous focus on commercial expansion, while considerable residential
development is forecast for Wanaka in the next year which should encourage the
steadying of values. A two-tier market is developing in these areas with property at the
upper end of the spectrum continuing to achieve new value highs and the mid-level
market consolidating due to affordability issues.
In Central Otago, low supply has driven record values in the past year and in the short
term dwellings are expected to continue achieving strong prices while more residential
The Otago population is rising at a subdivisions are being developed, due for release at the end of the year.
rate of 0.64% per year.
In Dunedin and South Otago, limited supply is driving continued growth and well-
located, high quality property is particularly sought-after. Entry level buyers are also
active in both areas and buying sentiment will continue to be characterised by a desire
to obtain good quality property in sought-after locations.
TOTAL
SALES IN OTAGO
In contrast to the common perception that winter is a slow time to sell, there’s unlikely
to be a better time to test the market as you’ll join the trend of rising values in Otago
and benefit from strong buyer interest with very little competition.
DWELLINGS
1991 THE CYCLE OF REAL ESTATE VALUES
SECTIONS Rising Real Estate Values
319 Easier Money 11
12
1
Rising Interest Rates
PEAK
Y
Stong residential ER S 2 Building activity decreases
We use median values rather than
CU
10
V
LO
R
CO
building activity
RE
W
average values in line with REINZ’s
NT
RE
DO
Rising Exchange Rates
MA
recommendations. This is because
VERY STRONG
RK
WN
ET
one anomalous figure can skew Section sales increase
ST
AT
the average value whereas the 3
E
Section sales decrease
median “mid-point” value is less 9
subject to irregularities. Medians Property shortage
REC
ECO
are a more accurate reflection of
E
the property market.
R
SSIO
T
4
AN
Falling Exchange Rates Surplus of rental property
8
N
T
SI and plentiful supply of property
RE C HE for sale
Increase in rental demand
OVERY BEGINS
Falling Interest Rates 7 5 Tighter Money
6
2017 Falling Real Estate Values
OTAGO MARKET REPORT edition no.2
WANAKA MARKET
• Economic factors keeping market strong
• Significant investment from non-local buyers
• Easing value growth after $1m+ highs of 2016
Economic, tourism and population influences are despite these areas also tracking significant lifts in
driving continued growth in the Wanaka property value over the last 12 months. The total value
market despite a lack of available property and the of annual residential
consolidation of values this year. Tourism and immigration is strong in Wanaka building work in
and, as such, strong investment is coming from Wanaka is
Although a similar number of dwelling sales were outside of the region — just 38 per cent of this
completed in Jan-Jun 2017 and 2016 (191 vs 199),
fewer than half the number of sections were sold
year’s buyers were Wanaka locals against 42
per cent from elsewhere in New Zealand. The $79,436,454
which has caused an annual rise in median land economic development of Wanaka, which
value of $100,000. Monthly reported figures for includes significant investment in the ski
sections are volatile as titles are issued during industry, will continue to attract nationals and
construction and completion of subdivisions, provide further employment opportunities, thus
but purchases are being steadily and reliably
concluded in varying locations and price ranges —
increasing competition among buyers while
also underpinning the positive rental market for The Statistics
even if they’re no longer met with queues of buyers investors. However, with LVR restrictions affecting
on public launch day. A substantial amount of land borrowing capabilities, investment is inhibited and OUTLOOK
is awaiting release in late 2017 to early 2018 and, it is improbable that the short rental supply will
with many still keen to get their hands on Wanaka be supplemented in the near future: rental rates
FOR THE REST OF 2017
land, sustained pressure on section prices is will continue to rise with temporary and seasonal
unlikely to let up until this becomes available. workers hit hardest.
Dwelling values on the other hand have steadied, The desire to live in Wanaka remains exceedingly
MEDIAN
DWELLING PRICE $790,000
with a six-month median of $790,000 — just a five
per cent increase on the previous six months. First
home buyers may feel the market has mercifully
high and new value benchmarks are still possible
if competition is encouraged with excellent
presentation and strong marketing. In the long
MEDIAN
SECTION PRICE $412,000
relented after the outstanding value peaks of $1m+
last year. Luggate and Lake Hawea are identified as
more inexpensive options for entry-level procurers
term, value growth is anticipated to ease in
reflection of the softening New Zealand market.
MEDIAN
WEEKLY RENT $600
Median sale prices have been calculated from Jan-June 2017
Source REINZ
WHERE ARE OUR BUYERS FROM? VOLUME OF SALES SECTIONS
DWELLINGS
400
OVE
350
RSE
300
AS
250
NUMBER OF SALES
NORTH
ISLAND LOCAL 200
150
D
AN
H I OF
100
SL
OTA
UT ST
SO RE
50
GO
0
JUN-07
JUN-08
JUN-09
JUN-10
JUN-11
JUN-12
JUN-13
JUN-14
JUN-15
JUN-16
JUN-17
DEC-07
DEC-08
DEC-09
DEC-10
DEC-11
DEC-12
DEC-13
DEC-14
DEC-15
DEC-16
6 MONTHLY 2007- 2017 SOURCE REINZ
View online at www.harcourtsotago.co.nz
3
QUEENSTOWN MARKET
• Two-tier market developing with top end still growing
• Uncertainty in election year limiting supply of property
• Positive outlook in the medium term
A two-tier market is developing in Queenstown values is encouraged by the slow release of new
as the backdrop of a cooling national market subdivisions. More apartment developments
inhibits mid-market growth and high end are being proposed with confidence that the
property continues to move quickly and achieve demand is there and homes in Lake Hayes Estate
premium values. and Shotover Country are now hitting $1m,
meaning many first home buyers are looking
64,654
Critical lack of supply has long been the outside of the Wakatipu for more affordable
diagnosis in Queenstown, causing extremely options.
strong growth across all price brackets for
MONTHLY AIRPORT ARRIVALS several years. However, uncertainty is evident With comparable values to Auckland,
among potential sellers in 2017 with sales Queenstown is often likened to the big smoke.
volumes taking a hit in the first six months of But with Queenstown’s lack of buildable land,
this election year — the number of completed the discrepancy between demand and supply
The Statistics
sales is down 34 per cent compared to last year. is acute. Additionally, the unique tourism and
Demand, on the other hand, remains high, immigration proposition continues to drive
prompting a median dwelling value increase growth whereas Auckland has recently seen
from $745,000 in the first quarter of 2017 to a downturn in these areas. In reality, the two
OUTLOOK $857,000 in the second. markets are now in very different places: we
FOR THE REST OF 2017 predict Queenstown’s long-term outlook to be
The family market in particular is restricted by one of sustained reliable growth while Auckland
a lack of affordability, and people in the middle leads the downturn in the general New Zealand
MEDIAN
DWELLING PRICE $890,000 pricing bracket are no longer willing to pay
premiums. High-end homes on the other hand
are moving quickly and buyers in this category
market.
In the medium term, Queenstown’s market
MEDIAN
SECTION PRICE $535,000 are willing to spend more for extra special, wow-
factor property.
will remain positive with significant growth
continuing after a fleeting period of uncertainty
regarding the election.
MEDIAN
WEEKLY RENT $775 Section sale numbers appear to have taken a hit
in the official figures but in fact many have been
sold without titles, while constant growth in
Median sale prices have been calculated from Jan - June 2017
Source REINZ
600 VOLUME OF SALES SECTIONS
WHERE ARE OUR BUYERS FROM? DWELLINGS
500
400
OVERSEAS
NUMBER OF SALES
300
LOCAL
200
NORTH
REST OF SI
ISLAND OT 100
AG
O
0
JUN-07
JUN-08
JUN-09
JUN-10
JUN-11
JUN-12
JUN-13
JUN-14
JUN-15
JUN-16
JUN-17
DEC-07
DEC-08
DEC-09
DEC-10
DEC-11
DEC-12
DEC-13
DEC-14
DEC-15
DEC-16
2017 6 MONTHLY 2007- 2017 SOURCE REINZ
OTAGO MARKET REPORT edition no.2
View online at www.harcourtsotago.co.nz
CENTRAL OTAGO MARKET
CROMWELL & ALEXANDRA
• Short supply of dwellings key challenge in region The Statistics
• Demand increasing faster than availability of property
• Market in upbeat mode for medium term CROMWELL OUTLOOK
FOR THE REST OF 2017
The Central Otago market is in a positive medium term as the region fails to satisfy
upbeat mode with the shortage of listings the
key challenge facing the growing number of
rising incoming demand from New Zealand
nationals.
MEDIAN
DWELLING PRICE $545,000
$255,000
motivated buyers. MEDIAN
The median section value throughout SECTION PRICE
All-time value highs have been recorded Central Otago has been relatively steady
throughout the region in the first six months
of 2017 with Cromwell’s market in particular
all year and many bought sections are due
to be issued titles this year — reported
MEDIAN
WEEKLY RENT $470
continuing on a remarkable incline: sale figures do not include non-titled sections.
prices hit a record high in June 2017 with a Greater availability is also expected with Median sale prices have been calculated from Jan-June 2017
Source REINZ
median of $649,500. Alexandra, meanwhile, new subdivisions in Cromwell releasing
started the year with a drop back to the values buildable land in the coming months — the
of early 2016 but has recovered impressively six-month median for a section in Cromwell ALEXANDRA OUTLOOK
with a value increase rate far superior to is $255,000 and value increases are predicted FOR THE REST OF 2017
that of last year, generating a high six-month to moderate as demand is met. In Alexandra,
median value of $382,000. you can expect to pay $169,000 for a section
Lack of housing supply throughout Central
based on the six-month median, increased
from $139,500 in the first six months of 2016
MEDIAN
DWELLING PRICE $382,000
Otago is the main contributor to these rising
values: just 167 sales were completed in
despite this year’s lift in supply. MEDIAN
SECTION PRICE $169,000
Alexandra and 135 in Cromwell in the first six After a good summer of wine-making in the
months of 2017 which has not come close to
meeting the enduring and persistent interest
region, the viticulture industry is strong and
such property is sought-after, particularly
MEDIAN
WEEKLY RENT $360
from buyers. We predict the buyer scene will from buyers outside of the region looking to
Median sale prices have been calculated from Jan-June 2017
remain highly competitive in the short and move to Central Otago for lifestyle choices. Source REINZ
500 WHERE ARE OUR BUYERS FROM?
VOLUME OF SALES SECTIONS
DWELLINGS
ALEXA CROMWE
400
N L
OVERSEAS
NUMBER OF SALES
L
DR
300 REST OF
NORTH
A
SOUTH
ISLAND ISLAND
200
REST OF LOCAL LOCAL
NORTH
100 SOUTH ISLAND LOCAL
ISLAND
O
O
0
OTAG
OTAG
JUN-07
JUN-08
JUN-09
JUN-10
JUN-11
JUN-12
JUN-13
JUN-14
JUN-15
JUN-16
JUN-17
DEC-07
DEC-08
DEC-09
DEC-10
DEC-11
DEC-12
DEC-13
DEC-14
DEC-15
DEC-16
6 MONTHLY 2007- 2017 SOURCE REINZ
View online at www.harcourtsotago.co.nz
5
DUNEDIN MARKET
• Well-located and good quality property driving overall growth
• Lack of alternative living options reducing supply
88% of Dunedin residents rate • Investor confidence predicted to continue in long-term
their quality of life as extremely
good or good, compared to 81% Dunedin is experiencing its usual slowdown in outperforming the same month last year in
across other cities. listing activity in the winter months with a lack of median values. The time property is spending
supply currently the key theme, demonstrated on the market is also currently at a median
in a 16 per cent drop in completed dwelling sales of just 25 days showing available property is
in the first six months of 2017 versus 2016. Last being sold quickly. The strongest demand is
year’s LVR alterations and the general election in the $250,000-$500,000 range with investors
are new influencers triggering a reluctance to competing with local first home purchasers.
bring property to the market, while good rental Student demand will keep driving investor
yield and attractive capital growth is seeing confidence in the long-term, particularly with
investors choose to hold on to their assets. North Island and overseas students dominating
new enrolment at the University of Otago.
On top of this, a primary issue in Dunedin is a
lack of alternative living options — many are Well-presented, refurbished or new housing
The Statistics
unable to identify property of good quality that is preferred throughout the market by those
is more suited to their needs and so they don’t looking to upgrade or obtain their ideal family
sell, limiting options for buyers. This is where we home: such property is likely to continue
believe apartment developments could benefit achieving premium prices due to limited
OUTLOOK the city — particularly because 28 per cent of availability. This trend also applies to rental
FOR THE REST OF 2017 Dunedin households are single person (2013 yields as we’re beginning to see students
census) — to free up more family-style dwellings sacrifice campus positioning for better
and ensure alternative yet good quality housing standards of accommodation. Multi-offer
MEDIAN
DWELLING PRICE $350,000 is available for those who want to downsize. scenarios are particularly common for property
in desirable locations and the method of auction
MEDIAN
SECTION PRICE $152,501 The good news for sellers is that buyer activity is
still very strong and record values are therefore
is gaining traction as sellers seek to achieve the
best possible sale value for their asset.
being logged. The six-monthly median to
MEDIAN
WEEKLY RENT $355 June is $350,000 with every month of 2017
Median sale prices have been calculated from Jan-June 2017
Source REINZ
WHERE ARE OUR BUYERS FROM? 2000 VOLUME OF SALES SECTIONS
DWELLINGS
OVERSEAS ND
NO
1500
RT
RE
HI
ST
NUMBER OF SALES
SLA
OFS
I
1000
OTAGO
LOCAL 500
0
JUN-07
JUN-08
JUN-09
JUN-10
JUN-11
JUN-12
JUN-13
JUN-14
JUN-15
JUN-16
JUN-17
DEC-07
DEC-08
DEC-09
DEC-10
DEC-11
DEC-12
DEC-13
DEC-14
DEC-15
DEC-16
2017 6 MONTHLY 2007- 2017 SOURCE REINZ
OTAGO MARKET REPORT edition no.2
View online at www.harcourtsotago.co.nz
SOUTH OTAGO MARKET
• Largest sales volume in a decade
• Capital growth in middle price bracket
• Rental stock depleted
South Otago is experiencing a period of strong as a whole recorded an average sale price of
growth with the largest sales volume in six $393,450 in June.
months since 2007. Although Otago as a whole
has recorded a 25 per cent drop in housing stock Rental stock has depleted with investors opting to
in June 2017 versus June 2016, South Otago is cash in on first home buyer demand while rental
out-performing other areas due to a marked vacancy is extremely low. As such, rental rates are
increase in local and first-home buyer activity. creeping up slowly throughout the region and
Agriculture, forestry and fishing is
are expected to continue rising, particularly in
the top industry by employee count
Locals are encouraging good capital growth townships such as Balclutha and Milton.
in the Clutha District
for tidy and well-maintained dwellings in the
$200,000-$300,000 bracket, while there’s good
demand from first home buyers looking for
property priced up to $250,000. New listings are
highly sought-after with strong initial interest,
RURAL COMMENTARY
The Statistics
but concern arises if a property has been on In the rural market, the good
the market for more than 60 days. This, in turn, economic outlook for the dairy OUTLOOK
is making some sellers uncertain as to whether industry is instilling a renewed FOR THE REST OF 2016
they can afford to get their expectations in front confidence in farming property.
of the market, limiting the amount of new listings Many rural owners are also looking
and causing competitive buying scenarios. to supplement their income with
additional offerings such as cafes
MEDIAN
DWELLING PRICE $176,250
and farm activities to cater for the
SECTION PRICE $45,000
This lack of supply has also driven value growth
over the last year with the six-month median tourism market or installation of MEDIAN
sale price now $176,250. Despite this, South sustainable energy sources such as
WEEKLY RENT $260
Otago is still excellent value compared to other solar panels and wind turbines. MEDIAN
areas of the country: the provincial South Island
Median sale prices have been calculated over a 6 month period
250 WHERE ARE OUR BUYERS FROM?
VOLUME OF SALES
NORTH
200
SO
SECTIONS
U
ISLAND
TH
DWELLINGS
NUMBER OF SALES
150
LA
ND
100 OTAGO
50
LOCAL
0
JUN-07
JUN-08
JUN-09
JUN-10
JUN-11
JUN-12
JUN-13
JUN-14
JUN-15
JUN-16
JUN-17
DEC-07
DEC-08
DEC-09
DEC-10
DEC-11
DEC-12
DEC-13
DEC-14
DEC-15
DEC-16
6 MONTHLY 2007- 2017 SOURCE REINZ
View online at www.harcourtsotago.co.nz
7
Six offices. One company. The team behind Otago. Dunedin Balclutha Queenstown Wanaka Cromwell Alexandra HIGHLAND REAL ESTATE GROUP LTD LICENSED AGENT REAA 2008
You can also read
