To most Kiwis, Queenstown buyers are the super-rich, international celebrities and cashed-up Aucklanders. Few would pick Dunedin as the source of new interest in the country’s most expensive housing market.
While the top end of Queenstown’s market has seen its fair share of multi-millionaire property hunters, the market as a whole is generally driven by local buyers – both from the city itself and the from wider Otago region.
The latest buyer group looking to make their mark on the city’s real estate scene are those that have benefited from rising prices in the country’s hottest property market right now - Dunedin.
Agents report that the downturn Queenstown’s economy as a result of Covid-19 and the loss of international tourism has activated interest from Dunedin-based buyers.
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Gail Hudson, general manager at Bayleys Queenstown, says buyer activity in Queenstown has increased since lockdown.
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"There are significant numbers of active buyers in the market, many of them from surrounding areas in the South Island in addition to expats looking to invest with the view of returning to New Zealand in the future,” said Hudson in the Real Estate Institute of New Zealand’s latest house price report.
"However, the negative commentary around the tourism industry means that many of these buyers are reluctant to commit at present. Bank lending continues to remain an additional challenge for purchasers.”
Colleague David Gubb, who is managing director of the franchise, had noticed a recent surge in interest from buyers from Dunedin, which he put down to rapid house price growth there.
“People are trying to get their heads around values based on what’s happened to the tourism industry but overall, enquiry levels are really good from Otago.
Above, the luxury Queenstown lodge US singer Shania Twain bought. Below, Twain in concert in New Zealand. Photos / Supplied and Getty Images
“They now have a lot more money to spend because of growth there in the past two to three years.”
He also noted a lift in buyer enquiry from expats but not the kind who come back home to raise their young children.
They were mostly young professionals aged between 25 and 35 doing their OE, who wanted to come back to New Zealand for lifestyle reasons, Gubb said.
"They are not super wealthy, but people who are looking for affordable homes. They have had a chance to reflect on where they want to live and Queenstown is quite a desirable place so they are coming through."
Economist Tony Alexander says Queenstown was in the past the aspirational holiday home spot for Christchurch and Dunedin buyers. “That’s how it used to be before Shania Twain and other celebrities showed up,” he says.
South Islanders who have been waiting for the right opportunity are now entering the market at around $1 million to $2 million mark.
“Queenstown and Central Otago are returning to the original housing support base of the mainlanders,” Alexander adds.
Mortgage Me director Guy Carter says he has noticed more buyers from Dunedin and Southern provinces entering Queenstown Lake and Central Otago housing market.
“They have had a pretty strong growth in their own areas and it’s always going to mean more equity and more wealth,” he says.
Dunedin’s housing market has outstripped Auckland and Queenstown in price growth. Photo / Getty Images
OneRoof-Valocity figures for April show Dunedin eclipsing the other major metros when it comes to price growth, with the city's median property value up 24.58 percent year on year to $517,000. Auckland's growth by comparison was 3.95 percent to $920,000. Queenstown’s median value, on the other hand, grew just 0.49 percent to $1.025 million over the same period.
Nidd Realty owner Joe Nidd, who is based in Dunedin, says the growth in Dunedin market has been amazing.
“The two things come together quite nicely: an increase of equity in Dunedin and potentially a decrease of the price they are purchasing on the other end. It’s certainly not something that we have a heightened awareness of, but Queenstown Lakes are on the receiving end of it, so it’ll be more noticeable for them,” he says.
It makes sense for Dunedin homeowners to take an advantage of low interest rates and the slowdown in Queenstown’s housing market but Nidd says more people are making a move to Dunedin from other parts of New Zealand.
Compared to the rest of the country it’s still deemed affordable. “The vast majority of people we’re dealing with are moving to Dunedin, not away from Dunedin.”
