Queenstown crisis: ‘If someone gave me a crowbar, you could solve it overnight’

Queenstown’s housing problem is complex and not easy to fix, say those in the industry.

The expensive tourist town has seen a “ferocious” resurgence of population since it emptied of tourists and staff after Covid arrived.

Now they are back and there is a dire shortage of rental accommodation with some people sleeping in cars as winter approaches.

But the problem is not a lack of houses, says independent economist Benje Patterson, who lives in Queenstown.

Among issues faced by the town is that Covid led to a big demand for secondary homes by Aucklanders and others buying to holiday there but changes to legislation have made people more reluctant to rent their properties out.

Queenstown is still super expensive, he says. While values have flattened, the town has not slumped like some other parts of the country’s housing market.

The latest OneRoof-Valocity house price figures show the average property value in Queenstown-Lakes district grew 1% in the last three months to $1.908 million, and is up more than half-a-million dollars on pre-Covid levels.

Queenstown has distinct categories in its housing market, ranging from managed apartments used by owners a set amount of time per year to multi-million-dollar luxury houses in the hills which often sit empty for parts of the year.

Patterson says the luxury homes don’t usually form part of the rental pool anyway but there are thousands and thousands of standard three to four-bedroom subdivision homes around, some of which have been bought as secondary homes, that are now not going to the rental pool either but rather to Airbnb and Bookabach.

Data shows rental properties with active bonds lodged went up in the early stages of Covid but have been steeply declining over the past year, he says.

“We’ve actually been losing rentals at the same time as we still had pretty sharp population growth.”

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Homeowners don’t want the “fuss” of putting the house into the rental pool, or they want to keep it as a holiday home or as something to retire to further down the track.

Patterson points to legislative changes which he thinks have misfired in a town with a different mix of tenants to other places.

The changes include the removal of tax deductibility for landlords, new healthy homes standards and also changes to the Residential Tenancy Act which Patterson says all play a role in a complex picture.

Healthy homes standards make it harder for older properties to be rented, but the standards don’t apply to short-term accommodation which is why in Queenstown those homes go on Airbnb.

Landlords have not been as active because of the removal of tax deductibility, and the Residential Tenancy Act changes have meant formerly common short-term rentals for eight or 10 months to seasonal workers are not so easy.

“Don’t get me wrong,” Patterson says, “these are very well-intentioned policies that long-term are incredibly beneficial to help protect tenants but we’re facing the brunt of it here and now, because the stories of people sleeping in cars are real, absolutely real, you just need to drive around backstreets and see it at night.”

Independent economist Benje Patterson: “We’ve actually been losing rentals at the same time as we still had pretty sharp population growth.” Photo / Craig Baster, Otago Daily Times

Queenstown residents in March take to the streets to raise awareness about the shortage of rental accommodation in the city. Photo / Otago Daily Times

There needs to be short-term levers made available in a town like Queenstown to encourage rentals, he says, because the housing exists.

“Put it this way, if someone gave me a crowbar and immunity from prosecution, you could solve it overnight.

“There are physically enough beds and enough sheets in this town to house everyone, it’s just availability and use of housing.”

Harcourts Queenstown sales manager Priscilla Uhrle says the biggest volumes of sales over the past three months have been in the $1m to $1.5m band but she says there are still “plenty” of residential apartments and townhouses available to buy for under $1m, and there’s plenty of buyer inquiry for them, too.

“There is a huge opportunity to purchase affordable modern, warm residential apartments in Frankton, close to so many amenities.”

Uhrle thinks some Kiwis are still holding on to the dream of owning a piece of land and as such are overlooking low maintenance apartments or older townhouses with a garden and a basic body corp set-up.

Aimed at first-home buyers, this two-bedroom home at 35D Robins Road, in Queenstown, goes to auction on May 11. Photo / Supplied

A two-bedroom home for sale at 16/18 George Bullen Lane, in Arthurs Point. The listing says the owners have left town and want the property sold. Photo / Supplied

Harcourts has an “amazing” selection in the $650,000 to $1m price point, she says, including a two-bedroom townhouse not far from the CBD.

Also on the market is a two-bedroom property in the suburb of Arthurs Point, and a two-bedroom property in Frankton, which is part of an apartment complex and being sold by offshore owners.

It's a great time to buy, Uhrle says, although demand is highest in the $1m to $1.5m band.

“We are working with a large number of buyers wanting to secure a home to live in, both local interest as well as buyers who are relocating from other parts of New Zealand and overseas.

“Queenstown will always be a desirable place to live. Our agents are always scouting for new properties for our buyers – not all properties make it to the internet, however, the opportunities are there.”

A two-bedroom property at 37/716 Frankton Road, in Queenstown, goes to auction May 11 and is pitched at first home buyers and investors. Photo / Supplied

A two-bedroom apartment at 603/34 Lake Esplanade, in Queenstown, is on the market with a price tag of $619,995-plus. Photo / Supplied

New Zealand Sotheby’s International Realty agent David Penrose is selling an apartment in another part of the affordable market in Queenstown.

The two-bedroom managed apartment in central Queenstown is on for $619,995, plus GST if any.

There are conditions around managed apartments such as this, where owners can use the accommodation for a certain number of days each year and it stays in the manager’s pool otherwise.

“There’s a good, steady inquiry for properties like that,” Penrose says.

“There are a lot of owners that don’t reside here particularly from around New Zealand, Australia, Singapore, for example, and further afield, that want a slice of paradise that Queenstown gives people and as a result they can buy and own a managed apartment.”

The nature of a tourist town is having a hospitality industry served by foreign nationals, who stay for a while and enjoy all the recreational benefits then move on, he says.

There is a shortage of properties, he thinks, from the bottom to the top of the market, but also says the local council is pulling its weight with a number of homes being built to accommodate families with children.

He says the upper part of the market, which Sotheby’s specialises in, is very much alive - and as for the managed apartment he has for sale demand is such he does not expect it to be on the market for long.

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