Vendors are seeing the market dynamics and understand that the market is more complex now, but they are still holding out for the right price in many instances which is protecting values across most levels.
The lower level of sales volumes in some areas compared to the same time last year can be attributed to a number of things – the raft of legislative changes impacting the housing market at the moment, the increasing difficulty in accessing finance (despite a record low OCR and very low mortgage rates from the banks) and vendors’ pricing expectations.
While vendors and investors take a ‘wait and see’ approach to the housing market – much like you would normally see around election time, first home buyers are steady and consistent. Speculation of a Capital Gains Tax – since rejected by the Government, the new requirements under the Healthy Homes regulations, ring fencing for tax losses on rental investments, and the offshore buyers ban has caused some investors to think twice about investing in property and has pushed some to sell their investment properties – adding to the rental properties shortage most areas face.
It is clear however, that if investors were withdrawing from the market, listings and sales would be much stronger. The lower level of sales volumes suggest that many investors are holding on to their investment properties and weathering the storm, cemented in the market due to firm values and a predicted upturn.
From 1 January the real estate industry are required to comply with the Anti Money Laundering and Counter of Financing of Terrorism Act (AML). The impact on the industry has been minor thus far – we now need to identify and verify all of our vendors. The result of this process has so far indicated little change to days to sell.
In a time of exceptional growth in tourist and resident population, the Otago region continues to offer attractive opportunities for all budgets and objectives.
The outlook for 2019 is “steady as she goes” with a predicted continuation of a reduction in sales volumes when compared to 2018. – Geoff Stevens, Harcourts Queenstown Manager.
Queenstown saw an increase in both median prices and sales volumes when compared to the month previous – climbing to $1,047,500 in March 2019 from $920,000 in February.
Pent-up demand for housing has provided a floor for activity, though the offshore buyer ban, healthy homes standards, and ring fencing of tax losses on investment property are forces that have impacted buyer confidence and resulting sales volumes in the first quarter of 2019. With the departure of overseas buyers, enquiries in the higher end of the market have dropped and nudged days to sell up slightly.
Future residential developments are expected to alleviate the severe housing shortage in Queenstown. Housing and Urban Development Minister Phil Twyford confirmed more than 300 homes – including 100 KiwiBuild homes – will be built on the former Wakatipu High School site, close to the CBD. Subdivision consent is expected to be lodged within a month and the first homes are expected to be finished in 2022.
An eventual upturn is expected due to continuing firm population growth set against insufficient construction.