Queenstown Market Update - November 2023
Over the past few months we have seen a little quieting of the market, as we eagerly approached the General Election. With that over and done with now, and a new Government in place, only time will tell what will happen to house prices, interest rates and affordability.
A lot of the upcoming changes are going to benefit the property market and property owners. These are not clearly detailed yet but are well documented that interest deductibility, overseas investors able to purchase $2m+ (Australians and Singaporeans continue to do so at any level) and Bright line test being reduced from 10 years and 5 years to 2 years, are extremely likely.
A couple of the major banks have just increased their 1 year special rates to between 7.25% to 7.39%. When I look at the cost to the bank to lend you and I money (called a swap rate) at 1 year fixed it is at 5.77% today and we would have to go back to 18th September for it to be lower than this (5.76%) and it peaked 4th October at 5.96%. So, it appears the banks are second guessing where the market may head next or grabbing more profit margin. The cost to lend for 1 year fixed has been dropping since 4th October, albeit not by much, but nevertheless dropping not increasing.
Long and short of it and as has been stated for one reason and another there is slight upwards pressure on rates before they are anticipated to start to come down and when this is to occur is a moving target. 12-18 months is probably where the money is at and noting the fixed rates will certainly starting dropping before the OCR does.
As part of National’s promise for the housing market, they will be bringing back interest deductibility for investors of existing property, reducing the Bright Line test to 2 years and enabling overseas investors to purchase property over $2,000,000. This means that the 2 year backlog of investors is likely to come back into the market stronger than ever once these changes are implemented.
This means if you are a first home buyer, the clock is probably ticking, as before long you will be competing against investors who will also be pre-empting interest rates peaking and anticipation they will start dropping next year.
Open home attendance has started picking up in the market, with high-end properties beginning to attract more attention. Auctions are still proving popular, so it’s more important than ever that you are pre-approved and ready to purchase when you find the right property.
The average house price in Queenstown for September was $1,230,000, which is down 16% on the month before, but up 1.2% on this time last year. There were significantly less sales in September compared to August, however the number of sales remains similar to this time last year. Properties are still taking a while to move, with the average Otago property taking 49 days to sell - an all time high.
If you are looking to buy a property in the coming months, or it’s a goal for 2024, then get in touch with our Queenstown based mortgage advisors. We understand the local market and the effect that change has on local house prices, and we can guide you to make the best decision for you and your situation. Give us a call on 03 441 1307 today.