NZ top end property running hot

Government measures to cool the market have not deterred wealthy buyers.

176 lower Shotover Road in Queenstown. Source: supplied

Despite the New Zealand government’s latest measures to cool its housing market, real estate agents report the upper end is running hot, buoyed in part by strong luxury holiday bookings from Australia’s east coast given the introduction of quarantine-free travel from Monday.

“Our inbox has been ‘slammed’ since the bubble announcement,” says Jacqui Spice, chief executive and founder of Touch of Spice, a New Zealand luxury accommodation outfit.

Spice says there’s been a mix of Australians wanting to book high-end villas with all the trimmings such as helicopters and chefs in both Queenstown and Wanaka.

“The rest of the Australian bookers, mainly from Sydney and Melbourne, are wanting Huka and Cape Kidnappers if they don’t want to ski,” says Spice, adding that some are even wanting to book Bay of Islands accommodation as far out as December.

However, bookings around ski areas are lower than expected with Australians choosing NZ beaches as well as areas known for vineyards and cuisine according to home management firm, Bachcare.

“What is coming through in our research this year is a surprising lack of bookings around New Zealand ski fields such as Queenstown and Ohakune,” said Zaina Razzaq, of Bachcare.

“At this time of year, we would typically be seeing an influx of Australian’s booking their accommodation for a midwinter ski holiday.

“Instead, the bookings are concentrated around beaches and vineyards; and feedback we are getting is that a lot of people want to spend time reconnecting with family members living in New Zealand.”

The top 10 locations for Australians are Raglan, Tauranga, Waiheke, Marlborough, Mount Maunganui, Marlborough Sounds, Martinborough, Akaroa, Whangamata and Hanmer, says Bachcare.

Meanwhile, agents report Kiwi real estate is still selling strongly despite the government’s new housing measures designed to cool off investors.

Luxury Real Estate New Zealand director Nick Horton said the measures did not affect the high end of the market and he is fielding lots of inquiry from Australian buyers.

He is presently marketing several high end homes and a vacant site at 23 Fitzpatrick Road, Queenstown, covering more than six acres of flat land with views to Coronet Peak. Around $NZ2m is expected for the site through Horton with expressions of interest closing May 12. The site can be subdivided to an average lot size of 10,000 sqm.

Horton is also marketing 176 Lower Shotover Road, Speargrass Flat, Otago, which is an architecturally designed home designed by John Blair and with a French country farmhouse look near Queenstown. Around $NZ9m is expected for the four bedroom home on four hectares.

Another luxury property for sale on 3 ½ acres is 43 Birchwood Road, Speargrass Flat, with gardens designed by Australian Paul Bangay. It is on the market through Horton. He expects around $NZ7.65m

Agents note that parts of the general NZ property market have been affected by the new measures introduced on March 23. Century 21 New Zealand owner Derryn Mayne says there has been some softness due to the bright-line test for investors extending for ten years and the removal of interest deductibility. The bright-line test brings in a tax on the income or capital gain on a property, with the profit made from the sale added to the owner’s income and subject to the marginal tax rate.

A recent REINZ survey reveals 56 per cent of agents continue to feel that prices are rising — the same proportion as August last year. While a net 66 per cent feel that FOMO (fear of missing out) remains a factor for buyers.

“This is the first significant industry survey since the housing initiatives were announced on 23 March, and it supports what we’re hearing and seeing:overall, things are not slowing yet,” says Mayne.

The survey showed 41 per cent of agents have reported seeing fewer investors. However, the market continues to enjoy significant interest from buyers with strong sale prices still being achieved.

“I agree with REINZ’s conclusion that if the government was seeking a substantial and sustained slowing of the residential property market then its work is not complete,” she says. Record low interest rates continue to help drive demand.

“High rents and low returns on offer in other sectors continue to make residential property an attractive option for investors despite the tougher rules.”

She said many buyers are now taking their chance to get in before the deposit requirement lifts to 40 per cent for investors on May 1.