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Market update - winter 2024


From an overall perspective, the regional economy in the lower half of the South Island is reflecting much of what is being experienced elsewhere in New Zealand – with households carefully reviewing their expenditure – whether that be discretionary spending on ‘luxury’ items, or scheduled outgoings such as mortgage repayments, rates, fuel, or food.

There had been universal expectations of a rise in the unemployment rate from four percent in the December quarter, up to 4.3 percent in the March quarter. This takes the rate back to where it was early in 2021, but is still below the 5.3 percent recorded mid-2020. It is critical to remember though, that over the past three decades, the rate has averaged 5.3 percent.

However, there are definite nuances in the Lower South Island economy which in fact mitigate many of the economic burdens being experienced elsewhere in the country.

For example, residential property in Queenstown, Lake Hayes, Cromwell, Wanaka, and Arrowtown is virtually immune to what is being experienced elsewhere in the country because tourism is still the overwhelming economic activity generator in this region.

Residential rental property is strongly sought-after both as short-term holiday lets, or by employees working in the tourism sector at the ski-fields, visitor attractions, or hospitality businesses in and around the region, and locals who can’t afford to buy yet.

Property investment in the Queenstown Lakes district still remains robust – sustained by these underlying geographic and economic factors. Data from the Ministry of Business Innovation and Employment records that the weekly rent level across the Queenstown Lakes locale rose by 14 percent between February 2023 to February 2024.

That’s an impressive growth figure for those with rental properties in the area – and a figure which investors will certainly be cognitive of when assessing what to buy.

With the busy winter months looming, the area is bracing itself for the return of the Australian skiers – replacing the Americans and Europeans who came and spent up over the autumn and summer months. Interestingly, visitor numbers from the U.S. are at 97 percent of their 2019 levels, while Queenstown Airport’s logs recorded that passenger flight numbers in December 2023 far exceeded numbers exceeding those in December 2019 pre-pandemic.

Economic data agency Infometrics points out that international tourism drove up Gross Domestic Product GDP) in the Queenstown Lakes region by 5.9 percent in 2023. Nationally at the same time, GDP grew by a mere 0.7 percent.

"Growth in employment of Queenstown-Lakes’ residents continued to accelerate, up to a record 10.8 percent in the year to December 2023, likely enabled by the record population growth of 8.0 percent in the year to June 2023. Employment growth has been led by the tourism sector, with accommodation and food services adding 760 jobs in the past year, and arts and recreation adding 370 positions,” notes Infometrics.

Meanwhile, with the productive rural sector playing such an important part of Southland’s greater economy, employment worries are peripheral for many working on the land. Cows will always need to be milked, sheep will always need to be mustered and sheared, tractors and farm equipment will always need to be maintained and repaired, and livestock will always need to be processed at the meat works.

Consequently, jobs in Southland’s rural productive sector remain plentiful. Likewise in Central Otago’s viticulture sector as vineyards are tended during the winter months.

Over in Dunedin, several major construction projects – spearheaded by the new hospital build, as well as expansion of premises at both Otago Polytechnic and the University of Otago, then capped off by the George Street reformatting – are underpinning high employment rates in the city.

Listings numbers of homes across the Dunedin, Otago, Southland, Invercargill, Queenstown Lakes, and Central Otago districts are high at present – up some 23 percent nationally in the nine months to the April – representing a strong ‘buyers’ market’ scenario.


Independent property economist Tony Alexander notes that many residential property buyers responding to his regular market update bulletins, are indicating they are very cognisant of job security at present when thinking about either entering the market for the first time, or selling up to move up the property ladder.

“This has been the key change in the economy since the start of the year. People, and especially young ones who have known nothing other than strong employment conditions, are shocked by the reports of layoffs. I use the word ’shock’ because in reality the overwhelming majority of people are not affected,” said Tony Alexander.

Tony Alexander’s last point is particularly poignant… that the “overwhelming majority of people are not affected” by the current economic slowdown – as noted in my earlier comments in relation to the Lower South Island.

With a comprehensive network of offices in Dunedin, Mosgiel, Invercargill, Gore, Winton, Arrowtown, Cromwell, Wanaka, and Queenstown, Bayleys across the Lower South Island gets a broad cross-sector of feedback from the scores of open home attendees and database contacts our teams speak to week-in/week-out.

Consequently, we are hearing directly from the ‘coal face; about what is happening in our local districts and sub-regions. Reflecting what we are hearing, many of the residential property buyers which Bayleys Otago, Central Otago, and Southland are talking to, are expressing their desire to get in now ahead of the looming bow-wave, and are looking to secure their next residence over the next three to four months while much of the market, and thereby the buyer competition, is in economic hibernation.

That correlates with Tony Alexander’s forecast that just as the Reserve Bank over-loosened monetary policy during the pandemic and in the year immediately after, the bank has now ‘over-tightened’ its policy. He, like the general public, is predicting there will be rapid official cash rate cuts later this year – which will lead to a reinvigoration of the economy.


Latest in-depth Otago regional sales data from the Real Estate Institute of New Zealand reflects this, and shows that residential property prices across the region are all up year-on year over the 12-month period to the end of last month.

The year-on-year residential property value increases within Otago’s districts include: • Clutha District – up 16.8 percent from $375,000 to $438,000 • Waitaki District – up 14.1 percent from $412,000 to $470,000 • Queenstown Lakes District – up 29.5 percent from $1.12million to $1.45million • Dunedin City – up 9.4 percent from $575,000 to $629,000 and • Central Otago District – up 14.5 percent from $730,000 to $836,000.

The REINZ data also tracked that in Otago, the current median number of days to sell a residential property now sits at 41 days – more than the 10-year average for April which has been 36 days.

On current sales levels, there was 20 weeks of inventory on the market for sale in April – which is two weeks more than the same month in 2023. The REINZ data also showed that year-on-year, the number of homes sold rose 6.4 percent over the period – up from 311 dwellings sold in April 2023 to 331 residences changing hands in April 2024.

Digging down deeper into the statistics, the Real Estate Institute of New Zealand commentary for the wider Otago province identifies that: “First home buyers and owner-occupiers remained the most active in the market.”

Meanwhile down in Southland, the REINZ statistics highlight similar signs of positivity for property values over the 12-month period to the end of April 2024, encompassing: • Invercargill City – up 13.4 percent from $410,000 to $465,000 and • Southland region - up 7.1 percent from $425,000 to $455,000.

Values remained the same in Gore – at $380,000. The Real Estate Institute of New Zealand statistics for Southland emulate activity in its neighbouring province, showing the current median number of days to sell a residential property in the district now sits at 40 days – more than the 10-year average for Southland in April which has been 36 days.

On current sales levels, there was 15 weeks of inventory on the market for sale in Southland in April 2024 – which is six weeks less than the same month last year. The REINZ commentary for the wider Southland province identifies that: “Some purchasers remain cautious and are taking time before making decisions.”

“Factors such as mortgage serviceability and challenges for buyers with getting finance approved are having the most impact on market sentiment,” adds the REINZ review.

As an indication of what type of dwelling style home buyers are now purchasing, recent Statistics NZ data shows that the number of consents issued for new dwellings to be built fell 26 percent year-on-year to the end of March – sitting a few weeks ago at an inventory of 35,200 dwellings – down from 46,900 a year earlier.

Bayleys’ offices in Dunedin, Mosgiel, Invercargill, Gore, Arrowtown, Winton, Cromwell, Wanaka, and Queenstown, as well as the surrounding areas and towns they service, are well positioned in this sector of the market – with a high proportion of our listings being standalone dwellings, or terraced residences.

So there you go with a comprehensive overview of not only the residential property market in the Lower South Island, but also analysis of what is driving the market. I hope the information and data has been useful in guiding you towards the next phase of your real estate buying or selling decision.

As always, if you uncover a property of interest or appeal, feel free to contact the Bayleys salesperson marketing the property for a chat on how we can assist in achieving your real estate dreams. We look forward to talking with you.

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