Strong property market in the South Island

VICKI HOLDER examines the property markets in the South Island.

In the past 12 to 18 months, residential and rural property markets in the South Island have been particularly strong in the provincial areas.

Harcourts' southern regional manager, Bryan Thomson, says properties have become hard to find and the pressure has lifted prices.

Ray White's South Island franchise manager, Tayte Cozens, attributes the strength to a combination of expat New Zealanders returning home in search of security, peace of mind and good value, plus the strength of the rural sector.

"There are a lot of investors with discretionary money to spend," says Cozens. "If you drive up the east coast through Oamaru, Timaru, and Gore, you will see more sold signs than you will for sale signs."

Thomson highlights Nelson and Marlborough as particular hot spots. "In Nelson, there are a lot of offshore purchasers - people shifting for the climate and the lifestyle," he says.

"With fishing, tourism and horticulture, the multi-faceted economy makes it strong. It's becoming a cosmopolitan centre."

Tony Vining, of Bayleys, Nelson, says Nelson is finally being recognised as "a destination lifestyle pozzie". "We have good infrastructure, port facilities and lots of industry," he says.

"The unemployment level is one of the lowest in New Zealand. Prices in key areas, such as the Port Hills, and in waterfront areas are experiencing huge rises. Some properties are achieving more than double their CVs. Lifestyle properties are also selling like hot cakes."

Adds Harcourts' Thomson: "Marlborough has been strong due to the wine industry. Huge areas of land are being planted for viticulture."

Heading further south, Invercargill has had a huge resurgence. The impact of farming has been considerable, according to Thomson, and the area is now one of the strongest markets in New Zealand. Ray White's Cozens says it's normal for a salesperson to complete around 10 sales a month in the area.

Driven by offshore interest and buyers north of Christchurch, the areas of Queenstown and Wanaka have had tremendous growth in the past 18 months.

Extensive residential development has spread across Wanaka, says Don Kindleys, of Don Kindleys Real Estate. New developments include a residential complex beside the golf course in Double Bay, a subdivision at Peninsula Bay and a residential and tourist development on the mountain.

Most sales fall in the $500,000 to $1 million bracket, but sales volumes start to slow beyond that.

High prices in Queenstown and Wanaka have put the areas out of many buyers' reach, and there has been an accommodation shortage in the regions. As a result, many people commute from Cromwell and Alexandra, which has pushed prices up in these areas, says Thomson.

Liz Nidd, of Bayleys, reports a buoyant start to the year in the Dunedin office. North Islanders are attracted by the low cost of living and being able to get to work in five minutes. Meanwhile, expats are returning with reasonable money to invest. Consequently, there has been a significant rise in sales in the $500,000-plus end of the residential market.

"People come to Dunedin expecting to be able to own a character home, and we have lots," she says. "They also expect a water view, because we are so hilly. They're looking for well-located homes with four bedrooms, two bathrooms and internal-access double garaging."

An influx of State housing between 1996 and 1999 has kept prices at the lower end reasonably static, she adds.

Due to the flow-on effect of the rural economy, sales began to lift in Christchurch in November last year. "The market has been going well since then," says Thomson, of Harcourts.

"The Harcourts office sold 56% more properties than in the same month in previous years. It's really picked up. There's now a shortage in some parts of the market."