NZ SOTHEBY’S INTERNATIONAL REALTY
Designed by architect Michael Wyatt, Pokapu on Remarkables Ski Field Access Road in Queenstown is a luxury property currently listed on NZ Sotheby’s International Realty. A mountain lake surrounds the front of the 609-square-meter home, which is for sale by negotiation.
There is one sector of the real estate market that appears to be largely unaffected by falling prices, and that is the luxury sector.
However, that may change as more properties are listed, and there has been a huge jump in listings this year. Trade Me Property sales director Gavin Lloyd says that in February there was a 56 percent increase in property listings over $5 million compared to the same period in 2021.
In February 2021 there was an 11% increase in the total number of properties in all price brackets listed nationally, compared to the previous year.
But real estate agents who specialize in very expensive properties say the credit crisis is not having the same effect on their clients as it is on buyers in the middle and lower ends of the market.
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Graham Wall of Wall Real Estate in Auckland says “we found virtually nothing changed.” “Usually when someone coughs, everyone gets the flu.”
He attributes the absence of panic to several factors. “Some pretty smart people seem to think that the safest place to keep your money in slightly turbulent times is in prime residential real estate.
“There are very few really beautiful houses in New Zealand and there are more buyers than sellers, so the luxury sector is not affected like the mass market. That doesn’t mean that as soon as you have a $25 million listing, you’ll sell it that afternoon. There’s always a bit of a thought process for buyers.”
And the second reason Wall cites is that buyers are often not at the mercy of banks. “If someone is spending more than $15 million, they are usually reallocating money. They don’t go to the bank saying ‘I need a $10 million loan.’ Usually they are selling a business or a farm or other expensive property.”
Bayleys Remuera’s Gary Wallace says there has been a downturn across the board, “but it obviously affects society differently, depending on where you sit.”
Wallace says that sales are still very dependent on the property: “If you have a good property that attracts and qualifies for buyers, there’s still a lot of interest, whether it’s $2 million or $20 million.
“Although there is a bit of pessimism, there are still a lot of people going on with their lives. Life goes on and people are quite pragmatic. But it is true, depending on the spectrum you are operating, FOMO (fear of missing out) has become fear of paying too much.”
Wallace says there is currently “good interest” following a recent deadline sale on a home that the Bayleys are marketing. 120 Victoria Avenue, Remuerawhich has an RV of $17.25 million and a Homes.co.nz estimate of $19.2 million.
Mark Harris, managing director of NZ Sotheby’s International Realty says there has been a bit of a dip in inquiries over the last three months across the board, but a big part of that was the usual lull from December to February.
“People are getting back into the groove. While there has been a small reset, there is not too much concern. There is still a lot of interest in the high end. That end of the market is pretty solid – the Aussies are coming back in and the New Zealanders are on the move.”
Harris also says that the luxury real estate market is less affected by a rise in interest rates. “We remain vigilant and watch it carefully, but it hasn’t had much of an effect yet. Properties in high-quality locations with views or lakefronts continue to attract inquiries and interest.”
Harris says much of that interest in Southern Lakes properties falls in the $14 million to $15 million range.
Marketing by ‘stealth’
Terry Spice of Luxury Real Estate in Queenstown says the firm has barely missed a beat this year. “We are certainly getting very good inquiries right now. But there is a lack of premium stock, to the point where some people don’t want to go to the market – they keep it quiet (but look for a sale).
Spice says that the commercialization of these suppliers is a “stealth process”. “It’s about getting a group of very qualified people to show the properties.”
The agent says the high-end market for local families in Queenstown is generally “limited” to between $5 million and $6 million, with buyers from other parts of the country looking in the $7 million price range and above.
“The convenience of being here is still very good. We still have to test the Australian market, but we are expecting a good winter for tourism, which always creates additional interest.”