Living in Wanaka and partying in Queenstown or living in Queenstown and chilling in Wanaka the next day is totally possible – the towns are literally only an hour’s drive apart.

What are the biggest differences between Queenstown and Wanaka?

Queenstown is bigger than Wanaka. With an urban population of more than 14,000, the town is the second largest urban area in Otago. Wanaka, on the other hand, is home to less than 8,000 people.

While Queenstown has always been the ultimate destination for travellers and professionals from cities, such as Auckland and Wellington, relocating to achieve a better work/life balance, Wanaka mainly attracts families and those seeking a quieter pace with a more personal feel. They often have deeper pockets.

Both towns are quite similar in things to do in the summer and winter.

In summer, the activities in both places are determined by the waters of Lake Wanaka and Lake Wakatipu – swimming, kayaking, biking, jet boating. With Mt Aspiring Park in the backyard, Wanaka is the mecca of rock climbers, hikers and trampers. Queenstown is the gateway to many attractions further south, such as Milford and Doubtful sounds and some of the great walks – the Routeburn, Kepler and Milford tracks.

In winter, the region attracts skiers from all over the world. With Treble Cone, Wanaka has the largest skiing area in the South Island, while Queenstown offers the Remarkables and Coronet Peak, with the only sealed road accessed skiing in the South Island. Cardrona is equally reachable from both towns.

Both have some of the country’s most expensive real estate. The latest CoreLogic data shows house prices from Lake Hayes Estate to Albert Town rose steeply from 16.8 per cent to 35.7 per cent respectively in the year to May 1 this year.

Albert Town had the highest rise at 35.7 per cent, increasing from $996,100 to $1,351,750, while Kelvin Heights rose 18.4 per cent, $2,076,250 to $2,458,300.

QV’s April House Price Index shows Queenstown defying the odds, with prices increasing as values drop in most other areas across the country. Prices were up 3.2 per cent over the three months to April.

Bucking The Trend

Queenstown’s Tall Poppy owner Ron Blunden says despite the huge price increases over the past two years and hundreds of willing buyers the market has done a complete about-face in a matter of two to three weeks and is quiet.

“Six weeks ago we were still dealing with multi offers on properties. Two weeks later we had a house for sale at Arthur’s Point with a reasonable price and received no inquiry. The vendors dropped the price by $100,000 and there has still been no inquiry.”

Blunden says there are fewer but more genuine buyers in the market, but it is definitely harder for sellers. “Tougher lending criteria and rising interest rates are having a major impact on buyers. Mortgage lending rules are supposed to ease this month and it will be interesting to see what happens then.”

He believes Queenstown’s housing market will be quiet through the winter as people take a breather, especially investors.

While listings are increasing, inquiries from buyers are not. The average house price is $1.4 million and there is not much for under $1 million, so when a home and income property for under $500,000 hit the market Blunden expected it to fly out the door. It hasn’t.

“Last year it would have sold in a matter of days to an investor, developer or DIYer. It would have attracted four to six buyers, half of them investors who would have probably upgraded and managed the property themselves. It shows how fast the market has turned.”

He also cites Jack’s Point where at the beginning of last year expensive houses were selling in only a few days, but by the end of the year there were no sales. Fifteen properties are now sitting on the market waiting for new owners.

Equally as expensive are sections at Jack’s Point, which have asking prices of $1 million-plus. Blunden says as there is not a lot of subdivision land because of Queenstown’s topography, prices are being forced up, but they are slow to sell.

While house prices are mainly holding up his major concern is expensive mortgages that will come off low interest rates later in the year when holders will have to find thousands of dollars more to pay higher interest rates.

Investors are thin on the ground and usually migrate to Hanley’s Farm and Shotover Country where there is a multitude of new home and income properties, and buyers are exempt from the new tax changes. These types of properties took off as an investment five to six years ago.

Blunden believes the market will falter along for a while and prices will drop about 10 per cent, although he says that is hard to justify as building is extremely expensive and costs are rising.

Reality Check

In Wanaka, First National’s property sales manager Lynette Winsloe says many buyers at open homes are turning up armed with information from the media about the market while vendors are still hoping to sell at last year’s prices.

‘People have needed deep pockets to live here but ski-field jobs are opening up again’ Caroline Anderson

“Vendors need to be realistic or they won’t get offers. Often they will put their house on the market without a price, get feedback from the market, and re-advertise it with a price.”

Wanaka does not attract the investor pool seen in other centres. Winsloe says the market has more first home buyers and owner-occupiers looking and struggling to buy, and first holiday home buyers.

“Investors want to buy and rent, so any property they look at has to be of a certain size, standard and criteria to meet Healthy Homes standards.”

High prices could be a deterrent for investors. In March, the average Wanaka price was $1.9 million, boosted by apartment sales on the lakefront. Two big sales of $3.5 million and $4.3 million added to the figures. There were only three sales under $1 million. February’s average CV was $1.8 million.

Despite the high house prices it hasn’t stopped owner-occupier buyers from Auckland, Wellington and Christchurch, says Winsloe.

“People who have sold their houses in the bigger cities can afford nice homes in Wanaka.”

While more properties have come on to the market, there is not an abundance. “It is better than last year but still lean.”

Three to four-bedroom homes are the most popular with buyers along with waterfront apartments, particularly for older people downsizing. Wanaka buyers tend to have deep pockets and prefer a quieter way of life as it doesn’t have the traffic lights and traffic jams of Queenstown.

“It’s been a rough ride for everybody” is how Caroline Anderson, of Queenstown’s Divine Property Management, sums up the past two years.

After the first lockdown in 2020 rents in Queenstown dropped 20 per cent, but they are now back up to within five per cent of pre-Covid rates.

Divine runs long-term rentals as well as holiday homes and Anderson says she has been renting about 10-15 per cent of properties to Aucklanders, who have decided they can work from home and would rather do it in Queenstown.

Also on the comeback trail are seasonal workers who have been absent for the past two years due to Covid. Workers from the UK and Australia, in particular, are looking for winter season rentals for four to six months.

Cost Of Living

They are having to pay on average $350-$400 a week for a one-bedroom apartment and $700-$800 a week for a three-bedroom house.

Anderson says she feels sorry for workers who also have to face more expensive food, petrol and electricity. “People have needed deep pockets to live here but ski-field jobs are opening up again. Everyone has to hustle a bit.”

Nowhere in particular is popular for renters in Queenstown. Long-term renters favour Lake Hayes, Shotover Country and Hanley’s Farm for back yards and schooling, while tourists like Queenstown central.

Although Divine is on a growth trajectory, Anderson says investors stopped in their tracks when the new tax rules were announced in March last year. “It’s not viable to invest in new properties even though they are exempt from the tax rules and this has knocked a lot of mum and dad investors out of the rental market. Those left in the market are more savvy about what they want.”

About 10 per cent of investors with properties under management by Divine have sold and often don’t have the capital for a complete renovation to bring their properties up to Healthy Homes standards. Some have also sold to buy new properties exempt from the tax changes.

Too many renters and not enough properties is the continuing story for Wanaka property management company Home & Co.

Just on realestate.co.nz the properties Home & Co advertises are getting between 300 and 1,100 hits a week. About 700, or 40 per cent, of Wanaka rentals are professionally managed, so there is lots of inquiries and too few properties, says Home & Co owner Colleen Topping.

Demand for Wanaka rentals is continually growing and as a result rents have risen five to six per cent in the past six months to now sit at five per cent above pre-Covid levels and will continue to rise this year, she says.

Most of the demand for rentals is coming from people moving to Wanaka from Auckland and the bigger cities. Tradies from Timaru, Temuka and Christchurch are also moving south as there is plenty of work in the lakeside town.

Renters are interested in any house, although families want to live in the two areas that have zoned schools.

Rent Rates

Average rents for three-bedroom home are $650 a week and $750 for a four-bedroom home.

A big percentage of rentals on Home & Co’s books were sold last year and some of the sellers bought new properties to avoid the tax changes. However, Topping says unless investors are cashed up it is hard to make any new build a cash-positive rental at prices being paid.

Other rentals were taken off the books when the overseas owners moved into them after returning home or other owners started working from home. “This contributed to rent increases and has kept the squeeze on demand.”

She says despite this investors are still in the market and new rental owners are asking for professional property management.