What would further cuts to interest rates mean for mortgage holders and buyers? OneRoof Need to Know host Frances Cook and Mortgage Lab's Rupert Gough explain.
Queenstown's housing market has weathered the Covid storm remarkably well, although there's some concern about how it fares in 2021.
Economist Benje Patterson, who lives in the tourist town, says the market has defied expectations, with strong retail spending belying the lack of international visitors.
"We've had weeks where it's approached a normal level thanks to the domestic tourists."
That's kept a lid on unemployment, keeping the lights on for most households and businesses, Patterson says.
"When we look towards 2021 that is where you begin to get a little bit more angsty. If we're a visitor town that has always relied on high volumes, what do we do next year if we don't have the borders open?
"There's only so many times you can convince someone from Auckland to come and visit Queenstown within a one to two year period, so we need to look more deeply at how we get through long-term.
"How are we going to generate income? It's about reflecting on our strengths as a place that people want to visit, and as a place to invest, to work, to start businesses, to migrate, to have a longer-term connection to the area.
"Some of those can still happen in a Covid world. With a lot more remote working happening, it is possible for people to come and live in an area like Queenstown from a lifestyle perspective."
While 2020 was the housing market's softest year for a while, it's reverted only to a post-GFC state and no further.
Ongoing challenges included the town having the most expensive market in the country bar some blue chip suburbs in Auckland.
"It's a very low-wage economy with very expensive houses, and quite a young economy as well," says Patterson. "So a lot of people come into the market from not a very good starting position equity-wise."
Low interest rates and unemployment have masked those concerns, but a reliance on external capital raises questions about future economic reilience.
A lot is riding on the planned trans-Tasman bubble.
Queenstown's housing market faces particular challenges. Photo / Mike Scott
Adrian Snow, from the Professionals, says 2020 was a rollercoaster year with three distinct phases.
Covid, which stopped everything for two months, was followed by a two-month recovery period. That was followed by a surge in residential and commercial activity.
Investors had been making the most of the removal of the LVR restrictions; cheap money because of low interest rates was encouraging buying activity.
A lot of buyers were from Auckland and there were plenty of inquiries from Australia.
(DOES THIS MEAN KIWI EXPATS RETURING BECAUSE OF COVID, OR AUSSIE EXPATS IN NZ?)Expats are an emerging demographic but the big problem, like nearly everywhere in New Zealand, is a lack of stock.
"We don't see people changing properties like they used to 10 years ago," says Snow.
"I think first home buyers are often going straight for the good home. So rather than buying an old ex-renter, doer-upper or townhouse, they're buying a building company home in a new subdivision which will be their family home for a long time.
"Investor-buyers probably haven't been churning property, overseas buyers probably haven't been churning properties. I think in general, mortgages are probably high and the cost of changeover is high. All of those factors I think have led to low churn."
