From an over-all perspective, the regional economy in the lower half of the South Island appears to have endured the last couple of tough economic years relatively well and is now well positioned to slowly but surely move ahead into a new era of stability, and ultimately, prosperity.

For example, underpinning long term prosperity in Central Otago’s residential real estate sector, the Central Otago Economic and Social Context report prepared for Central Otago District Council this year spotlights that: “Central Otago’s population is anticipated to grow at an average of two percent over the next decade, and 1.5 percent over the next 25-years – which is well above the 0.7 percent population growth predicted nationally (for New Zealand as a whole) over the next 25-years.”

Similar positivity for the residential real estate market in Dunedin also emerged in the city council’s Future Development Strategy 2024 – 2054 paper released recently, which highlights a forecast need for 540 new homes to be built per year in the area over the next three years alone. Suburbs on Dunedin’s city fringe such as Maori Hill and Mornington are predicted to experience rapid housing growth due to their proximity to the central business district, along with well-served bus routes.

Meanwhile over in Invercargill, buoyed by the news earlier this year that the New Zealand Aluminium Smelter at Tiwai will remain operating for the next 20-years, in conjunction with Meridian Energy’s progressing wind farm project creating scores of jobs, the Southland Business Chamber’s latest business confidence survey found that 54 percent of business respondents expected a stronger economy through the end of 2024 and well into next year.

The same number of respondents in the survey anticipated a stronger financial performance for their enterprise over the same period and well into 2025. That improving business confidence will of course spill over into the area’s residential real estate sector.

Independent property economist Tony Alexander notes three key findings from the real estate ‘coal face’ in his recent monthly real estate survey. The Bayleys sales teams across the Otago, Central Otago, and Southland provinces are seeing the same trends emerge amongst the potential new listings they are working on, and from buyer feedback at open homes.

With a comprehensive network of offices in Dunedin, Mosgiel, Invercargill, Gore, Arrowtown, Winton, Cromwell, Wanaka, and Queenstown, Bayleys across the Lower South Island gets a broad cross-sector of feedback from the scores of database contacts our teams speak to week-in/week-out. Tony Alexander’s three key observations gleaned from real estate agents are:

• There has been a notable rise in the number of investors back in the market – motivated by falling interest rates and expectations of increasing prices • Demand from first home buyers remains strong • ‘Fear of Missing Out’ (FOMO) has risen to 19 percent.

The New Zealand property market is experiencing a dynamic shift at present. While median prices are gradually rising, some buyers remain cautious about overpaying for properties due to relatively high mortgage interest rates – albeit that those rates are decreasing quarter by quarter. This behaviour encourages buyers to be more strategic in their approach – giving them confidence when negotiating a purchase price.

So, what is the latest real estate sales data for the Dunedin, Otago, Southland, Invercargill, Queenstown Lakes, and Central Otago districts showing us? For this, we draw on the most up-to-date independent market-wide figures compiled by the Real Estate Institute of New Zealand.

The latest in-depth Otago regional sales data from the Real Estate Institute of New Zealand shows that residential property median prices across the region are up 11.2 percent year-on year over the 12-month period to the end of October – increasing from $670,000 to $745,000 for the province as a whole.

Drilling down further into the REINZ stat’s spotlights the year-on-year residential property median value increases within Otago’s sub-districts also include:

• Clutha District – up 8.8 percent from $409,000 to $445,000 • Queenstown Lakes District – up 5.8 percent from $1.3million to $1.375million • Dunedin City – up 4.2 percent from $595,000 to $620,000.

Meanwhile down in Southland, the REINZ statistics highlight similar signs of positivity for median property values over the 12-month period to the end of October 2024, encompassing – with all four measurable geographic zones showing price rises.

Median residential prices for the Southland region as a whole rose 14.1 percent from $425,000 to $485,000, while for the sub regions, the year-on-year data for the 12-months to October showcased:

• Southland District – up 35.5 percent from $465,000 to $630,000 • Gore – up 11.4 percent from $440,000 to $490,000 • Invercargill City – up 10.7 percent from $420,000 to $465,000.

Bayleys’ offices and sales teams in Dunedin, Mosgiel, Invercargill, Gore, Arrowtown, Winton, Cromwell, Wanaka, and Queenstown all contribute sales data and market sentiment feedback to the Real Estate Institute of New Zealand report – underpinning that our analysis of market conditions is right at the bow wave of activity. So there you go with a comprehensive overview of not only the residential property market in the Lower South Island, but also analysis of the factors which have been driving the market alongside some of dynamics coming into play in the future.

On behalf of Bayleys teams throughout the Otago, Central Otago, and Southland regions, we wish you and your loved ones and families a very merry Christmas and a relaxing new year holiday period.