NZ Engine

Source: Radio New Zealand

A former World Bank senior economist says people buying holiday homes and leaving them empty in Queenstown for much of the year are on track to “hollow out” the town, unless authorities take strong action to build more affordable housing for workers.

Data suggests, at any given time, more than a quarter of the district’s properties are unoccupied.

On Census night 2023, there were 3480 empty dwellings and 3402 listed as ‘residents away’, compared with 18,219 properties occupied or under construction.

At the same time, the cost of renting or buying a house has risen sharply, and more than 1600 households have joined a waitlist for an affordable housing scheme.

Ralph Hanan, who has lived in Queenstown for nearly two decades and spent 29 years at the World Bank, said the number of empty houses would likely increase in coming years.

He told RNZ councils and the government could not compel people to rent their properties out.

“If these ‘ghost houses’ were available, of course, that means that the money that went into new developments for new housing could be spent somewhere else for a more productive enterprise within our economy,” he said.

“I think it’s a real long shot to expect people who have a house here to open it up for 9-10 months of the year to whomsoever to come and live. It’s not good economics, but it’s reality.”

Hanan said urgent structural changes were needed to ensure Queenstown remained a viable place to live and work, including affordable housing for local workers.

A town increasingly owned from afar

Little data is available on exactly who owns Queenstown’s “ghost houses”, but property maintenance companies told RNZ they had noticed a major shift in the market.

Peak to Peak Property Services director Matthew Kurtovich said about 60 percent of his clients either rented out their homes as short-term accommodation or kept them empty, except for the “one or two weeks a year” they visited.

“We’ve had a huge shift to absentee owners,” he said. “The business was predominantly built over locals and providing service for locals, but as the places change and become a lot more holiday destination, there’s a lot more investment properties around and a lot more apartment complexes that we deal with.

“It’s definitely a change of scope for the business in the last 10 years.”

In recent years, several other maintenance businesses had emerged, catering specifically for absentee owners – offering to pay bills, clean gutters, keep cars WOF-compliant and even stock fridges for people who lived away from Queenstown.

Those companies declined to speak to RNZ.

Low-rental yields discouraging landlords

Some Queenstown propertyowners would rather let their homes gather dust than rent them out, a property investment specialist said, because rental income lagged far behind soaring property values.

Despite Queenstown rentals being among the most expensive and under-demand in the country, Opes Partners managing partner Andrew Nicol said property owners did not have much to gain from long-term tenants.

“It is really expensive to own a property there,” he said. “The yields are just disproportionately low at the moment.

“I don’t know that they’ll catch up any time soon. I’ve seen yields as low as three percent for people that are buying investment properties.”

Nicol said healthy-homes requirements and tenancy rules introduced by the previous Labour government – even those later repealed – had pushed some landlords off the long-term market.

Meanwhile, people could only rent out a house as a short-term rental – for example, an Airbnb – for a maximum of 90 days without resource consent.

“Because of the restrictions around tenancies – healthy homes and not being able to give a nine-day termination – there were a lot of properties taken off the market,” he said. “If you were really rich and you had no debt, and it was just a bit of a hassle, [you might think], ‘Well, I’ll rent it out for the 90 days I’m allowed to and then I’ll have it empty the rest of the year’.

“Or, ‘I’ll just have it empty [all the time]’. There are some people like that.”

However, he said that was slowly changing, with more rentals coming back online in Queenstown, after the re-introduction of no-fault evictions and other measures designed to give landlords more confidence.

On the other hand, it was becoming more costly to use houses for short-term accommodation, Nicol said.

“I know a lot of people have made some really good money, but the cost of cleaning, for example, has gone up quite significantly in Queenstown and the Airbnb fees have gone up. There’s further GST implications now.

“You can make some really good money, but there are just significant costs that go with that as well.”

Capital gains tax could make a difference – mayor

Mayor John Glover said many of Queenstown’s ghost houses were legitimate holiday houses bought by people who intended to visit or move down eventually.

“A lot of people, even in New Zealand, they’re cashed out,” he said. “They’re maybe retiring, they want to move down, or have the opportunity to come and have their holidays here.

“We live in a free market economy.”

Yet empty houses were a “fundamental” problem in Queenstown and in Wānaka, he said.

“There’s a place for holiday homes all over the world and tourism hotspots, it’s always the case,” Glover said. “Elsewhere in the world, various interventions come along, such as local ownership clauses on new developments, that try to address the fact that there are far more people with money than the people trying to live and work here.”

He said a capital gains tax on second homes might lead to fewer ghost houses, although he framed that as a broader governmental debate.

Personally, he would be prepared to pay a capital gains tax, if it meant more services for the town.

“I think, if we want to have some of the things in this country that we aspire to, we need to look at how we get the revenue to do that,” Glover said. “I’m constantly told by people, if you go to Sweden, you get free education, the public transport is cheaper, there’s all sorts of benefits, health services, and they’ll have 75 percent top tax rates, they’ll have capital gains tax, they’ll have inheritance tax.

“The issue is we don’t have those in this country.”

In the meantime, Glover said he was focused on ensuring Queenstown had a good supply of rental stock.

He said Simplicity’s plan to build up to 600 long-term rental houses on Ladies Mile would help.

Glover would also like to see the Queenstown Lakes Community Housing Trust scaled up, potentially by requiring developers to contribute to it.

“We’re trying to twist the arm of government and make the case that, when landowners get a significant zoning uplift and so they go from farm paddocks to housing estates, then maybe we get to capture some of the value of that.”

Pressure on the workforce

Ralph Hanan said he’d like to see 10 percent of the properties at each new housing development set aside for the housing trust’s affordable schemes.

Without action, he warned, workers would be pushed out of the town and more houses would sit empty in the centre.

“If we don’t do more to retain these people, they’re going to move out of our area,” Hanan said. “They may move to dormitory suburbs like Cromwell, which is already the case, or the south of Lake Wakatipu and Kingston, which is already being developed.

“They will move out of our Queenstown City urban area pretty soon and that is not good for any city.”

“Ultimately, if you’re looking 50 years down the track, I suppose Queenstown is heading to become to become a trainwreck. It will be a place that will be less attractive for foreigners to want to come to and less attractive for people to want to live in.

“We have to avoid that. We’ve got to have structural change to make sure that we are a balanced, caring community, including all types of workers, diversity of people and diversity of our economy.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

Many New Zealanders are starting the year feeling stressed about money despite interest rates having fallen, one bank says.

Westpac surveyed just over 1000 of its customers and found 28 percent said their holiday spending would probably or definitely cause financial stress in the new year. Another 23 percent thought it might.

Just under 20 percent said they planned to use debt to cover their costs. Just under three-quarters said they were very or moderately concerned about the cost of living.

Westpac managing director of product sustainability and marketing Sarah Hearn said there had been an increase in the number of people applying for debt consolidation loans as well as increases in the amounts they were asking for.

“While we have seen a reduction in interest rates over the last year it’s clear that people and our customers are still feel very much the cost of living and the pressure of finances is present still.

“At this time of the year, though, we would tend to see in the coming months more debt consolidation going on as people look to kind of get their finances in order and simplify the debt that they may have into the one.”

Almost a quarter said additional costs in January and February added pressure, including annual bills and the cost of sending kids back to school.

“A really high portion of people said that they’d be expecting more financial pressure at this time of the year.

“One in four people pointed out that it’s the annual bills that would be coming through, life insurance and paying off summer holidays, but it’s also the additional expenses like children going back to school. paying off the summer holiday. So some of those incidental expenses that you typically see more in January, school uniforms, books, laptops, all those sorts of things, there’s a real spike. So that puts additional pressure on top of what is already a cost of living pressure that people are feeling.”

Hearn said people were sometimes consolidating by now pay later debt, or credit card and personal loans.

If the problem was bigger than debt consolidation could fix, she said people should speak to their banks to work out what options could be available.

Loan Market mortgage adviser Bruce Patten said he was dealing with more people who wanted to top-up their mortgages to clear other debt.

“With the current market conditions there are a lot of people getting top ups to consolidate debt due to the cost of living pressures, so car or boat finance is being extended over a longer period under mortgages to provide some relief.”

This can mean lower repayments in the short term but cost more overall if the loan term is extended and people end up carrying the debt for longer.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand