Fears of 'zombie' town as Queenstown reaches breaking point

Queenstown's million-dollar dream is turning into a housing nightmare as locals are priced out, homes sit empty, and homelessness grows

Queenstown's postcard-perfect image is increasingly masking a growing crisis - one where soaring house prices, empty holiday homes and a shortage of affordable rentals are leaving many locals struggling to survive or find a bed for the night.

The southern resort town, long seen as one of New Zealand's most glamorous destinations, is also one of its least affordable places to live, with an average house price of more than $1.8 million, well above the rest of the country. The national asking price is just over $900,000.

And rent for a standard three-bedroom home in the region is now about $1000 per week.

This is creating a "two-speed" housing market - one for the wealthy, and another for the workers who keep the town functioning.

"I don't think you would find many other places in New Zealand, where you would find nurses, doctors, teachers, police officers having to live in overcrowded situations or living in garages just to afford where they live, it's pretty unique," One Roof property journalist Nikki Preston tells The Detail.

"They can't afford to rent or buy a home there because of how expensive it has become."

Some desperate workers, she says, are even opting to hot-bed, "Which is where one person sleeps in the bed in the day because they might be a night worker, and the day worker would use that same bed at night.

"Others are just moving out of the area and making the long commute into work because it's the only way they can afford it."

Mayor John Glover acknowledges that "housing affordability is the headline" for his region.

"The house price for earnings ratio is getting on for 17 - anything above three is deemed to be unaffordable," he says.

"We have heard that the prices are driving our long-term locals away, and that is very, very confronting."

He says the council needs to look at rating differentials for the region.

"It may be that if people can afford [expensive homes], they can afford to pay a little bit more."

Vanessa Williams, from RealEstate.co.nz says the Queenstown market is increasingly driven by high-income buyers, investors and people purchasing lifestyle or holiday properties.

And over the past six years, the region has defied every housing trend and has rewritten the housing rulebook.

"The Central Otago Lakes District has been a really fascinating one, or more specifically Queenstown, and they have just bucked every trend over the last six years," she says.

"While the rest of the economy was cooling, while we saw people struggle with the cost of living, it seems that not only did the average asking and house prices in the region continue to grow, but also so did the rents that followed.

"It's just been completely free of the economic shocks that the rest of the country has had and continued on a trajectory all of its own."

A lot of the wealthy buyers are keeping the homes as "holiday cribs", using them for about a month every year. And for the other 11 months, they sit empty, fuelling frustrations in the region.

Locals told Preston that it can be difficult watching darkened homes line parts of the district while workers scramble to find rentals, sleep in cars, or rely on emergency accommodation.

"[They say] even if you are living in Queenstown, it's actually not that nice to have an empty house next door to you," says Preston, who has just covered the situation for OneRoof.

"You want to be in a community, but there are all these empty homes.

"The latest Census information showed that almost 30 percent of the homes in the district were unoccupied."

Mayor Glover says he doesn't want a town of "zombie houses, which sucks the life out of a neighbourhood"; instead, he wants a sense of community for the tourist-heavy region.

"You can't have tourists without the workforce that goes with that, and the workforce that goes with tourism, they have families, they have children, and the children need to go to school, and therefore we need teachers, so you have to take a holistic view of what are the things that we need in a community so as it grows and it develops and matures, we do that well together.

"And that has to be a partnership with the government. They control many of the things needed to do this well."

Mayor Glover also has concerns for developers, who are "coming in from a flat-lined Auckland housing market", hoping to strike property gold down south.

"We have seen a lot of developers come down to this district and pay a lot of money at very, very inflated prices for land, and that will either result in some very, very expensive properties or some quite significant risks in some of those developments.

"So, that's a bit of a black cloud on the horizon - people paying more for the land than it is worth."

The region now wants stronger intervention, including more affordable housing developments, potential restrictions on empty homes, and tighter rules around short-term rentals. Because for many locals who call Queenstown home, it is no longer just expensive; it's simply unattainable.

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