The Northern Express Herald

Quiet streets in Kelvin Heights reflect Queenstown housing divide

Queenstown has long struggled with a shortage of long-term accommodation coupled with a high number of empty homes. Photo / NZME

A weekday afternoon visit to one of Queenstown’s most affluent suburbs offered a glimpse into the housing patterns underpinning the district’s long-running affordability pressures. Ben Tomsett reports.

It was a glorious late autumn day when the Herald visited Kelvin Heights.

But where was everyone? It was a workday afternoon and the weather was fine, but many streets were silent. Few cars were parked outside homes, and nobody ventured into the street.

About 30 homes were approached in Kelvin Heights, but only a handful of people were home.

Several residents said many properties in the lakeside suburb were owner-occupied, while others were used as holiday homes or secondary homes.

The well-heeled area, known for its elevated lake views and high-value properties, recorded one of the district’s highest rates of unoccupied dwellings in the 2023 Census.

Census data showed 35.5% of private dwellings in Kelvin Heights were unoccupied on census night, compared with a national average of 10.8%.

Kelvin Heights is known for high-value homes with lake and mountain views. Photo / Ben Tomsett
Kelvin Heights is known for high-value homes with lake and mountain views. Photo / Ben Tomsett

The figures include holiday homes and properties where residents were temporarily away, and do not necessarily mean homes are empty year-round.

The data has become part of a wider debate around housing in Queenstown Lakes, where rapid residential development has coincided with worsening affordability and rental pressures despite a sustained building boom.

Between 2013 and 2024, nearly 13,000 new dwelling units were consented across the Queenstown Lakes district, with more than 1500 approved in 2024 alone.

Electricity Authority figures show active residential power connections in the district increased from 16,463 in 2017 to more than 22,000 this year.

Despite that growth, rental availability has tightened.

Tenancy Services bond data shows the number of active long-term rental bonds in Queenstown Lakes has fallen from about 118 per 1000 residents in 2013 to about 100 per 1000 residents in late 2025.

At the same time, rental costs in the wider Central Otago Lakes district are the highest in New Zealand.

Realestate.co.nz data shows average weekly rents reached $891 late last year, while average asking prices in the district remain well above national levels.

Census data shows many properties in Kelvin Heights are used as holiday homes or secondary residences. Photo / Ben Tomsett
Census data shows many properties in Kelvin Heights are used as holiday homes or secondary residences. Photo / Ben Tomsett

Homes in Kelvin Heights regularly sell for several million dollars, placing the suburb among the district’s most expensive residential areas.

Short-term rental market data from AirDNA shows there are about 2900 to 3000 active Airbnb and Vrbo listings across Queenstown Lakes, with about 89% listed as entire homes rather than private rooms.

Queenstown Lakes District Council estimates that about 12% of the district’s housing stock is used for short-term accommodation, with numbers fluctuating seasonally during peak tourism periods.

The Ministry of Housing and Urban Development, Te Tūāpapa Kura Kāinga, said Queenstown faced “severe housing affordability pressures” driven by a range of factors, including migration, tourism demand and geographic constraints.

“Queenstown Lakes district has well-established housing affordability issues, with the highest rents and house prices in the country.”

The ministry said it was working with local partners, including Queenstown Lakes District Council, Otago Regional Council and the Queenstown Lakes Community Housing Trust, to better understand housing pressures in the district.

Kelvin Heights recorded a 35.5% unoccupied dwelling rate in the 2023 Census. Photo / Ben Tomsett
Kelvin Heights recorded a 35.5% unoccupied dwelling rate in the 2023 Census. Photo / Ben Tomsett

Queenstown Lakes Community Housing Trust chief executive Julie Scott said Kelvin Heights was not unique, with the issue evident across the district, particularly in areas where property values and amenities were highest.

The district had a long history of housing patterns shaped by its role as an international visitor destination and lifestyle location.

“A relatively high share of dwellings are used intermittently as holiday homes, seasonal accommodation, or are held for personal use rather than full-time occupancy.”

The 2023 Census found that about 27% of homes across the district were unoccupied on census night.

“The problem now is our population has grown phenomenally, more than tripled in the last 20 years, and there is no longer sufficient housing stock for local families and workers.”

Scott said holiday homes and short-term accommodation were a legitimate part of a tourism-driven economy, but could reduce the pool of housing available for long-term rental.

“At scale, this contributes to tighter rental supply, upward pressure on rents, and reduced security of tenure for local households.”

However, she said housing affordability pressures were also driven by factors including land supply constraints, construction costs, population growth and investment dynamics.

Demand for the trust’s rental and assisted home ownership programmes remained strong, with waiting lists continuing to grow.

“More households who would traditionally have expected to access housing in the private market are now seeking support.”

Economist Benje Patterson has described the issue as one of housing allocation rather than overall supply, arguing that the district continues to build homes at rates far above the national average.

Kelvin Heights should not be viewed in isolation, he said.

“The reality is that it is an absolutely beautiful spot, with great sunshine and stunning views. Those attributes make it incredibly desirable for a holiday home.”

However, the suburb was less practical for permanent residents than other parts of the district because it lacked shops and had weaker transport connections.

“Kelvin Heights is also a relatively small place from a population perspective, and so what happens there is not going to shift the balance for Queenstown Lakes.

Around 30 homes were approached during a weekday afternoon door-knock, with limited residents home. Photo / Ben Tomsett
Around 30 homes were approached during a weekday afternoon door-knock, with limited residents home. Photo / Ben Tomsett

“Our current high rates of building, if sustained, do have the ability to materially influence housing availability, providing that we get the right mix of typologies.”

He said that included not only a range of dwelling sizes and price points, but also housing tenures that were less prone to speculation.

He pointed to Simplicity Living’s planned large-scale build-to-rent development as a potentially significant shift in the market.

“The large-scale Simplicity development of well over 1000 build-to-rent dwellings could potentially be an absolute game-changer that dwarfs any concerns regarding the holiday home mix in Kelvin Heights.”

The ministry said the Government’s response was focused on increasing housing supply through planning reform and infrastructure investment.

It pointed to the National Policy Statement on Urban Development, which requires councils to provide sufficient development capacity and enable denser housing in well-connected locations.

The Government is also exploring a City and Regional Deal with the Otago Central Lakes region, comprising Queenstown Lakes and Central Otago districts, aimed at supporting growth, infrastructure and housing delivery.

Ben Tomsett is a multimedia journalist based in Dunedin. He joined the Herald in 2023.