Situated at the top of New Zealand’s South Island, with Cook Strait to the north and the Pacific Ocean to the east, the Marloborough region has a maritime climate. This provides a cooling influence which, coupled with some of the highest sunshine hours in the country, creates the perfect environment for grape growing.

Marlborough has four main valleys, which are home to the following towns and settlements: Blenheim, Picton, Havelock, Seddon, Wairau Valley, Renwick, Canvastown, Ward, Spring Creek and Grovetown. Each of these towns and settlements have their own community hall as a hub for activities.

The region is about world famous sauvignon blanc from the country’s largest winegrowing region and the soils and enviable climate that create it. It’s about fresh seafood sought by the world’s finest chefs, and it’s also about diverse landscapes, from vine-filled valleys to the sheltered waterways of the Marlborough Sounds.

Big enough yet small enough, with 51,900 residents, the region offers all the facilities of a larger centre without the cost, travel time or stress.

It’s also easy to get around. Locals call it the “seven-minute commute”, which includes travelling from its main centre, Blenheim, to the airport.

If people can’t park outside their desired store, they will do laps of the town until a space becomes free. And if they have to park around the corner, likely free, you can hear the grumbles from across the street.

The biggest economic drivers are wine and viticulture, aquaculture, farming, food, fibre and forestry and wood processing. These sectors live side-by-side with a healthy visitor economy.

Marlborough house prices

For those living in the region, house prices are more stable and affordable than many other areas of the country. Marlborough’s median house price dropped 0.7 per cent year-on-year to $680,000 in February, $5,000 below where it was at the same time last year, REINZ data shows.

Meanwhile, the latest CoreLogic data reveals a big disparity between average house price increases and drops in the region. Prices at beachside suburb Rarangi have increased 4.9 per cent from $930,850 to $976,050 over 12 months to March 1 this year. At Tennyson Inlet, in the Marlborough Sounds, they have increased 2.7 per cent from $700,550 to $719,500 over the same period, and at Havelock, 44 kilometres from Blenheim, prices have risen 0.8 per cent from $664,550 to $670,150.

Other suburbs have dipped from 0.5 per cent to 3 per cent. At Redwoodtown prices dropped three per cent from $600,350 to $582,500, while in Riversdale they have declined 2.8 per cent from $557,050 to $541,500. Prices in Wither Hills, one of the higher priced suburb’s close to Blenheim, have dropped 1.1 per cent from $1,023,300 to $1,011,850.

More sales, potential buyers doing extensive research and an intermittent market have marked the first quarter of this year for Ray White sales consultant Michael Rea.

In February, 77 houses sold, compared with about half that in the same month last year. “Well over double the volume of sales brings the market back into balance,” Rea says.

It means a much better outlook for the market for the rest of the year. “I’ve been involved in real estate for 14 years and in Marlborough we tend to see from January to March where the market will potentially head for the rest of the year. People make a lot of big decisions at the beginning of the year, such as whether to buy or sell houses.”

More people are turning up at open homes and although they might not be cashed up and ready to buy, they are doing their research, Rea says. “There is pent-up activity from what was a difficult 2022 year.”

The difficulty spilt over into last year and Rea has recently signed up an investor for two, two-bedroom units that had been on the market for nearly a year. The investor has asked for an August settlement in light of bright-line test changes.

“There has been quite a bit of interest in the units since the beginning of the year and the fact an investor wants to buy them is quite telling in a market that has been devoid of investment buying for the past couple of years.”

Middle of the range two-bedroom properties have traditionally been on investors’ radar between the median price of $650,000 to $700,000.

Rea doesn’t expect a drastic increase in prices over the rest of the year. “There is still a disparity between vendors’ expectations and what buyers are willing to pay. We are still heavily in negotiations between sellers and buyers.”

Marlborough house sales

Marlborough had a flood of listings in February, but many are coming out the other end. Rea says how fluid sales are depends on what happens with interest rates. Most homeowners are concerned about interest rates now they are rolling off low rates and adapting to a new normal.

While sales have been picking up, the market is intermittent. “I can be run off my feet one week with a variety of different inquiries and buyers out the door and then the next week I am thinking ‘geez what happened, where has everyone gone’.”

Marlborough’s grape harvest can have a big impact on the housing market – often it takes a dip in April when entire families, retirees taking on part-time employment, truck drivers, mechanics and grape pickers are busy harvesting. Once it’s over May can be the biggest sales month.

This year lower fruit quantities meant there wasn’t a noticeable gap. Rea says although there weren’t as many grapes, they were of a higher quality and May should be a big selling month.

The most desirable Marlborough areas are Witherlea and Springlands, where 1950’s two and three-bedroom bungalows sell for the top end of $500,000 into $600,000, while in newer developments properties are selling in excess of $1 million. “Properties in the region are definitely more affordable than Nelson and Christchurch.”

After the Christchurch earthquakes Marlborough houses were on a par with Christchurch for a while, but the Christchurch market has now lifted quite a bit.

The most expensive properties are on the outskirts of Blenheim. Rea says many are luxurious homes on a small vineyard.

Other expensive properties are in Picton, Waikawa and throughout the Marlborough Sounds, particularly if they are 20 minutes to half-an-hour from Blenheim. They are predominantly holiday homes, although there is a good smattering of permanent residents in the sounds.

Access plays a big part in a property’s value – whether it’s by road or boat. “There are certain areas in the sounds called the ‘golden mile’,” Rea says. “It can cost millions to get land in these areas, but 20 minutes further into the sounds and it will cost half for land, but the fishing is still as good.”

Local property market

The government’s canning of two major projects in the region – the iReX inter-island ferry project and co-locating Marlborough Boys’ and Marlborough Girls’ colleges – is having a major effect on the housing and rental markets.

One of Finance Minister Nicola Willis’ first decisions when taking the reins was to decline extra funding for ferries to replace KiwiRail’s inter-island fleet and upgrading the Picton ferry terminal.

This resulted in Picton’s rental market turning on its head in March. From a market that had three to four houses a week for rent at the beginning of the year, in a matter of weeks there were 16 homes in one week on the market and few inquiries.

Pauline’s Property Management owner, Pauline Johnson, who has been in the industry for a decade, says she has seen nothing like it. “It’s a massive shift from where there are not enough rentals and in two to three weeks there is an abundance. Because many are also expensive there are not handfuls of tenants in the market for them.”

Workers who came in for specialised roles at the ferry terminal and rented a property have now gone.

Prices for rented properties were already high and, as happens with supply and demand, there is not enough demand and a lot of broken leases, Johnson says. For rentals on fixed-term contracts, the landlords will still be getting paid by the tenants until the lease runs out or they are re-rented.

Marlborough rentals

A three-bedroom rental 12 months ago in either Picton or Blenheim would have reached $500-$600 a week. It’s now about $750 a week for a three-bedroom, two-bathroom home. “Many tenants are not impressed with what they get for their dollars at that level,” Johnson says. “The average person in Blenheim cannot afford $750 a week in rent. And while there are a lot more rentals available, landlords are not repricing them.”

She has had a couple of houses for rent that are sitting on the market. “At the rent level being asked they really need two families to move in, but they are hard to find.”

Rents took off when ferry workers arrived in Picton and landlords could see there would be a shortage of accommodation. At the same time interest rates were rising and Johnson says many landlords wanted more in rent than their places were worth.

While there are people looking at the Picton rentals, there is not much in the way of employment. “It is not a highly desirable area. Most of the job opportunities are in Blenheim and more people want to rent there.”

The average rent in Blenheim is about $620 a week and at that level is attracting tenants. It is when rents are getting into the $700 and $800 a week range that properties are sitting.”

Few investors are buying. The numbers just don’t add up, says Johnson. Rentals are coming from owners who are either moving overseas or within New Zealand for work, or they are investor owners who are sick of looking after their own rental.

Many property owners have to be encouraged to bring their rentals up to scratch. Johnson has a cleaning checklist she gives landlords and says often houses are in a worse state than a tenant would leave them.

Tenants are encouraged to sign a two-year tenancy so they can avoid a rent rise in that time. Johnson says many would be happy to sign a five-year agreement to get long security of tenure.

She says while tenants can now pick and choose, too many of the tenancies are too expensive. “The market has changed, and it needs another change to bring it back into equilibrium.”

Corelogic analysis – Marlborough

Kelvin Davidson, Chief Property Economist

The data

Rental data is sourced from the Ministry of Business, Innovation and Employment based on rental bonds lodged. This data is supplied grouped into geographic areas based on statistical area units used by Statistics NZ for the census and as a result do not always match well with common usage suburb names.

The rental data for each area is matched to property price information from our database to determine property prices and therefore yield. The yield is calculated as the annualised rental income divided by the median property value calculated using our E-Valuer.

Market Composition

The rental market across Marlborough is dominated by houses, which is normal for most parts of the country. Of the 186 recently available on the market for rent, 159 have been houses (85 per cent), and the other 27 have been flats (15 per cent). There were no apartments for rent.

Sounds/Rural Marlborough has had the most flats for rent (12), followed by Blenheim Central (9), and Blenheim Outer/Renwick (6). Sounds/Rural Marlborough has also had the highest share of flats among all properties recently available for rent, at 29 per cent.

The most houses for rent have been in Blenheim Outer/Renwick (69), followed by Blenheim Central (60). Those two markets have also had the highest concentration rates for houses, at 92 per cent and 87 per cent respectively, with 71 per cent in Sounds/Rural Marlborough.

House Size, By Bedroom Count

Looking specifically at the 159 houses recently for rent across Marlborough, none have had either one or five bedrooms, and only 18 in the four-bedroom bracket (11 per cent). There have been 48 (30 per cent) with two bedrooms, and the remaining 93 (59 per cent) with three bedrooms.

Looking at four-bedroom houses for rent, most have been in Blenheim Outer/Renwick (12), with six in Blenheim Central, and none in Sounds/Rural Marlborough. The largest area for two-bedroom houses for rent has been 27 in Blenheim Central, with 12 in Sounds/Rural Marlborough. The concentration rates for those two areas are 45 per cent and 40 per cent respectively.

And finally, for the dominant three-bedroom house bracket there have recently been 48 of these properties for rent in Blenheim Outer/Renwick, with 27 in Blenheim Central, and 18 in Sounds/Rural Marlborough. Blenheim Outer/Renwick’s concentration rate has been the highest, at 70 per cent, with Sounds/Rural Marlborough 60 per cent.

Rent And Yield

By matching average value to rent we can look at gross yield for three-bedroom houses in each area.

Median weekly rents for three-bedroom houses across Marlborough are in a tight range of $570-$580, although the median values on these properties differ more widely, starting at $588,100 in Blenheim Central, up to $730,500 in Sounds/Rural Marlborough.

That results in a reasonably wide range for gross rental yields, too starting at 4.1 per cent in Sounds/Rural Marlborough, and more than 5 per cent in Blenheim Central. Of course, even at 4.1 per cent, that’s still a pretty decent rental yield in the current market.

Rental growth in Marlborough has been solid. Blenheim Outer/Renwick has been a little lower (3.6 per cent), while Blenheim Central is at around 5 per cent, but Sounds/Rural Marlborough has significantly outperformed, with gains of 11.5 per cent in the past year.