The number of Queenstown rental property listings on TradeMe jumped about 80 per cent from February to March.

Queenstown's previously strained rental market is being flooded with new properties as a big dip in property values is predicted.

The number of Queenstown rental property listings on Trade Me jumped about 80 per cent from February to March as Covid-19 led to the international visitor market shutting down.

The announcement that New Zealand will move to level three next week further prompted the number of listed rentals to swell on social media and in local publications.

Economist Benje Patterson said the shift was driven by tenants doing "runners" as the tourism industry shut down and landlords pulling their property from the visitor accommodation market into long term rentals.

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Rental prices were dropping as landlords needed to get a return on assets they were "mortgaged to the hills on", he said.

TradeMe figures showed the median weekly rental across the district was $665 in March, an 11 per cent decrease from February and well below the record median price of $800, set in January.

Patterson predicted the increase in rental properties would be the first wave in a shift in the property market, which would include the loss of hospitality and tourism jobs.

The second wave would hit once the Government's wage subsidy and moves by retail banks to allow mortgage holidays expired. That would flow into the service industry, retail and construction sectors.

"Two-thirds of jobs are in tourism. When you add in construction that's almost 80 per cent of the economy. We're not going to be able to indefinitely stop the inevitable."

Supplied Economist Benje Patterson believes the economic impact of Covid-19 on Queenstown will come in two waves.

The widely predicated 10 per cent property decrease across New Zealand was likely to be significantly greater in Queenstown, he said.

Harcourts Queenstown chief executive Kelvin Collins also believed Queenstown's property market would be harder hit than other parts of New Zealand.

However, he did not expect the impact to be as great as during the 2008 Global Financial Crisis when property listings dropped 50 per cent.

There might be an oversupply of rental property but that could be offset by a drop in interest rates making mortgages more affordable for home owners, he said.

Unlike 2008, there was a shortage of residential property and sections available so a downturn would stabilise the market.

"More people have more equity in their property than what they did back in 2008. Lending has been pretty tough," he said.

Mayor Jim Boult had indicated there could be 6500 jobs lost in Queenstown but that might not have a large impact, Collins said.

"Will they leave town? Stay in town? Will they all lose their jobs? We actually don't know.

"If 5000 people leave Queenstown tomorrow that will have an impact on rental property but I don't know if that's going to happen."

The managed apartment market was the most at risk of oversupply with large new developments under way in the Remarkables Park and Queenstown Central under construction, he said.

Agencies were reporting an increase in enquiries from ex-pats for high-end properties, he said.

TradeMe head of property Nigel Jeffries​ said is was not surprising the Queenstown rental market had been hard hit

"This is a market that relies heavily on tourism, with a huge number of short-term rentals – so the pause in travellers has really shaken it up."​