The Queenstown effect on the housing market is starting to be seen in another South Island destination.

Mackenzie District - the gateway to Mount Cook - has seen its home values increase five-fold over the past two decades.

Deputy mayor James Leslie told Mike Hosking people are realising they can make a lot of money off tourists.

"People are coming to town, bringing some money, and building expensive houses but that's not helping our middle market.

"We're being hollowed out a bit. We need more workers, and they can't afford to come here."

He says that houses aren't being snapped up for residents.

"We're now finding that houses are being priced out of the average earners market and weaker accommodation are getting harder and harder to find, because everyone's moving into the BNB Market."