Cairns To Just Keep On Rising - Optimism Is Finally Outweighing Pessimism!

Last week I had the privilege of being invited to a presentation by Dr Andrew Wilson, the Fairfax Senior Economist, outlining the Australian Housing Markets Report with a special highlight on the Cairns Market…the main headline being, ‘Cairns To Just Keep On Rising’. Music to our ears!

Most real estate agents remain cautiously optimistic about these so called ‘rises’ that the experts are predicting for Cairns, but Dr Wilson presented a very balanced and sensible report, backed up with plenty of credible evidence, many of which was enforced by our experiences in the real estate marketplace. And to be frank, based on this guy’s previous presentations, I feel quite confident we are on the right track.

Cairns remains a ‘premium lifestyle destination’, particularly for “Fly-In-Fly-Out” residents , regional sea changers and retirees whereas  the likes of Townsville remains largely an ‘economic’ town  . Our market is still very affordable by comparison to other cities. There are still very few houses being built, but this is obviously on the increase. Hardly any units are being built. This all puts pressure on price…a typical supply and demand trend.

Optimism is finally outweighing pessimism

In summary, the Cairns property market is clearly moving from recovery to recovered. The estimate is a return to pre GFC levels by June 2013.

·         Cairns has had 2.7% growth in the 1^st quarter of 2014

·         Over a 5 year period, it has risen by 7%

·         The average house price is now $380,000

·         The average unit price is $220,000

·         Expected prices to keep rising

·         Cairns jobless numbers are falling, though employment remains flat, but stable

·         Growth in China remains strong impacting on local tourism and investment

·         Interest rates are set to remain low

·         The $4.2B AQUIS development is obviously a key driver in moving forward

·        Confidence remains a key to Cairns growth 

·        View the full AHM Report here:

The latest local Herron Todd White Report,’ Cairns Watch’, reflects much the same by comparison. They state that the official population of Cairns stood at 153,566 in June 2013. They also estimate that the local Cairns population will grow by about 2.4% in the 12 months to June 2014, followed by a 2.3% growth in 12 months to June 2015. Here is the latest ‘Cairns Watch’ Report.

Through the eyes of a Cairns real estate agent, sales remain steady though buyers are clearly still hoping to secure properties at yesteryears prices. Many sellers want to sell at next year’s prices. Our job is to negotiate to bring these two time zones together…often not an easy task. Throw the valuers into the equation and it becomes even more challenging. Cyclone Ita, Easter, Anzac, Mothers Day, school back and the big Federal Budget have all played havoc on the momentum of the market in the past month. Who said real estate was easy?

The news is more positive than ever for our beautiful town. As property owners, you should all be thrilled with these two reports!

Regards, Debbie

Residential Sales Levels up 40.9%...Cairns Powers On!!

Exciting times for the recovering real estate market in Cairns as investor demand picks up and more people take on the opportunity of some excellent buying opportunities. Prices are slowly improving with buyers now seeking to secure a bargain before the market gets out of their reach.

 

Real estate agents are enjoying good volumes of potential buyers through properties as the market claws its way back. From a selling agents view, we now have the exact problem we had when the GFC hit hard; only the problem is in reverse! Buyers are still reflecting on past sales and making assumptions on value based on this past sales evidence. Sellers are getting excited with the constant banter from the media beating the drums on the signs of the rising market. Some sellers expectations of price have moved way ahead of the market…I guess the prospect of a fantastic price would excite anyone! Our job is now to pull both the buyers from low expectations and the sellers with high expectations together; like two stubborn horses with their hoofs stuck firmly in the ground. Smart buyers are realising their predicament very quickly as offers are refused, opportunities of great buys are slipping through their fingers as multiple offers coming rolling in on well-priced properties.

 

Price will always relate to time in this game. The higher the price, the slower the sale. With the scales beginning to tip in the direction of sellers thanks to a lack of listings available to sell, the situation is beginning to even out. Auctions are becoming more popular as a means to cure the problem. This month the RE/MAX Cairns office auctioned off 6 Police houses. With 70 bidders registered, there were 64 upset buyers walking out that night with starting bids from the crowd starting well above many budgets.

 

·         Sales volumes are continuing to acelerate

·         Rent prices are continuing to climb

·         The population continues to grow

·         Pressure is increasing on prices as a lack of listings is beginning to frustrate buyers

·         Interest rates are at an all-time low

 

The AQUIS development plan appears to have been the main catalyst in much of this renewed buyer confidence. Although we received news recently that there will be a delay on this plan for at least another 18 months, it really came as no surprise to locals. It certainly shone the light on what is possible for Cairns and injected a massive wave of enthusiasm and investment interest to the region. The Christmas tourism season also produced some exceptional, record breaking numbers with reef charters booking out for days at a time, hotel/motel occupancy rates at peak levels and many happy cabbies about! We were blessed with perfect weather too!

 

The January CairnsWatch report from Herron Todd White revealed Cairns' residential property sales had increased by a staggering 40.9% between December 2011 and December 2013. The average median rent increased by $15 per week over the 12 months to December 2013, up from $355 to $370 per week for houses and $255 to $270 per week for units. Building approvals are now at a 3 year high.

You can read the last two full HTW reports here for both January

http://www.cairnswatch.com.au/uploads/uploads/201401fullreport_1.pdf

and February http://www.cairnswatch.com.au/uploads/uploads/201402fullreport.pdf

 

All in all, things are looking good for property owners and potential investors to the region as Cairns powers on.

 

Have a great month!

AQUIS MOVES FORWARD WITH REEF CASINO TRUST TAKEOVER

 

Aquis Great Barrier Reef Resort Group today announced it has taken the next step in its proposed $269 million takeover of the Reef Hotel Casino by entering into a Takeover Bid Implementation Agreement with the Reef Casino Trust (ASX: RCT).

Aquis Chief Executive Officer Justin Fung said the move showed the proposed takeover bid was on track with both parties working co-operatively to achieve a successful takeover.

“We are pleased to have reached this agreement for the Reef Casino Trust,” Mr Fung said.

Mr Fung said he welcomed the announcement today by the board of Reef Corporate Services Limited on behalf of the Reef Casino Trust that it unanimously supported the proposed takeover offer by Aquis (subject to certain matters set out in full in that announcement).

RCT’s two largest unit holders, Casinos Austria International and Accor who collectively have a relevant interest in more than 70 per cent of the units in RCT, have also confirmed that they intend to accept the Offer in respect of all of their RCT units within two weeks of the Offer opening and would not withdraw that acceptance.

Subject to the terms of the Takeover Bid Implementation Agreement, Aquis will make an off-market cash bid to acquire all of the ordinary units in RCT for $4.354 in cash per unit. This bid, in conjunction with other share purchase agreements for other entities related to the operations of Reef Casino, will deliver ownership of the Reef Hotel Casino. Aquis has also separately agreed with Casinos Austria to acquire Casino Canberra.

The proposal, if it proceeds, would provide investors in the Reef Casino Trust with a very attractive return on their investment, with the proposed price representing a 53.3% premium on the closing price ($2.84) on 12 November 2013 (the last trading day prior to this proposed bid being announced) and 69.4% premium to the six-month VWAP of $2.57.

As well as the acquisition of Reef Casino Trust, Aquis is participating in the State Government process that commenced in late 2013 for the grant of two regional integrated resort licences.

“As well as the acquisition of Reef Casino Trust, work is also continuing on the Aquis project.  If we are successful, I can see the Reef Casino offering additional synergies and benefits to staff and the Cairns community through becoming part of that exciting and much larger integrated project,” Mr Fung said

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Cairns Continues to Soldier On

Cairns real estate continues to move from strength to strength as we gather momentum for a better than expected, galloping finish to Christmas. To many, there is a sense in the market that now is the time to sell, taking advantage of the strongest market conditions since 2007. There is clearly a wariness about the direction of the market next year but, the news for buyers is, well priced properties are still getting snapped up at a rate of knots!

The lower range properties are obviously receiving a lot of attention. One 2 bedroom unit advertised at $115,000 on the internet had 5 offers on it within  2 hours of being live! Whist buyers are more educated than ever to market prices, they are still looking at past prices quoted on sales data websites, often the information is well over 3 months old. As a consequence, in a rising market, more people than ever are complaining about “the one that got away!”…some offers are coming in too low! Look forwards, not backwards. Sellers have no problems looking forward - funny that. Buyer frustration is becoming stronger by the day with quality stock in low to mid-range price brackets becoming severely depleted. 

While there is plenty of activity about the City, locals still tread with caution as, sadly, there are still business foreclosures evident with some of our long term favourites simply running out of cash reserves to keep going. Ask any real estate agent about the prevalence of residential property owners in strife with their mortgages. There is a fair bit of that going on, sending mixed messages to the local market. All is not completely rosy in paradise, but we are certainly looking forward to a very positive 2014. For the latest on the Cairns property market movements, here is the Herron Todd White Report, CLICK HERE: 

It’s Official - Cairns Is Almost Ready for Take Off!

The good news keeps coming in for real estate punters with word / confirmation that Cairns has officially vacated her 5 year position at the bottom of the property clock and heading for better times! The latest Herron Todd White Report is out but with a bit of a mixed bag. Lot’s of positivity, with a dash of doom here and there to keep us real. Locally, another major developer has gone down, a few more of our favourite businesses have not been able to pull through to the good times. Unemployment has risen (what a nice place to be unemployed though!) On the brighter side, Mortgagee In Possession sales are beginning to fritter away. The talk continues about the AQUIS development in Yorkeys Knob becoming a reality. Airport passenger numbers continue to improve with an increase of 6.1 % in the past 12 months. Building Approvals are up a massive 51.4% for the year, a huge boost for the economy and confidence levels of the locals. There seems to be a lot of action in the streets with restaurants and hotels reporting very positive action. It is wonderful to see Cairns looking so vibrant and alive again! 

 

While there has been no movement in median prices of residential property, the number of sales between September 2011 and September 2013 have increased by an impressive 33.7%. The median house price sits at $354,400, 2.4% lower than February this year. Median unit prices sit at $185,000, a surprising 8.6% lower than February…we are not quite out of the woods! With stock being swallowed up by the increased sales volumes, listings are getting tighter by the day for agents. There are a few exceptions to the rule with stock variations very much suburb sensitive. We are still adjusting prices downwards in some areas, the most popular suburbs are definitely enjoying more demand, putting pressure on prices.

 

Herron Todd White reports that the median rent has increased by only $10 per week in the past 12 months. Houses at a median of $355-$365 per week, Units at $255 to $265 per week. The vacancy rate for houses is holding at 1.7%, Units at 2.2%. At the 2% overall vacancy rate, the rental market seems to be balancing out to an optimal level for Cairns. Click Here for the full economy report from Herron Todd White.

 

We are swiftly changing from a buyer’s market to a much more level playing field between buyers and sellers. Open home numbers are improving markedly, record numbers of auction bidders, more homes selling under the hammer. Homes selling quicker if priced right. I would suggest there is much optimism out there, though the newspapers would lead us to believe that life is a bed of roses up here. We are clearly off the bottom but it could be a hard slog to the top if sellers begin getting over excited about the market. Unless your property is priced right, presented right and marketed right, it could still sit on the market for quite some time. Don’t believe everything you read in the news, but it is still worth strapping yourself down for a fun ride of real estate action in 2014…The Cairns market is showing every sign of taking off!

 

 

The Cairns Real Estate Market – Let’s Get Excited!

It seems there are exciting times ahead for the City of Cairns with plenty of good news on the horizon including the announcement of the plans for the $4.2B AQUIS Great Barrier Reef Resort Development in Yorkeys Knob. Here is a link to the overview if you are not familiar with it: http://aquisgreatbarrierreefresort.com/wp-content/uploads/2013/08/Aquis-GBR-Resort_Project-Booklet_MedRes1.pdf. We are all hoping of course, it gets the full go ahead. Cairns has a spring in her step as the excitement begins to build; the Cairns Amateurs Cup this weekend coincides with the government elections and, as real estate sales agents, we are expecting the new surge of growth to begin to show itself as positivity and hope takes the place of 6 years of doom and gloom!

The continuous pick-up in sales volumes is just beginning to have an impact on prices. Though prices record as quite flat across town, they are balanced out by the fact that some suburbs are showing 5% rises, whilst others are still sliding. We remain at the bottom of the property clock.

Buyer demographics are almost exactly the same as 2003 whereby momentum was building as out-of-town buyer’s realised value in Cairns prices and clearly recognised a bottomed out market. Unfortunately, many locals back then sat on their hands complaining they were missing out on all the “good deals”. It is happening again now in 2013. NSW buyers are showing particularly strong interest in our real estate, not afraid to pay reasonable prices and realising that if they do not buy now, they could miss out. Locals often ask us “What is the lowest figure the Seller will take?” Out-of-towners have a different take on things. They are doing their research, often not even viewing the property and stating “…that’s a fair price – I’ll take it”

Sellers would be wise to listen to the current market without getting too excited with the prospect of rising prices however. The valuers’ are still tough, the banks do not intend on taking risks with buyers wanting to invest in what still appears to be a restless Cairns market. New build housing popping up in pockets about Cairns fiercely compete on
price with older homes. There are more and more being built slowing demand on existing housing. Building approvals have gone up by a massive 43.1% between December 12 and June 13. That’s huge! A major concern for agents is the fact that stock is so tight; in fact houses actually listed for sale have reduced by 20.6% between June 11 and June 13. Why complain?! This is one of the major stabilisers of current local prices. An increase in stock could pop this bubble we are all hoping for.

A new government in the starting blocks…what sort of measures will they have to take to get the country back in shape? We are witnessing local mining contractors losing their jobs now. Ergon Energy workers being trained to handle retrenchments, a very nervous Queensland Health sector to name but a few concerning events. On the other hand, across the nation, low interest rates, rising incomes and improved affordability, rents growing quicker than house prices… the creation of a buoyant real estate market at work. Anything could happen after next week but, rest assured, this weekend will definitely be a great excuse to celebrate what we hope will be the start of some serious action in the Cairns real estate market. The latest Cairns Watch report confirms much of our thoughts. Click here to view the August Edition for Herron Todd White: http://www.cairnswatch.com.au/uploads/uploads/201308fullreport.pdf

The Good News Keeps Coming For Cairns Real Estate

This is definitely the most exciting time in our real estate market in Cairns since 2007, with the momentum clearly showing some great improvement in sales volumes as Cairns continues to build on its economic recovery. As you know, we are heavily dependent on tourism, and having had no favours from the Aussie dollar being so high, the accommodation occupancy trend has moved up to a sound 69.8% with airport passengers up by a record 6.3% over the past 12 months as we begin heading into our peak tourist season. A combination of those Chinese flights into Cairns and targeted delegations from Cairns business leaders to form new markets and ties with, particularly the Chinese and Papua New Guinean markets, has been a real shot in the arm for business activity and the stabilisation of employment in the Far North. We are still seeing plenty of new families making their move to Cairns and flowing through Open Homes, clearly excited to be here!  

As most of you will be aware, sales volumes have been steadily increasing though prices still remain flat-lined. For example, the February 2013 median house price sat at $352,400, just 0.8% higher than February 2012. Unit sales fared no better with a median price of $190,400 in February 2013, 2.1% lower than in February 2012. The rental market remains tight with the vacancy rate for houses sitting at 2% and units at 2.8%. Many Landlords are trying to increase rents to prices never ever achieved in our market. Tenants are avoiding overpriced stock so be conscious of this when pushing the envelope with Property Managers advice. The median rent for houses have indeed increased by $20 per week in the past 12 months, up from $345 per week to $365. Units have come from $245 to $265 per week. Whilst our rents are a lot cheaper than down south of Queensland, our lower wages also need to be taken into consideration.

The great news is that Cairns is expected to finally break from the bottom of the Property Cycle in the coming months. For buyers, it is glaringly obvious that moves should be made to secure property now rather than waiting for an upward trend. Some select properties are now only on the market for a few days. If it is well positioned, well priced, and most importantly, advertised well, stock will start moving quickly. Agents are still working on past sales prices. When the market starts moving, you will most certainly see prices beginning to move up to slow this trend down. It has happened to every property cycle since the beginning of time. How many of us will reflect in the future with a sigh… “ Should have bought that property in 2013!”

For the full Herron Todd White Cairns Watch Report for April, click here:  http://www.cairnswatch.com.au/uploads/uploads/201304fullreport.pdf