Cairns still sitting at the bottom of the Property Cycle

The latest figures for Cairns residential property are out for October, compliments of Herron Todd White Independent property advisors.

Property continues to turn over at a much greater rate than 12 months ago but the prices are still slipping away from us. The August 2012 Cairns median house price came in at $331,000, a 3.7% reduction since August 2011. The median unit price is also struggling, reducing to $178,000 in August 2012, a 6.9% reduction since August 2011.

Rental houses continue to show very tight supply as a result on on-going demand and the absence of new supply, but the shortage of units appears to have alleviated in recent months.

The trend vacancy rate for houses stood at a very low 1.7% during September 2012, while units displayed a trend vacancy rate of 2.9%. The overall market vacancy rate stood at 2.4%.

Rental housing shortages have resulted in escalated rents across all categories of housing over the last 12 months. Between September 2011 and September 2012, the weighted average median rent

increased from $325 to $350 per week for houses, and from $240 to $255 per week for units. Rents are likely to continue increasing during 2012-13 as the rental supply stays tight.

Building approval numbers staged a recovery in August compared to their very low July figure, highlighting the variations that have occurred during the course of this year from changing grant schemes, stamp duties, etc. Though the trend level has reverted back to 2011 levels, there is a perception that there may be underlying improvements taking place in the industry as the economy slowly recovers.

The Cairns market position remains unchanged on last month, wavering at the bottom of the property cycle. There are plenty of opportunities to pick up a great deal now as we begin to enter the slow recovery phase.

If you are interested in reading the full Cairns Watch report CLICK HERE: http://www.cairnswatch.com.au/uploads/uploads/201210fullreport.pdf

Have a great week!

Chinese Boost For Cairns – More Residential Investment Needed

The town is buzzing this week with the very first flights direct from China to Cairns touching down at the International Airport. As mentioned previously, these flights will be coming in 3 times a week in the coming months, rising to daily services during a trial period, opening up a fresh tourism market we are very much in need of to help reignite the regions tourism industry and regional economy. It was amusing listening to the radio this morning and hearing that many of these Chinese being interviewed at the airport were previously not even aware of Cairns existing! We saw similar activity with Japanese tourism in the 1980’s. The injection of foreign investment at that time was phenomenal. Business leaders are hoping for a similar effect in the coming months to help strengthen Cairns position as the “Asian Gateway To Australia”. Even without the impact of these extra flights, Chinese visitors to Cairns were up 40% last year.

 

From a real estate point-of-view, this is all pretty exciting as more tourism creates more demand for jobs and services…and it’s a fact, everyone needs somewhere to live! After a 5 year downturn in building approvals, the time is also almost right to create affordable products for FIRB (Foreign Investment Review Board) approved buyers. There are very few investment opportunities for these people and like it or lump it, investment of residential property is critical for the well-being of our communities. Can tenants really afford to pay increasing Cairns rents as demand overtakes our accommodation supply? As property guru Michael Yardley pointed out recently, our government provides public housing, but not enough for those who can’t afford to buy their own property. In the past few years, local investors have slowed in the purchase of residential properties in Cairns. It is only the private rental market that can deliver rental accommodation at the rate and scale that is needed at present. Foreign investment would be a great help but, let’s face it, it is certainly an opportune time for Aussie Mum & Dad investors to snap up the great deals on offer in Cairns.

 

Have a great week!