Cairns Property Market In Recovery Mode

 

Construction on the move - Cairns Base Hospital

 

There is a new buzz about Cairns with lots of good news surfacing for the economy. Most of us are taking this news in with a cautious optimism, things are still very shaky for many businesses and families but at least there is light at the end of the tunnel. Right now, we have much to be thankful for. We have had the most glorious summer up here. Cairns is lush and green having a perfect balance of generally light rains and plenty of sunshine for the entire wet season. It came as no surprise to find that domestic passengers at the Cairns Airport are achieving record highs with a growth of 7.9% in volume in the past 12 months. Unemployment is at its lowest rate since December 2008.

Open Home numbers are really exciting…particularly for properties advertised well. I have not seen these numbers since 2006 and I tell you, as real estate agents, it is such a thrill to see the numbers back! I recorded 86 people through one Forest Gardens Open Home… People were lined up all the way out to the street. This was a house that had been on the market for 5 months. Two adverts, and bang! Five offers in one day! It was priced to meet the buyer’s market. Though the residential sales volumes are increasing, it clearly remains in favor of the buyers. Cairns is still officially languishing at the bottom of the property cycle.

 

 

We appear to be experiencing a bit of what I call, a “Change-Of- Guard” with buyer profiles. Many Cairns residents have lost their jobs recently, particularly Government workers. Many are packing up and leaving town. Speak to any removalist. Replacing them, we are finding a phenomenal number of new faces from Adelaide, Darwin and WA. Kind of exciting for the town!

Medium houses prices came in at $354,000, a rise of only 1.7% since December 2011. Medium prices for units dropped to $170,000 in December, 6.7% lower than December 2011….still in trouble. The news keeps getting better for residential investors with rentals still critically tight as the result of ongoing demand and no new supplies on line yet. The vacancy rate for houses was officially 1.5% during January, while units sat at 1.9% with an overall trend of 1.7%. Relief is on the way for tenants with building approvals for housing up an incredible 36% compared to 2011. Unit development remains pretty much non- existent with developers still trying to offload stock built before the GFC. For a full report click on the Cairns Watch Report.
 

It is still a very tough market but confidence is clearly building. Lots of bargain hunters coming forth from the south with some ridiculous low offers. Some score, many are getting frustrated. Many have left their run too late. Competition is building for well priced properties…This market is getting really exciting, but we won’t crack the champagne just yet!

Have a great week, Debbie

 

Cairns Sales Volumes Increase, Prices Still Slipping

There seems to be a pick-up in listings in the last few weeks with many buyers revelling in the fact that they have an increasing choice of properties to view, putting even more pressure on our sellers to reduce their expectations of price on their properties to be ahead of the competition. This is not a trend we were hoping for as Cairns properties continue to languish at 2005 prices. It seems many sellers are finally giving up on the hope of an improvement in the market and pressing on with life plans. Life does go on, people get older, families grow out of their homes, many scale down, circumstances change. An interesting fact is that at any given time, 3% of people are either in buying or selling mode. A return to normal stock levels will definitely have some sort of impact on our prices and with so many variables in the global and domestic outlook, it is anyone’s guess as to what to expect in 2013.

Cairns in summary for November:

·         Volumes of sales are still increasing, though prices still falling

·         Medium house price is $330,000, a reduction of 3.7% since the same time in 2011

·         Medium unit price is $179,000, a 4.4% reduction since the same time in 2011

·         Rental vacancy rate for houses are at 1.3%, units 2.5% (Overall 1.9% - down from 2.4% last month)

·         Building Approvals return to growth with a 24% increase in the past 12 months

·         Since 2008, Mortgagee in Possession & Receivership sales accounted for a trend level 13.6% of all residential sales in September 2012

 

 

To keep your finger on the pulse, the November Herron Todd White Cairns Watch Property Report has just been released. You can find it here: http://www.cairnswatch.com.au/uploads/uploads/201211property.pdf

We are still experiencing good numbers through advertised Open Homes, in fact I had over 60 people visit an acreage property last Sunday! On average 4-5 groups through most Open Homes. Real estate is a numbers game, the more people through, the better chance of selling but unless the advertised price is within 10% of where the buyers are, we are wasting our time. Buyers have become “internet intellectuals”, more prepared and more informed than ever.

The year has ended with plenty of action and very pleasing results in comparison to last year. It is now cheaper to buy than to rent and interest rates are at an all-time low. As long as the prices are right, there are plenty of buyers about and that’s the way we like it!

Have a great week!

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!  

Cairns is Improving!

The latest Herron Todd White Report is out! Cairns is continuing to slowly emerge from its economic trough. In the brief report from our guru of Herron Todd White, Rick Carr, the most gratifying result has been an increase in employment, and although unemployment is higher, even that gets a positive spin – more people coming out to look for work as they perceive the economy to be improving. Coupled with perceptions of a much busier tourist season this year and with direct flights into China about to commence, there is growing confidence in the future of Cairns economy. If you are interested on the latest official stats and figures for our Cairns Region, click onto the following snapshot of the property market: http://www.cairnswatch.com.au/uploads/uploads/201209property.pdf If you are keen to see the overall picture about the economy, click here: http://www.cairnswatch.com.au/uploads/uploads/201209fullreport.pdf

Have a great week!

 

Cairns - The 2 Speed Property Market

The Cairns property market continues to languish on the bottom of the property cycle, with our saving grace being the lack of stock available to buyers. As I have mentioned before, we are experiencing a two speed property market with house prices somewhat stabilizing and the unit market continuing to splutter downwards. High insurance fees continue to plague the unit market and I'd love a dollar for every person wanting to have a whinge about our Cairns Regional Council rates.

The entire market is being driven by price!

Only yesterday I adjusted the price of a townhouse in Manoora listed at $145,000 down to $125,000 - It has been chaos on the phones. Three interstate offers within two hours. How can this be? The property has been on the market for 12 months! It just goes to show.

From a real estate agents position, the very worst thing that I can do is expose my sellers to a falling market. If you are a seller, listen to the market. Sorry, buyers are in control.

Recent studies show that until a property is within 5% of what buyers are willing to pay, they will basically ignore it, no matter how enticing it looks! You will find that this is why BIG impact real estate companies are selling via the auction method, whereby the property is judged on its merits and not just price. There is nothing like a "cash, unconditional" sale in a time where professional property valuers are confronted with a truly confused marketplace. Many a contract is terminated on valuation. Mortgagee in possession sales at rock bottom prices. An emotional buyer with a real desire to be at a particular address will pay a record price, whilst the real estate agent frantically runs about trying to find solutions to everyones problems!

Cairns unemployment is at 10.3% (Is it ????)....the population continues to grow at 2%. The rental vacancy rate is officially 1.8% (though I firmly believe it is now below 1%). For forty years, Cairns has run at a sustainable average of 2% until the GFC hit us five years ago. Low interest rates are certainly having an effect.

Its an exciting and opportunistic time for investors, with rock bottom prices, sky rocketing rents and not a great deal of residential developments in the future. The perfect storm is brewing!

Have a great week

Debbie

The Chinese are Coming?

I was interested to read this weekends local newspaper and note that is is not only real estate agencies searching to employ bi-lingual staff at present. Tourism and service companies share our quest as we gear up for an expected surge in the Chinese market. There has clearly been an increase in the number of Chinese buyers about seeking to secure good quality homes for their families in Cairns. They must meet certain criteria to buy property in Australia. I have personally not experienced the onset of investors to date.

In just over 2 months, the direct flights from China to Cairns begin. Are we about to experience a reoccurance of the heady days of the early 1990's when the Japanese were flying direct to Cairns resulting in one of the largest boosts to the local economy ever? We remain cautiously optimistic on that one. At least momentum is building, for for what appears to be the beginning of the upturn on the Property Clock.

When do we know it is on the bottom? When sales volume and sales values start going up! Sales volumes are definitely on the rise. Sales values?

We'll have to consult the buyers on that one!

Have a great week, Debbie