Cairns Property Market Update – April 2016

 

cairns property market

 

The latest Herron Todd White Cairns Watch report reveals the Cairns economy continues to experience extremely positive tourism activity indicators feeding through into slow improvement in the region’s employment market. But there is still a long way for the employment market to go, especially to address the region’s high rate of youth unemployment.

Meanwhile the mood of the property market continues to soften, influenced by the screws having been tightened on finance to investors, the debate now occurring over negative gearing and the volume of building approvals starting to fade.

All the latest statistics from HTW are as follows:

 

property prices

The Cairns median house price trend has eased downward in recent months, coming in at $394,700 in February 2016. This represents a trend reduction of 0.5% over the latest 12 months. The trend in the median unit price also lowered to $220,600 in February 2016, but has still risen 3.2% since February 2015. The median land price trend came in at $212,900 in February 2016, which is 4.1% lower than in February 2015 due to increasing proportions of Southern Corridor land sales in the sales mix.

N.B. The median property price is the actual sale price of the middle-priced property from the list of properties sold each month. Movements in median prices do not necessarily equate to movements in individual property values.

 

property listings

The slowdown in residential sale volumes and the lack of price growth has seen growth in the number of properties being listed for sale moderate over the last half nine months. The trend in the number of properties listed for sale stood at approximately 2,600 in the March quarter of 2016, consisting of approximately 1,700 houses for sale and 900 units. The March 2016 trend of approximately 2,600 properties for sale has nevertheless increased from approximately 2,400 in March 2015 and approximately 2,300 in March 2014.

 

rental vacancies

Rental vacancy rate trends have tightened over the last six months, especially for units as opposed to houses. Rental vacancies overall continue to demonstrate a moderately tight rental supply. The trend rental vacancy rates for March 2016 stood at 2.3% for houses and units alike. The market vacancy trend overall stood at 2.2%.

 

median rents

Low rental vacancy rates are continuing to place mild upward pressure on rents. Over the twelve months to March 2016 the Cairns weighted average median rent has increased from $387 to $393 per week for houses, and from $280 to $282 per week for units.

N.B. The median rent is the middle-priced rental from the list of properties rented during the quarter. Movements in median rents do not necessarily equate to movements in individual property rents.

 

building approvals

Building approvals over the last three months have dropped back significantly from the spikes experienced in October/November 2015, reverting the trend into a decline in both actual and stylised (trend-in-thetrend) terms. The building approvals trend ran at 61 per month in February 2016, down on the 71 per month in February 2015, but nevertheless significantly stronger than the 44 per month recorded in February 2013.

 

property clock

Herron Todd White’s National Property Clock is prepared each month based on the local market perceptions of its Australia-wide network of offices. Even though local property demand has cooled in recent months, we still regard Cairns as being at the ‘Rising Market’ stage of the cycle.

 

tourism

The tourist industry recovery is well under way, with the Tropical North Queensland region experiencing a visitor number increase of 20% in 2015. The region received a record 2.9 million visitors who stayed at least one night in the region in 2015, of whom 2.1 million were domestic travellers and 800,000 were from overseas.

The value of tourism expenditure by overnight visitors to the region totalled a record $3.3 billion in 2015. This represents a 26% increase on the $2.6 billion recorded in 2014, and reflects the combination of increased visitor numbers as well as their average expenditure increasing from $1,084 per visitor in 2014 to $1,138 per visitor in 2015.

 

airport passenger numbers

Continued strength in Cairns Airport figures during March 2016, aided by the early Easter and the return of Air New Zealand to the Cairns-Auckland route, have manifested in heightened passenger trend increases at both the international and domestic terminals. Overall passenger numbers at Cairns Airport have shown 13.2% trend growth over the period from March 2015 to March 2016. Cairns Airport comments that in addition to growth in the Chinese and Japanese markets, European travellers have switched to arriving via Asian hubs as they offer journeys up to 25% shorter than flying via gateways in Australia’s south. The USA market has also increased, with many flying into Cairns via Asia due to shorter journeys, e.g. the 1-stop New York-Tokyo-Cairns journey is 1,300km shorter than 2-stops via Sydney and Los Angeles.

 

employed

ABS headline figures for the Cairns Region (inclusive of Cairns, the Cassowary Coast, Douglas and the Tablelands) estimate that there were 110,700 persons employed during March 2016 compared to 106,700 persons employed during February 2016.

Trend calculations have been affected by changes in the processes the ABS uses to derive State and national trends (which we emulate to derive the local trend). In our estimation, the regional employment trend increased to 111,300 persons employed in March 2016, which represents a 2.7% increase since March 2015.

N.B. The ABS Labour Force figures are estimates derived from a sample survey of only about 500 Cairns Region residents, and hence are subject to a potentially large margin of error. Neither the headline nor the trend estimates should be interpreted as precise values.

 

unemployed

The Cairns Region’s headline unemployment rate rose to 9.5% in March 2016, up from 8.6% in February 2016, and more than its ‘normal’ seasonal increase.

Unemployment trend calculations have become increasingly uncertain following ABS methodology changes. In our estimation, and after accounting for normal seasonal effects, the unemployment trend rate reduced to 7.4% in March 2016. The region’s unemployment rate remains higher than the State average of 6.0%, but the gap is continuing to narrow.

N.B. To be counted as ‘unemployed’ in the ABS Labour Force survey you need to not have a job and be actively seeking work. People who do not have a job and are not actively seeking work are not counted as unemployed, they are regarded as ‘not in the labour force’.

 

job ads

The number of jobs being advertised in The Cairns Post has shown a static to mildly softening trend over past two years, influenced by changing modes of job advertising from print to on-line media. Meanwhile the trend in internet job ads for the Cairns and Far North region has also been reducing mildly over recent months. There has been a 1.4% decrease in the internet job ads trend over the period from March 2015 to March 2016.

 

Jason Thomson is a Cairns based Mortgage Adviser and Finance Broker with clients all around Australia. 130+Client Reviews featured on his website proves that Jason is a trusted industry professional. Using his wealth of experience in financial services, he thrives on delivering superior service. Jason is very approachable and is always looking for new clients to help in the often confusing world of finance and property.

 

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