The latest month continued the run of positive economic news for Cairns. The economy is stepping in the right direction, but there is still much to happen to reach buoyancy.
Thank you to the team at Herron Todd White Cairns for making these statistics on residential property, employment and airport passenger numbers available to share.
The Cairns median house price has maintained a relatively steady to mildly softening trend in recent months, with the median house price trend standing at $394,200 in June 2015. However a trend rise of 3.3% over the latest 12 months is still indicated. Meanwhile median unit prices are currently steady, but with a 0.7% increase over the latest 12 months. The median land price has reduced in recent months, not because prices have reduced, but compositionally due to a revival of land sales in the less expensive areas of the Southern Corridor technically lowering the median.
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.
Stronger demand in the real estate sales market is further evidenced by a reduction in the time taken for listed properties to sell, down from an average of 70 days for houses sold in the twelve months to May 2014 to 62 days for those sold in the twelve months to May 2015. Time taken to sell a unit has also reduced, from an average of 103 days for sales in the twelve months to May 2014 to 89 days for sales in the twelve months to May 2015. However the average vendor discount – the average difference between the asking price first advertised on a property and its ultimate selling price – has started increasing for houses, as the stronger market environment means vendors are lifting initial asking prices to more ambitious levels.
Rental vacancy rate trends continue on a slight increase, though primarily in houses rather than units. Even so rental vacancies remain at levels indicative of a tight rental supply. The trend vacancy rates for July 2015 stood at 2.4% for houses and 2.8% for units. The market vacancy trend overall stood at 2.6%.
Building approvals for the construction of new dwellings have flattened off from the strong upward trajectory that had been in place earlier this year, but nevertheless remain at a near post-GFC high of around 65 new dwellings being approved per month. Approvals have increased in trend terms by 22.4% over the 12 months from June 2014 to June 2015, while approvals for 2014-15 as a whole were up 18.3% compared to 2013-14. The rate of new building approvals is still running at less than half of what would be expected on the basis of normal population growth and the demand for housing. Unit construction in particular remains very much in the doldrums, as even though there are projects in the pipeline, not much is happening yet ‘on the ground’.
There has been a distinct dichotomy in the performance of the residential and tourist apartment markets in Cairns over the last twelve years. The tourist apartment market peaked in median price terms back in 2004 and was followed by a distinct post-GFC correction from which it has only partially recovered. The June 2015 median tourist apartment price remains 28% down on the 2004 peak. By comparison the median residential apartment price peaked in 2010 before lowering as a result of the slow post-GFC market combined with buyer aversion over increases in strata insurance costs. The June 2015 median residential apartment price remains 19% down on the 2010 peak. However unit prices in general are now on the rise in both the residential and tourist apartment sectors.
Herron Todd White’s National Property Clock is prepared each month based on the local market perceptions of its Australia-wide network of offices. The Cairns market overall is presently positioned at the Rising Market stage of the cycle.
ABS headline figures for the Cairns Region (inclusive of Cairns, the Cassowary Coast, Douglas and the Tablelands) estimate that there were 111,800 persons employed during July 2015, compared to an estimate of 109,200 persons employed in June 2015. 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 Cairns regional employment trend rose to at 110,500 persons employed in July 2015, up 4.4% since January 2015, and maintaining the improvement evident during the course of this year.
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.
The Cairns Region’s headline unemployment rate came in at 8.7% in July 2015, an apparent rise compared to 8.0% in June 2015. Unemployment trend calculations have become increasingly uncertain following ABS methodology changes. According to our best guess, the estimated trend rate of unemployment stood at 8.7% in July 2015. The trend unemployment rate has been increasing in recent months as the improving economy encourages extra people to look for work.
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’.
The number of jobs being advertised in The Cairns Post has shown a 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 shown an 11.0% increase over the period from July 2014 to July 2015, albeit with a growth slowdown evident in the most recent months.
Cairns Airport experienced its busiest month ever in July 2015, with the trend in airport numbers overall increasing by 4.7% since July 2014. Even though passenger numbers at the domestic terminal were the highest ever, and showed a 4.1% increase compared to July last year, the trend was still technically not quite as strong as earlier this year. Meanwhile passenger numbers at the international terminal have experienced their highest July outcome since 2012 and have shown a trend increase of 19.0% on July last year. Cairns Airport comment that to meet the sustained increase in demand, a number of airlines have announced new or additional services, including Hong Kong Airlines launching seasonal flights to Cairns in January 2016, Tiger adding extra flights from Sydney in December 2015, and Jetstar adding supplemental flights from Tokyo in August 2015.
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Jason Thomson | Finance Broker and Mortgage Adviser | Smartline Cairns