The latest Herron Todd White Cairns Watch report reveals the Cairns economy is ending 2015 in a better economic position than it was at the end of 2014, but its progress along that path still remains painfully slow. Positive signals abound from improved tourism activity and a consequent revival of tourism investment intentions, but these signals are not yet translating to real improvements in business activity ‘on the ground’ and to new job generation.
Property sale volumes have reduced in growth from the screws being tightened on investment loans as well as some buyer resistance to increased asking prices. This has resulted in a general flattening in house and unit sales, and a slowdown in land sales, during the course of this year.
The Cairns median house price has steadied in recent months, with the median house price trend coming in at $396,600 in October 2015. This indicates a trend rise of 1.4% over the latest 12 months. Meanwhile the trend in median unit has increased 2.6% over the latest 12 months, to reach $207,200 in October 2015. The median land price trend reduced to $202,400 in October 2015, impacted in recent months by compositional change 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.
Rental vacancy rates have risen during the course of 2015, especially for units as opposed to houses. The rental market for units is moving into the ‘balanced market’ zone, which may help relieve some upwards pressure on unit rents, but rental vacancies overall remain at levels indicative of a moderately tight rental supply. The trend rental vacancy rates for November 2015 stood at 2.5% for houses and 3.1% for units. The market vacancy trend overall stood at 2.8%.
Building approvals spiked in October 2015 from a one-off approval for a 56 unit village development starting construction in Manoora. Building approvals have otherwise eased off over the last six months in stylised (trend-in-the-trend) terms, resulting in the building approvals stylised trend lowering by 2.5% over the period from October 2014 to October 2015. Nevertheless the expectation for the coming year is for building approvals to revert to an increase as economic conditions continue to slowly improve.
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 only positional change this month is Coffs Harbour (NSW), moving to join Sydney and Melbourne at the ‘Peak of Market’. The Cairns market has been cooling in growth, but is still judged to be 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 107,300 persons employed during November 2015, slightly down on a revised estimate of 108,100 persons employed during October 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 reduced to 105,400 persons employed in November 2015, little different to what it was in November 2014.
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 6.3% in November 2015, an unrealistic reduction from the 8.7% rate estimated in October 2015.
Unemployment trend calculations have become increasingly uncertain following ABS methodology changes. According to our best guess, the trend rate of unemployment still stood at 7.9% in November 2015. Even though the unemployment trend has reduced in recent months, it is not as a good sign. The reduction comes not from extra employment, but from people withdrawing from the search for work due to a perceived lack of jobs.
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 static to 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 rebuilt somewhat over the last six months, and a 2.2% increase is evident over the period from November 2014 to November 2015.
The passenger trend at the domestic terminal has flattened from the technical high it experienced earlier this year, but is still indicating 1.6% growth over the period from November 2014 to November 2015. Meanwhile passenger trends at the international terminal have also flattened, but should gain renewed impetus from Philippine Airlines having commenced direct flights to Auckland and Manila in December 2015 and Hong Kong Airlines launching seasonal flights to Cairns in January 2016. The international terminal passenger trend has increased 13.4% over the period from November 2014 to November 2015, while passenger numbers for the two terminals combined have grown in overall trend terms by 2.9% over the period from November 2014 to November 2015.
Jason Thomson | Mortgage Adviser and Finance Broker | Smartline Cairns