“The Cairns economy is entering 2019 with improvements on the employment and labour market front. Tourism still remains at healthy levels but will need to be closely watched as the year progresses. Meanwhile the property market, despite strong underlying fundamentals, remains spooked by external malaise from the Banking Royal Commission and tighter lending rules. For these reasons, Cairns is yet to budge from a ‘Steady State’ position” – Rick Carr, Research Consultant, Herron Todd White Cairns.
Details of HTW’s January CairnsWatch report is as follows:
Cairns Property Prices
Median property price trends have edged up for houses over the last six months, but have remained basically flat for units and increased noticeably for land on the back of very low volumes. However our view is that the majority of property prices are within plus or minus 5% of what they were twelve months ago, and that their overall trend remains static. The latest trend median prices, for properties sold in the month of December 2018, came in at $409,000 for a house, $221,000 for a unit, and $231,000 for a block of land.
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.
Cairns Rental Vacancies
Rental vacancy trends have tightened considerably over the last six months, led by shortages in the number of houses available for rent. As a result, rental vacancy rates continue to indicate very tight verging on stressed market conditions. Our latest survey results show that the trend rental vacancy rates for December 2018 stood at 1.3% for houses, 1.9% for units and 1.6% overall. Coupled with the low level of new rental supply being created due to very low levels of new housing construction and reduced levels of investor housing activity, rental market conditions are expected to stay tight and/or stressed for some time.
Cairns Property Rents
Low rental vacancy rates have been placing mild upward pressure on rents in year-on-year terms consistently over the last six years. Over the twelve months to December 2018 the Cairns weighted average median rent has lifted from $405 to $415 per week for houses, and from $285 to $295 per week for units. The very low rental vacancy rates being observed in the current market are likely to maintain upward pressure on rents in coming quarters, but will not be able do so indefinitely for rental affordability reasons. 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.
Cairns Building Approvals
Building approval figures have retreated substantially from their April 2018 spike, reverting to a five year low over the last three months. The November 2018 trend is 67.5% below the April 2018 spike, and down by 6.0% compared to November 2017. Together they highlight the lacklustre state of the residential property market at present, as well as the competitive state of new house construction due to price pressures from house sales in the established housing market.
Special Topic: Port Douglas Apartment Sales
The Port Douglas apartment market had been steadily rebuilding in both volume and price terms from the low point experienced in 2011, but that increase appears to have lost impetus during 2018. The current market is characterised by a slowdown in sales volumes combined with either static values or early signs of price decline. The market has been affected in particular by slowing real estate markets in southern states, especially Sydney and Melbourne, which generate the majority of purchasers.
National 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 we have been expecting the Cairns market to experience greater impetus as a result of improving economic conditions, Cairns is persisting in a ‘Steady State’ position.
Trended employment figures for the Cairns Region (inclusive of Cairns, the Cassowary Coast, Douglas and the Tablelands) estimate that there were 120,200 persons employed during December 2018, up from the estimate of 119,800 persons employed during November 2018. The calculated employment trend has shown distinct growth during the latter half of 2018, and reached an all-time record high in December 2018. The trend employment increase over the period from December 2017 to December 2018 came in at 2.9%. 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 actual nor the trend estimates should be interpreted as precise values.
The trend unemployment rate in the Cairns Region has been moving solidly downward over the last seven months. The Cairns Region had a seasonally adjusted trend unemployment rate of 4.7% as at December 2018, down from the trend estimates of 4.9% as at November 2018 and 6.1% as at December 2017. Importantly also, the Cairns Region’s unemployment rate has moved considerably below the State average of 6.1%. However our concern is that much of the unemployment reduction has arisen from reduced labour force participation rather than job creation as such. 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’.
Cairns Job Ads
The trend in the number of jobs being advertised on employment websites for the Cairns and Far North region is recovering from the slowdown experienced from its peak levels at the start of 2018, to increase by 6.5% over the five months from July to December 2018. Even so, the seasonally adjusted trend in the number of jobs being advertised in December 2018 is still 0.9% below what it was in December 2017.
Cairns Airport Passenger Numbers
Passenger numbers trends at Cairns Airport have softened during the course of 2018 but nevertheless remain at healthy levels. Over the 12 months from December 2017 to December 2018 there has been an overall airport passenger trend reduction of 4.5%, consisting of a 3.7% trend passenger reduction on domestic flights and a 9.0% trend passenger reduction on international. However the outlook remains positive, with Cairns Airport set to benefit from additional flights during 2019. Silk Air will be increasing operations to/from Singapore from five times per week to daily in June 2019, while Qantas will be adding additional flights from Brisbane and reinstating daily flights between Cairns and Port Moresby in March 2019.
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