“The Cairns economic recovery remained on tenterhooks over the last month as its labour market indicators continued to under-perform. Hopefully this is a short term situation, and the Cairns economy can soon return to the more robust improvements that its forward indicators are foreshadowing. On the property front, there are early signs of a pick-up in real estate sales volumes, but the absence of any accompanying price growth means we still regard Cairns as being in a ‘Steady State’ position”.
Rick Carr, Research Director, Herron Todd White Cairns.
Details of HTW’s June 2018 CairnsWatch report follows in this Cairns Property Market Update:
(Click here for more recent Cairns Property Market Updates)
Cairns Property Sales
There are early signs of volume starting to return to the real estate market. The trend number of sales taking place in the March quarter of 2018 totalled 1,091, a 2.6% increase compared to the levels observed in the March quarter of 2017 and a distinct change from the dead flat conditions that had been otherwise occurring during 2016 and 2017. The 2.6% trend increase taking place between the March quarter of 2017 and the March quarter of 2018 comes as the combined result of a 0.2% trend increase in house sales, a 5.5% trend increase in unit sales and a 7.6% trend increase in vacant land sales.
Cairns Property Prices
Median price trends have technically declined over the last six months, but these have resulted primarily from property sales shifting from more expensive areas such as the Northern Beaches to less expensive areas such as the Southern Corridor. In our view individual property prices have varied by no more than plus or minus 5% from their prices twelve months ago, and on balance have remained static. The latest trend median prices, for properties sold in the month of May 2018, came in at $403,000 for a house, $216,000 for a unit, and $198,000 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
Though rental vacancy trends have been somewhat wobbly over the last year, rental vacancy rates remain extremely low and continue to indicate tight and/or stressed market conditions. Our latest survey results show that the trend rental vacancy rates for May 2018 stood at 1.9% for houses, 1.8% for units and 1.9% overall. Coupled with the low level of new rental supply being created due to relatively 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 Building Approvals
Building approval figures spiked in April 2018 from the inclusion of 335 new units to be built in the Cairns CBD, comprising the first component of the long anticipated Nova City development. Whilst this development is a most welcome statistical game-changer, it is drawing a long bow to suggest that this one project is the start of a new uptrend in building activity rather than a one-off spike. The number of approvals for new houses in particular remains at a very low ebb, down in trend terms by 24.3% during April 2018 compared to April 2017.
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. Though there are early signs of a pick-up in real estate sales volumes, the absence of any accompanying price growth means we still regard Cairns as being in a ‘Steady State’ position.
Cairns Industries of Employment
ABS figures on employment by industry for the Cairns region need to be treated with a modicum of suspicion due to their low levels of statistical accuracy, even when presented in trend terms. Nevertheless the region’s standout employment growth sector has been Government and Social Services (inclusive of Health Care, Education and Public Safety), which has expanded in employment size by a staggering 53.6% since 2010. Meanwhile tourism related employment has grown by 10.7% over the last two years, and construction employment by 18.4% over the same period. The retail sector has been in long term decline, with a 30.6% employment contraction since 2010.
Trended employment figures for the Cairns Region (inclusive of Cairns, the Cassowary Coast, Douglas and the Tablelands) estimate that there were 112,600 persons employed during May 2018, down from the estimate of 113,200 persons employed during April 2018. Trend employment calculations are now indicating a loss of nearly 6,000 persons in jobs over the 12 months from May 2017 to May 2018, equivalent to a 5.0% reduction over the period. The unsettling element is the rapidity of the reduction since November 2017. 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.
There was a significant reduction in the region’s unemployment rate during 2016, but that reduction is now being undone. The Cairns Region had a seasonally adjusted trend unemployment rate of 7.4% as at May 2018, up from revised trend estimates of 7.3% as at April 2018 and 5.7% as at May 2017. In addition, the Cairns Region’s trended unemployment rate now sits uncomfortably higher than the State’s unemployment average of 6.2%. 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
Though the trend in the number of jobs being advertised on employment websites for the Cairns and Far North region has been tapering off since the start of 2018, it still sits at near record highs. The seasonally adjusted trend in the number of jobs being advertised in May 2018 is 13.2% higher than it was in May 2017, but has slipped 1.2% compared to January 2018.
Cairns Airport Passenger Numbers
Passenger number trends at Cairns Airport remain in steady growth mode for travellers on domestic origin/destination flights, but have slipped a notch for those on international origin/destination flights. Nevertheless there remains an overall airport passenger trend increase of 1.8% over the 12 months from May 2017 to May 2018, consisting of a 2.0% trend passenger increase on domestic flights and a 0.1% trend passenger increase on international flights. Passenger numbers are continuing to increase despite a reduction of seats into Cairns caused by fewer through-flights. This means that more passengers are actually flying into Cairns on flights to Cairns, instead of transiting through to different destinations.
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