“The Cairns economy is experiencing improvements on the employment and labour market front. However forward indicators such as tourism and construction are weakening and will need to be closely watched as the year progresses. Meanwhile the Cairns property market is still suffering from external malaise and is yet to budge from a ‘Steady State’ position.” – Rick Carr, Research Consultant, Herron Todd White Cairns.
Details of HTW’s March CairnsWatch report is as follows:
Cairns Property Prices
Property prices for houses and units have been largely unaffected by reduced sales activity over the last twelve months, with their median price trends holding at essentially unchanged levels. Land prices increased during 2018 as a result of compositional variation, but are now starting to reduce again as slow sales and competitive pressures bite into the market. The latest trend median prices, for properties sold in the month of February 2019, came in at $409,000 for a house, $220,000 for a unit, and $228,000 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 Property Sales
Real estate sales volumes have progressively contracted during the course of 2018, ending the dead flat sales trend that had been in evidence during 2016 and 2017. The trend number of sales taking place in the December quarter of 2018 totalled 937, coming in 11.3% below the levels observed in the December quarter of 2017. The reduction taking place from the December quarter of 2017 to the December quarter of 2018 consisted of an 11.2% reduction in house sales, a 7.5% reduction in unit sales and a more sizeable 26.3% reduction in vacant land sales. Anecdotal feedback is that sales levels have picked up a bit during the first three months of 2019, but the overall market remains slow.
Cairns Rental Vacancies
Rental vacancy rates continue to indicate tight verging on stressed rental market conditions for houses and units alike. Our latest survey results show that the trend rental vacancy rates for February 2019 stood at 1.7% for houses, 1.6% for units and 1.6% overall. Coupled with the very low level of new rental supply being created due to 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 have reverted to very low levels over the last four months, albeit their trend is stable. The February 2019 trend stood at just 44 new dwellings being approved per month, consisting of 40 new houses and 4 units. The low levels of new building approvals highlight the lacklustre state of the residential property market at present, as well as the parlous competitive state of new housing construction due to price pressures from sales in the established housing market.
Cairns Population Growth
The Cairns urban area (from the Goldsborough Valley through to Ellis Beach) experienced a continued slow population growth rate of 1.1% over the 12 months to 30 June 2018, with its official resident population reaching 161,993 as of that date. Even so, population growth rate has edged up slightly over the last three years, up from 1.0% in the twelve months to June 2015, 1.1% in the twelve months to June 2016, and 0.8% in the twelve months to June 2017. Our population model predicts that Cairns’ population growth rate will remain at or about 1.0% for the 12 months to 30 June 2019, but predicated on a continuation of economic growth, will rise to about 1.4% in the 12 months to 30 June 2020.
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 the Cairns market has been experiencing reduced levels of sales activity, we continue to regard Cairns as 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 126,900 persons employed during February 2019, up from the estimate of 123,600 persons employed during December 2018. The calculated employment trend shows an extra 14,300 persons in jobs since the middle of 2018, with the trend again reaching an all-time record high in February 2019. The trend employment increase over the period from February 2018 to February 2019 came in at 11.1%.
N.B. The ABS Labour Force figures are estimates derived from a sample survey of less than 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 eleven months as a result of increased employment. The Cairns Region had a seasonally adjusted trend unemployment rate of 3.6% as at February 2019, down from the trend estimates of 4.1% as at December 2018 and 6.7% as at February 2018. Importantly also, the Cairns Region’s unemployment remains considerably below the State average of 5.7%.
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 6.8% over the seven months from July 2018 to February 2019. The result is that the seasonally adjusted trend in the number of jobs being advertised in February 2019 is virtually identical to what it was in February 2018.
Cairns Airport Passenger Numbers
Passenger numbers trends at Cairns Airport have softened during the last twelve months, with an overall airport passenger trend reduction of 5.8% over the period from February 2018 to February 2019. This has consisted of a 6.3% trend passenger reduction on domestic flights and a 2.5% trend passenger reduction on international flights. Even though Cairns Airport set to benefit from additional flights by Silk Air and Qantas during 2019, the suspension (at this stage seasonal) of services by China Southern is a concern. The time is certainly ripe for a Middle Eastern operator to enter the market.
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