“The Cairns economy continues to move ahead with improvements on the employment and labour market front, though there is some suspicion as to pace. Meanwhile forward indicators such as tourism and construction are weakening. The Cairns property market is experiencing shrinking sales volumes, but on balance is maintaining a ‘Steady State’ position.” – Rick Carr, Research Consultant, Herron Todd White Cairns.
Details of HTW’s May 2019 CairnsWatch report is as follows:
Cairns Property Prices
Property prices for houses 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 at the start of 2018 as a result of compositional variation, but are now dead flat again as slow sales and competitive pressures bite into the market. Meanwhile unit prices are now softening also as a result of compositional variation. The latest trend median prices, for properties sold in the month of April 2019, came in at $409,000 for houses, $211,000 for units, and $227,000 for 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 shrunk during the last twelve months due to lower demand and more difficult finance conditions. The trend number of sales taking place in the March quarter of 2019 totalled 937, coming in 14.7% below the levels observed in the March quarter of 2018. The reduction taking place from the March quarter of 2018 to the March quarter of 2019 consisted of a 14.0% trend reduction in house sales, a 12.4% trend reduction in unit sales and a more massive trend 30.4% reduction in vacant land sales.
Cairns Rental Vacancies
The rental market has been essentially unchanged over the last two years, with rental vacancy rates continuing to indicate tight verging on stressed rental market conditions. Our latest survey results show that the trend rental vacancy rates for April 2019 stood at 1.7% for houses, 1.8% for units and 1.8% 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 Property Rents
Low rental vacancy rates have been consistently placing mild upward pressure on rents in year-on-year terms over the last six years. Over the twelve months to March 2019 the Cairns weighted average median rent has lifted from $405 to $420 per week for houses, and from $295 to $300 per week for units. The very low rental vacancy rates being observed in the current market are likely to maintain mild 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 properties rented during the quarter. Movements in median rents do not necessarily equate to movements in individual property rental values.
Cairns Building Approvals
Building approval figures have shrunk to very low levels over the last four months and remain on a downward trend. The March 2019 trend stood at just 35 new dwellings being approved per month, consisting of 30 new houses and 5 units. The low levels of new building approvals highlight the parlous state of the residential property market at present, as well as the tough competitive state of new housing construction due to difficult finance conditions and price pressures from sales in the established housing market.
Special Topic – Cairns Economic Growth
The Cairns Regional Council area had an economic size (in terms of Gross Regional Product) of $8.831 billion in 2017-18, equating to 2.79% of the total Queensland economy. During the halcyon days from 2000-01 to 2007–08, the Cairns economy grew at an average rate of 6.9% per annum. However, since then growth has averaged 1.2% per annum. Nevertheless economic growth came in at a respectable 3.3% during 2017-18, significantly above the population growth rate of 1.1% for the same period. Economic growth for 2018-19 should come in equally positive based on continuing employment growth.
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 a record 132,200 persons employed during April 2019, up from the estimate of 128,600 persons employed during February 2019. The calculated employment trend shows an increase of almost 20,000 persons in jobs since April 2018, an increase of 17.4%. However local business perceptions are that whilst economic and employment conditions are improving, the increase is nowhere near this rapid.
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.
According to the statistics, the trend unemployment rate in the Cairns Region has moved drastically down over the last twelve months as a result of strong employment growth. The Cairns Region statistically recorded a 20- year low seasonally adjusted trend unemployment rate of 3.4% as at April 2019, down from the trend estimates of 3.8% as at February 2019 and 6.9% as at April 2018. In addition, during April 2019, the Cairns Region statistically recorded the lowest trend regional unemployment rate in the State.
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 continues to increase, and indeed reached record levels in April 2019. Job ads have increased in trend by 6.4% over the twelve months from April 2018 to April 2019. This is possibly a more believable indicator of the strength of jobs growth than the 17.4% increase conveyed by the employment statistics.
Cairns Airport Passenger Numbers
Passenger number trends at Cairns Airport have softened during the last twelve months, with an overall airport passenger trend reduction of 3.8% over the period from April 2018 to April 2019. This has resulted from a 4.8% trend passenger reduction on domestic flights and comes despite a 2.5% trend passenger increase on international flights over the same period. Current international passenger numbers are almost back to what they were in 2010, but are destined to weaken again with Cathay Pacific’s withdrawal from the Cairns market in October 2019.
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