Cairns property market update – November 2015

cairns property market

 

“The latest month continued the run of dichotomous indicators on Cairns. There are strong forward indicators on tourism and job adverts, but employment and unemployment outcomes remain weak.  The economy is stepping in the right direction, but there is still much to happen to reach vibrancy”, HTW Cairns.

A big thank you to Rick Carr and the team at Herron Todd White Cairns for making these statistics available to share with you:

 

property prices

The Cairns median house price has maintained a mildly increasing trend in recent months, with the median house price trend coming in at $409,500 in September 2015. This indicates a trend rise of 4.7% over the latest 12 months. Meanwhile the trend in median unit has increased 5.2% over the latest 12 months. The median land price trend stood at $198,000 in September 2015, impacted in recent months by compositional change due to stronger growth in 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.

property metrics

Softer demand for real estate during the September 2015 quarter has seen the average time taken for listed properties to reach a sale increase from 62 days for houses sold in the twelve months to May 2015 to 64 days for houses sold in the twelve months to August 2015. Time taken to sell a unit has also nudged higher, from an average of 89 days for sales in the twelve months to May 2015 to 92 days for sales in the twelve months to August 2015.

The average vendor discount – the average difference between the asking price first advertised on a property and its ultimate selling price – has also been increasing due to vendors lifting initial asking prices to more ambitious levels.

 

rental vacancies

Rental vacancy rates continue to diverge, with the vacancy trend steady for houses but increasing for units. Even so rental vacancies overall remain at levels indicative of a tight rental supply.

The trend vacancy rates for October 2015 stood at 2.3% for houses and 3.1% for units. The market vacancy trend overall stood at 2.7%.

 

building approvals

Building approvals have eased off over the last twelve months and have moved into decline in both actual trend and stylised (trend-in-the-trend) terms. Building approvals have increased in stylised trend terms by 55% in the three years from September 2012 to September 2015, but are down by 5.8% over the latest twelve months. Nevertheless the expectation for the coming year is for building approvals to generally increase as economic confidence continues to improve.

 

Related: Download the free Market Outlook report I’ve provided at the end of this post and read about the under-supply situation of homes in Cairns. There is a need to start building more new homes.

 

land prices

Land prices in Cairns currently start at about $130,000 per allotment and show a median for the September 2015 quarter of $204,000. The median price has been impacted in recent quarters by compositional change due to stronger growth in Southern Corridor land sales in the sales mix.

Land prices over the last three years have escalated the most significantly in the Central, Western and Northern areas of Cairns, where the land supply is more limited. Land prices in these locations, and the Northern Beaches in particular, have also been influenced by speculation over the prospective Aquis development. The Southern Corridor land market has seen less severe price rises over the last three years due to its larger developable land supply and greater competition between developers.

 

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.

The only positional change last month was South East NSW (Wollongong), moving from the ‘Peak of Market’ to the ‘Starting to Decline’ stage.

In our view the Cairns market is cooling, but remains positioned at the ‘Rising Market’ stage.

 

employed

ABS headline figures for the Cairns Region (inclusive of Cairns, the Cassowary Coast, Douglas and the Tablelands) estimate that there were 108,200 persons employed during October 2015, compared to an estimate of 105,300 persons employed during September 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 dropped to 106,100 persons employed in October 2015. This represents a 0.6% trend employment reduction compared to October 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.

 

unemployed

The Cairns Region’s headline unemployment rate came in at 8.7% in October 2015, an apparent reduction from the 9.2% rate estimated in September 2015.

Unemployment trend calculations have become increasingly uncertain following ABS methodology changes. According to our best guess, the trend rate of unemployment stood at 9.0% in October 2015, which represents an increase of 0.8 percentage points since October 2014 The region’s unemployment rate during 2015 has been showing an increasing divergence relative to the State average.

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’.

 

job ads

The number of jobs being advertised in The Cairns Post has shown a mildly softening to static 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 increased substantially over the last five months, generating a 2.3% increase over the period from October 2014 to October 2015.

 

airport

Cairns Airport figures show that the passenger trend at the domestic terminal is maintaining near record highs, while passenger numbers at the international terminal continue to build, showing a trend increase of 20.3% since October last year. Overall passenger numbers at the airport have grown by 4.5% over the period from October 2014 to October 2015.

These figures continue to demonstrate that Cairns Airport is a leading component in our broader tourism and economic revival. Furthermore, flight increases (to Manila, Auckland, Hong Kong) scheduled to commence in coming months, combined with increased growth during the Chinese New Year period in 2016, will ensure that this strong growth continues.

 

accommodation occupancy

The trend in average Cairns tourist accommodation occupancy has improved significantly since 2009, but appears to have plateaued somewhat from June 2012 through to June 2015. The average Cairns accommodation occupancy trend stood at 67.3% in June 2015, compared to 67.0% in June 2014 and 58.6% in June 2009.

 

accommodation rates

Average accommodation rates in Cairns, tracked in terms of Room Rate (average daily revenue per room occupied) and RevPAR (average revenue per room available), continued to generally improve during 2014-15. Average room rates achieved for occupied rooms have increased from around $120 per room per night in June 2011 to around $135 per room per night in June 2015. When averaged across the totality of rooms available, this translates to a RevPAR increase from approximately $75 per room per night in June 2011 to approximately $90 per room per night in June 2015.

 

Related: cairnsnow.com.au dig further into this latest report in an article published 1 December 2015. You can read all the details here.

 

Jason Thomson | Finance Broker and Mortgage Adviser | Smartline Cairns

 

cairns property market outlook

 

 

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