“The Cairns economy is finishing 2018 on a stronger economic note than twelve months ago, particularly on the employment and labour market front. In addition there are positive signals for 2019 as the present investment and development cycle further advances. However residential construction, especially of houses, remains a point of weakness. Meanwhile the Cairns property market has experienced another relatively uneventful year in 2018. Despite our forecast for improvement throughout the year on the back of improving economic conditions, it continues to underperform, and is yet to budge from a ‘Steady State’ position” – Rick Carr, Research Consultant, Herron Todd White Cairns.
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Details of HTW’s November CairnsWatch report is as follows:
Cairns Property Prices
Median property price trends have edged up slightly for houses over the last six months, and increased more noticeably for land, from the first home buyer induced dip leading up to the FHB scheme’s cutback in June 2018. However our view is that nearly all property prices are within plus or minus 5% of what they were twelve months ago, and that their overall balance remains static. The latest trend median prices, for properties sold in the month of October 2018, came in at $405,000 for a house, $211,000 for a unit, and $223,000 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 extreme tightness 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 October 2018 stood at 1.3% for houses, 2.0% 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 September 2018 the Cairns weighted average median rent has lifted from $405 to $410 per week for houses, and from $290 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, trailing away to levels not seen since the 2011 market slowdown. The September 2018 calculated trend is 75.4% below the April 2018 spike, and down by 47.9% compared to September 2017. Together they highlight the parlous state of new house construction due to competitive price pressures from house sales in the established housing market.
Cairns Population Growth
New population projections for Cairns to the year 2041, produced by the Queensland State Government, indicate a grim picture of population growth in Cairns relative to its long term historical standards. Latest projections show the population of Cairns growing between 2016 and 2041, under a medium scenario outcome, at an average annual rate of just 1.5% per annum, to reach approximately 223,000 in 2041. This is down further on the State Government’s previous projection, made in 2015, of approximately 1.7% growth to 2036. The risk is that as population growth rebounds in response to the economic revival now being experienced, Cairns will again be ‘caught short’ with infrastructure provision, in key areas such as roads, schools and health, due to State Government underestimation of its future population 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 we have been expecting the Cairns market to experience greater impetus during 2018 as a result of improving economic conditions, Cairns has persisted 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 121,500 persons employed during October 2018, up from the estimate of 119,700 persons employed during September 2018. The calculated employment trend has shown distinct growth over the last five months, and provisionally reached an all-time record high in October 2018. The trend employment growth rate over the period from October 2017 to October 2018 stands at 3.0%.
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.
With strong employment growth over the last five months, the trend unemployment rate in the Cairns Region has been moving solidly downward. The Cairns Region had a seasonally adjusted trend unemployment rate of 5.7% as at October 2018, down from the trend estimates of 5.9% as at September 2018 and 5.9% as at October 2017. Importantly also, the Cairns Region’s unemployment rate has moved comfortably below the State 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
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, reverting to 4.5% growth over the last four months. Even so, the seasonally adjusted trend in the number of jobs being advertised in October 2018 is 2.4% below what it was in October 2017.
Cairns Tourism – Airport Passenger Numbers
Passenger numbers trends at Cairns Airport have softened a touch during the course of 2018, for passengers on domestic and international origin/destination flights alike. Nevertheless present numbers remain comparatively strong. Over the 12 months from October 2017 to October 2018 there has been an overall airport passenger trend reduction of 1.2%, consisting of a 1.0% trend passenger reduction on domestic flights and a 1.9% trend passenger reduction on international flights.
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