The Cairns economy continues to experience positive business activity and job advertisement indicators, but is being held back by the still slow state of its labour market. (HTW)
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The Cairns median house price has maintained a mildly increasing trend in recent months, with the median house price trend coming in at $402,900 in August 2015. This indicates a trend rise of 4.1% over the latest 12 months. The trend in median unit prices is currently wavering, but demonstrates a trend increase of 0.7% over the latest 12 months. Meanwhile the median land price trend has escalated by 12.2% over the latest 12 months, to reach $223,300 in August 2015.
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.
The supply of properties listed for sale has started to climb as generally increasing prices are attracting more properties onto the market. The trend in the number of properties for sale has increased by 16.0% between the September quarter of 2014 and the September quarter of 2015. There is also likely to be even more stock filtering onto the market in coming quarters from vendors who have been wishing to sell for some time, but have hung back from listing their properties for sale awaiting better market conditions.
Rental vacancy rates continue to diverge, with the vacancy trend lowering 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 September 2015 stood at 2.2% for houses and 3.1% for units. The market vacancy trend overall stood at 2.6%.
Low rental vacancy rates continue to place mild upward pressure on rents. Over the twelve months to September 2015 the Cairns weighted average median rent has increased by $5 per week, from $380 to $385 per week for houses, and from $265 to $270 per week for units.
Building approvals have eased off over the last twelve months and appear now to be in decline in both actual trend and stylised (trend-in-the-trend) terms. Building approvals have increased in stylised trend terms by 70% in the three years from August 2012 to August 2015, but by only 2.3% over the latest twelve months. Nevertheless the expectation for the coming year is for building approvals to generally increase as economic confidence continues to strengthen.
Out-of-town investors have shrunk considerably as a force in the Cairns market, with our analysis showing that outsiders buying into Cairns have reduced from nigh on 50% of the market in 2003, down to around 22½% of the market today. The switchover is especially noticeable for units, where outside buyers have reduced in activity from near 70% in the heyday of the market in 2003 to approximately 36% of a much smaller market in 2015. The flip side is that the Cairns market these days is being sustained much more by intending occupiers and local investors.
Herron Todd White’s National Property Clock is prepared each month based on the local market perceptions of its Australia-wide network of offices. Among positional changes this month, Melbourne has moved to the peak of the market, Perth has moved to a declining market, and Townsville has reverted to the bottom of the market. Cairns remains positioned at the Rising Market stage.
ABS headline figures for the Cairns Region (inclusive of Cairns, the Cassowary Coast, Douglas and the Tablelands) estimate that there were 105,300 persons employed during September 2015, compared to an estimate of 108,900 persons employed during August 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 107,000 persons employed in September 2015. This represents a 1.7% trend employment reduction since September 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.
The Cairns Region’s headline unemployment rate came in at 9.2% in September 2015, an apparent increase from the 7.2% rate estimated in August 2015.
Unemployment trend calculations have become increasingly uncertain following ABS methodology changes. According to our best guess, the trend rate of unemployment stood at 8.9% in September 2015, well above the State and national averages.
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’.
The number of jobs being advertised in The Cairns Post has shown a mildly softening 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 shot up in recent months, with a 15.4% increase now evident over the period from September 2014 to September 2015.
Cairns Airport figures up to August 2015 show a trend increase in airport numbers overall of 5.4% since August 2014. The passenger trend at the domestic terminal is not as technically strong as it was earlier this year, but passenger numbers at the international terminal continue to build, showing a trend increase of 20.5% since August last year. Strong international growth will be further boosted by new services including Philippine Airlines commencing direct flights to Auckland and Manila in December 2015 and Hong Kong Airlines launching seasonal flights to Cairns in January 2016.
Jason Thomson | Finance Broker and Mortgage Adviser | Smartline Cairns