“The Cairns economy gained further pace over the last month, led by strong employment growth and reduced unemployment. However forward indicators, such as airport passenger growth, job ad growth and building approvals, have all softened to varying degrees. Meanwhile we are still waiting for the accumulated economic gains to influence the property market, which has not yet budged from its ‘Steady State’ position.” – Rick Carr, Research Consultant, Herron Todd White Cairns.
Details of HTW’s September 2018 CairnsWatch report follows in this Cairns Property Market Update:
(Click here to find more recent Cairns Property Market Updates)
Cairns Property Prices
Median property price trends have buttoned off for houses over the last six months, and have also reduced for units and land, as a result of changes in compositional mix. However our view is that most property prices are no more than plus or minus 5% different from what they were twelve months ago, and that their overall balance has remained basically static. The latest trend median prices, for properties sold in the month of August 2018, came in at $389,000 for a house, $211,000 for a unit, and $194,000 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 Volumes
There are signs of volume returning to the real estate market, particularly from the units sector. The overall trend number of sales taking place totalled 1,074 in the June quarter of 2018, a 1.7% increase compared to the levels observed in the June quarter of 2017 and a distinct change from the dead flat conditions that had been otherwise occurring during 2016 and 2017. The 1.7% trend increase taking place between the June quarter of 2017 and the June quarter of 2018 comes as the combined result of a 2.1% trend decrease in house sales, offset by an 11.6% trend increase in unit sales and a 6.4% trend decrease in vacant land sales.
Cairns Property Metrics
Other property market metrics have improved slightly for house sales over the last twelve months, and shown significant improvement for units. The median time taken for units to reach a sale has decreased from 74 days for units sold in the twelve months to June 2017, to 62 days for units sold in the twelve months to June 2018. Meanwhile the median time taken to sell a house has decreased marginally from 58 days to 57 days for houses sold over the same periods. The median vendor discount – the difference between the asking price first advertised on a property and its ultimate selling price –has reduced significantly for units and to a lesser degree for houses.
Cairns Rental Vacancies
Though rental vacancy trends have crept up slightly over the last six months, rental vacancy rates remain low and continue to indicate tight verging on stressed market conditions. Our latest survey results show that the trend rental vacancy rates for August 2018 stood at 1.9% for houses, 1.9% for units and 1.9% overall. Coupled with the low level of new rental supply being created due to relatively 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 June 2018 the Cairns weighted average median rent has increased from $400 to $410 per week for houses, but for units, rents were surprisingly no different over the same period at $285 per week. The 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 somewhat from the April 2018 spike brought on by the first approval component of the Nova City development, but nevertheless remain heightened in technical trend terms. The calculated trend is 47.3% up in July 2018 compared to December 2017, but interestingly is down by 2.6% compared to the spike affected levels that were also prevailing in July 2017. Whilst it remains to be seen whether the building approval trend will continue at heightened levels, the extra construction activity will be most welcome.
Special Topic – Comparative House Prices
Median house price movements have experienced a world of difference along the Queensland regional coast over the last five years. House prices have progressively escalated on the Sunshine Coast since 2012, but have now reached a plateau as the market nears its peak. Meanwhile prices in Mackay have been through the worst and are in recovery from their post2013 slump, while Townsville’s median house prices continue to languish. Though house prices in Cairns have stagnated in recent times, home owners in Cairns are now considerably better off than those in Mackay and Townsville. However they have been considerably outperformed by those on the Sunshine Coast. The differences are plain to see!
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. Though there has been a pickup in unit sales, the absence of any substantive price growth across the market overall means we still regard Cairns as being 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 116,800 persons employed during August 2018, up from the estimate of 115,100 persons employed during July 2018. The calculated employment trend has shown a distinct turnaround, increasing by 3.5% over the three months to August 2018, and reverting to strong growth mode. Even so, the August 2018 trend remains 1.0% below that prevailing in August 2017. 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 three months, the latest statistics are now indicating that the unemployment rate trend in the Cairns Region is in reduction. The Cairns Region had a seasonally adjusted trend unemployment rate of 6.3% as at August 2018, down from the trend estimate of 6.4% as at July 2018. Importantly also, the Cairns Region’s unemployment rate has moved back to parity with the State average, which now also stands at 6.3%. 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
Though the trend in the number of jobs being advertised on employment websites for the Cairns and Far North region has been softening since the start of 2018, it remains at comparatively strong levels. The seasonally adjusted trend in the number of jobs being advertised in August 2018 is 3.2% higher than it was in August 2017, but has slipped 4.9% compared to January 2018.
Cairns Airport Passenger Numbers
Even though raw passenger numbers at Cairns Airport were at a record high during July-August 2018, when analysed in trend terms, passenger numbers are easing back ever so slightly for travellers on domestic origin/destination flights, and are moving sideways for those on international origin/ destination flights. Nevertheless there remains an overall airport passenger trend increase of 0.9% over the 12 months from August 2017 to August 2018, consisting of a 0.7% trend passenger increase on domestic flights and a 1.9% trend passenger increase on international flights.
Cairns Mortgage Broker – Jason Thomson is a Mortgage Adviser and Finance Broker based in Cairns with clients all around Australia. Over 100 client reviews featured on his website prove that Jason is a trusted industry professional, facilitating great outcomes for his clients. Using his wealth of experience in financial services, he thrives on delivering superior service. Jason is very approachable and is always looking for new clients to help in the often confusing world of finance and property. Offering a no fee service, you’ve got nothing to lose by having an obligation free chat with Jason today.