THE expectations are high for property prices in Cairns for 2016.
With major projects on the horizon, including new residential high-rises C3 Towers and Nova 8, the city’s first aquarium on Abbott St and Aquis still looming as a large contender, property experts are predicting confidence will turn into dollars.
If you are looking to invest, buy your first home or potentially sell up to cash in, here is what Cairns property experts are saying (via The Cairns Post 2 January 2016):
RICK CARR – Research Director at Herron Todd White
2016 predictions: Our expectations for 2016 are essentially for “more of the same” as the economy continues to slowly improve. Sales volumes will continue to slowly but steadily increase, and flow through to price rises typically around the five per cent mark. There will be ongoing demand for rental properties which, given the relatively slow rate of new housing development and tighter lending conditions to investors, will keep the supply of rental property tight and maintain upward pressure on rents.
Summing up 2015: The Cairns residential market remains in the “rising market” phase of the property cycle but its position has become more balanced. There is good demand for most residential property types.
Sales volumes are showing growth, but the rate of growth has eased during the course of this year, potentially as a result of buyer resistance to increasing prices as well as tighter lending conditions for investment properties.
The number of properties being listed for sale steadily rose throughout 2015, as increasing prices brought more vendors into the market.
Prices for houses typically regained 2008 peak levels in mid-2014, and prices continued to rise mildly during 2015.
The Cairns median house price stood at $410,000 in September 2015, which demonstrated a 4.7 per cent increase since September 2014.
The median price for units stood at $215,000 in September 2015, up 5.2 per cent from September 2014.
However, the median unit price remained shy of previous peak levels due to the impact of increased strata building insurance costs and the tighter lending conditions.
There was good demand for vacant land in most locations throughout 2015 but the strong rising prices experienced throughout 2014 and early 2015 tapered somewhat over the last six months.
Land prices now start at about $130,000 per allotment and the median allotment price stood at $198,000 in September 2015.
Land price rises have been strongest over the last 12 months on the northern beaches, but have been less severe in the southern corridor market due to its larger developable land supply and greater competition between developers.
In the rental market, vacancy rates remain relatively low and there is modest upward pressure on rents.
Our overall assessment is 2015 was a year of continued growth and consolidation in the Cairns market as a result of its steadily improving economy.
GRANT STONE– Sales Manager at First National Cairns
2016 predictions: I do believe 2016 will improve somewhat in the property sector. Cairns, as we all know, has not seen any major development in the region for some years, adding to the slower than expected recovery.
Although, some major projects, if not already approved, are certainly on the verge of being given the green light to start construction.
This, in my opinion, will help stimulate other developers and their long-awaited projects in the Cairns region.
We are all very much aware, once we start to see a crane or two on our city skyline, this will go a long way in helping bring back that long overdue confidence and vibe that has been lacking from our beautiful city for so long.
Along with development, I also believe we need to have all our representatives for the Cairns region, rallying for the long overdue and promised infrastructure for our area.
This will certainly go a long way in attracting other developers, investors and more business owners back to Cairns, bringing with them needed job opportunities. As for residential rentals, this section of the housing industry seems to be outperforming sales at present and is still performing strongly. With all major cities around Australia seeing some huge increases in their property values and prices achieved, this is driving the average Australian out of the property market or from ever being able to afford the great Australian dream.
This is where I still see the Cairns region, not only offering affordable housing in the area, but a beautiful lifestyle to go with it.
I do believe we will see improvement in the market in 2016, so it is really a good time to buy.
Summing up 2015: The year has come and almost gone, and to be honest, 2015 has not proven to be the one most experts expected and or predicted. Market growth steadied and levelled out.
KARL LATHAM – Associate Director for Sales at Elite Cairns
2016 predictions: I can see a similar trend to this year’s activity and sales volume.
Steady sales, slightly on the lower side in regard to numbers of previous years, however, with prices holding firm. If any of the major projects gain approval and we start to see cranes in the city, then this will boost confidence in the market.
I think 2016 will be the calm before the storm, as I have a feeling 2017 will be the start of the next boom in the Cairns region.
The large projects on the horizon such as C3 towers, Nova 8, the Aquarium and Aquis are on everybody’s minds and there has been scepticism, however, as soon as we see dirt turned you watch how quickly things turn and how confidence skyrockets.
My advice to buyers and investors looking to get into the market would be not to rush in and buy something tomorrow but don’t leave it too late. Think strategically about location and potential rental demand.
Summing up 2015: There is good value at the moment up at the northern beaches after a slow year in sales, and also those areas on the outskirts of the city like Bayview Heights and Brinsmead, although it will all depend on what you want to achieve and how long you are looking at holding your investment.
BILL CUMMINGS– Cairns economist at Cummings Economics
2016 predictions: Fundamental factors, such as a lower dollar and lower interest rates, favour a rise in activity in 2016.
But achieving lift-off in construction and general business growth is proving slow.
Latest quarterly building approvals for residential dwellings showed good growth but non-residential approvals were still low.
In real terms, tourism is now getting back above the peaks of the mid-2000s and 2016 can be expected to see an expansion of capacity commencing through a range of projects, including Nova 8.
In this region, mining output bottomed in 2012 and since then has been moving up, with the expansion at Weipa providing impetus as 2016 progresses.
However, there is a real need for government to play its role. Local government is recording a record capital spending program. By contrast the state government capital budget for the Cairns region for 2015-16 is down 54 per cent on an already low per capita budget from four years ago – representing an amount of $390 million less in the region’s economy.
State government processes in the region in relation to projects like Aquis, seaport development and agricultural expansion opportunities clearly need to be improved. Much will depend on a favourable outcome at federal level in relation to the Pacific patrol boats contract.
Summing up 2015: The lift in US interest rates did not produce a further lowering of the Australian Dollar many foreshadowed.
The situation in primary industry is mixed but lower sugar prices and the drought in the west are acting as retardants.
Jason Thomson | Mortgage Adviser and Finance Broker | Smartline Cairns