The month in review: Cairns
By Herron Todd White
Tourism is the major industry in Cairns and there are distinct functional relationships that connect tourism growth, job creation, population growth and the ultimate demand for housing. As a result of its ever expanding tourism industry, Cairns has experienced a long term average population growth rate since 1981 of 2.8% per annum, but there was a significant population slowdown in the post-GFC period when tourism growth subdued. However with tourism now returning to strong growth, our population model predicts that Cairns’ population growth will turn around to about 1.4% in the 12 months to 30 June 2016 and about 1.6% in the 12 months to 30 June 2017.
Population Growth in Cairns
Natural population increase in Cairns (excess of births over deaths) normally accounts for a base population increase of around 1% growth per annum. With its long term average population growth of 2.8% per annum considerably higher than the 1% per annum rate of natural increase, significant annual net migration inflows to Cairns are implied.
Migration to Cairns has traditionally consisted of two elements:
• Economic migration consisting typically of young singles, young couples and young families relocating to Cairns for employment reasons, either through job transfer or for employment opportunity, and
• Lifestyle migration consisting typically of older singles or couples (empty nesters) relocating to Cairns for lifestyle considerations, but still desirous of a vibrant economy in which to obtain work if needed.
The northern beaches are an excellent barometer of the number of people moving to Cairns. As a favoured location for people relocating to Cairns, when migration into Cairns is running strong, the northern beaches property market does likewise.
Property sale volumes in Cairns overall have been steadily reducing as a result of a general softening in demand from the lacklustre employment situation, the screws being tightened on investment loans, uncertainty over the future of negative gearing, and some buyer hesitancy in the market. These conditions have resulted in a general slowdown in house and unit sales and a more pronounced contraction in land sales over the past four quarters. House sales for the March quarter of 2016 were down 12.1% compared to the March quarter of 2015, while unit sales were down 9.4% and land sales down 23.5% for the same period. The trend level of sales overall has reduced by 12.6% over the period from the March quarter of 2015 to the March quarter of 2016.
Property Sales Volumes in Cairns
The Cairns median house price has also softened in recent months, with the median house price trend coming in at $385,900 in April 2016. This is 3.1% lower than it was in April 2015. The median unit price trend came in at $222,100 in April 2016 to give a 1.6% increase since April 2015. Meanwhile the median land price trend drifted down to $200,800 in April 2016, 8% lower than in April 2015, largely due to increasing proportions of southern corridor land sales in the mix.