Cairns May 2017

The month in review: Cairns

By Herron Todd White
May 2017

The past twelve months have been fairly lacklustre for the Cairns property market, characterised by steady to declining volumes of sales and minimal growth in prices.

Even though solid fundamentals are in place with low rental vacancy rates, no obvious oversupply in any market sector and continued improvement in tourism, the Cairns property market continues to be hampered by a lack of confidence and optimism. It is taking much longer than expected for economic recovery to restore perceptions of job security and improve property market confidence.

Price levels for houses are only very slowly rising. However, unit sales continue to be affected by the ongoing effects of buyer aversion to increased strata building insurance costs and tighter lending practices and unit prices are still at levels too low to justify new unit development other than in very specialised sectors.

The game changer needed to reignite the Cairns market will be the initiation of a new investment and development phase in the Cairns economy to cater for future tourism growth that is now starting to happen. These include the $200 million redevelopment of the Rydges Tradewinds Hotel now underway on the Cairns waterfront, early works on a new 200-room hotel at the corner of Lake and Aplin Streets in the CBD, and site preparation for a new hotel on the current Bellview site. In addition, there is the Nova City development of approximately 1,100 residential apartments in the Cairns CBD. The first stage of 187 units has been released to the market and is poised to enter construction in late 2017 once the required level of pre-sales has been achieved. These developments will be the catalyst the Cairns economy and Cairns property market need to overcome the announcement fatigue created by the numerous other projects that have not managed to get off the ground over the past few years. Once fully underway, they will inject much-needed confidence into the city and restimulate its property market.

 

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