Cairns September 2017

The month in review: Cairns

By Herron Todd White
September 2017

The Cairns market is best described as a steady state market that has been flatlining for some time, but nevertheless maintains a reasonable balance of market power between buyers and sellers. However it is the homeowner sector that is mostly sustaining the market, with the investor sector progressively thinning out. Cairns houses presently demonstrate a mainstream market ranging from around $250,000 to $750,000 in price, with a median level of $405,000.

The primary home buyer market typically consists of a mix of first home buyers, upgraders, downsizers and relocators from out of town. Due to an absence of new apartment construction, first home buyers wishing to utilise their grants are restricted to houses in mid to outer suburbs, where we are seeing estates for instance from Bentley Park to Gordonvale active in the $380,000 to $420,00 range with first home buyers as a target market. People relocating to Cairns from out of town, including cashed-up buyers originating from southern capitals, sustain a variety of housing styles and price points in the market and are a key demand element in areas such as the northern beaches.

Meanwhile the investor market, where it exists, typically confines to the sub $450,000 market. This arises due to purchases above this level becoming less attractive rental propositions. For instance a new 4-bedroom, 2-bathroom house in Gordonvale with a purchase price tag of $375,000 is liable to rent for $395 to $400 per week, but when the ante is upped to a $450,000 house in the same area, the achievable rent only rises to around $450 per week due to the market topping out for affordability reasons.

Buying decisions in the Cairns market have little to do with price levels and affordability. Indeed on the affordability score the Cairns market scrubs up extremely well compared to the overheated markets of the southern capitals. The stumbling block in the Cairns market is more about job security and the confidence to borrow, but this is gradually recovering as tourism and development continue to rebuild.