Cairns November 2017

The month in review: Cairns

By Herron Todd White
November 2017

A fully functional rental housing market is fundamental to Cairns, with the 2016 Census figures showing that 39% of its occupied private dwellings are rented, considerably above the Queensland state average of 34% and the national average of 31%. A high degree of reliance on rental accommodation is generally attributed to the transient nature of much of the Cairns population and is certainly not a reflection of housing affordability issues anywhere near the extent of Sydney, Melbourne or Brisbane forcing people to remain renters rather than homeowners.

Rental vacancy trends for houses have remained consistently tight over the past five years as a result of rental demand continuing to exceed the very low levels of new rental housing supply coming on line over the period. In addition right now is the peak rental demand time of year and agents are reporting a distinct shortage of supply and multiple applications for any properties that do come onto the market. The latest trend rental vacancy rates for September 2017 stood at 1.9% for houses, 2.1% for units and 2% for the market overall. Coupled with the low level of new rental supply being created due to reduced levels of investor housing activity, rental market conditions are expected to stay tight for some time.

Our chart depicts the correlation between rental vacancy rates and rental growth in Cairns in recent years. It highlights that rental rents have continued to ratchet up, with 2016-17 median rent levels reaching $395 per week for houses and $285 per week for units. Interestingly though, rent increases over the 2012 to 2013 and 2016 to 2017 period have not been as pronounced as they were in the 2003 to 2004 and 2007 to 2008 period when rental vacancy rates were also very low. This is likely a reflection of the market’s lesser ability to absorb rent increases in recent years because of tenant affordability limitations in the more subdued post-GFC economic conditions.