Recovery Plan Sought for Local Construction

The conditions of property markets in Far North Queensland are perfectly typified by the relative health of the local building and construction industry. Following the effects of the global financial crisis in 2007 the rate of new dwelling approvals in Cairns urban area took a significant hit. Despite a slight recovery in approvals experienced during 2009, throughout the past 12 months approvals have remained at a virtual standstill.

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As illustrated by the graph opposite, the current trend number of new dwelling approvals in Cairns urban areas sits well below 50 per month with almost no new units approved. Industry analysts assert that a minimum trend of 50 approvals per month is required for the region's building industry to prosper.

The Cairns Post recently reported on publication by the Urban Development Institute of Australia (UDIA) showing that $318 million has been wiped off Far North Queensland's economy in the past three years from the downturn. The UDIA also outline within their report critical actions required in order to return prosperity to the building sector.

Roadmap for Recovery in Cairns' Construction
The Cairns Weekend Post - 25th February 2012

A DEVELOPMENT hit-list has been drawn up to turn around a $300 million downturn in the Far North's construction industry.

A report by the Urban Development Institute of Australia shows that $318 million has been wiped off the region's economy in the past three years from the downturn.

UDIA Queensland president Matthew Wallace said the institute had 16 critical actions which it considered pivotal to restoring the prosperity of the sector.

"They include an overhaul of the prevailing planning culture and review systems in Queensland to deliver quicker and less costly outcomes, short-term removal of stamp duty on off the plan sales, greater leadership in the delivery of infrastructure and a senior government taskforce to undertake a training strategy to grow the construction workforce," he said.

"We now need decisive action from the incoming Queensland government to turn industry conditions around and harness the economic potential of the sector.

The report found that there had been a 26.4 per cent decline in construction in the Far North in the past three years – double that of the state decrease.

It said in the last financial year 846 dwellings were approved in the region, less than a third of the total in 2007-08 of 2994.

Despite the downturn, the region's industry remained a major employer, accounting for 10 per cent or 12,300 jobs.

Far North UDIA president Gerard Obersky said the Government had created a system that was "inefficient, prohibitive and layered in overlapping departmental assessment or consideration".

"As a result, the costs from these problems are continually spiralling. The planning process has been complicated to a point where delays, taxes and the subsequent cost of this process are making housing unaffordable," he said.

LNP candidate for Cairns Gavin King said the party had elevated the property and construction sector as "one of our top economic priorities".

"Many of the recommendations by the UDIA have been adopted and released as part of the LNP's property and construction strategy," he said.

Labor candidate Kirsten Lesina said Queensland had the lowest standard transfer duty rates of any mainland state and the Building Boost was having a direct impact on the new housing market which included a $10,000 grant for all new homes under $600,000, plus the $7000 first home buyers' grant.

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

Cairns Property Information Seminar

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This Thursday (23rd February) Ray White Cairns Beaches & Ray White Smithfield will be hosting an information seminar for buyers and sellers of local real estate.

The event will feature a number of guest speakers on the current state of the market and discuss the associated opportunities available. Whether considering buying or selling locally it is sure to be an event not to be missed.

Location: Paradise Palms Country Club, Kewarra Beach
Time: 6:30pm Start - 8:30pm Finish
Contact: 07 4057 9111 or sales.cairnsbeaches@raywhite.com *Booking not necessary however recommended

North Point Estate Sold to Local Developer

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The future for Smithfield's North Point Estate is now a little clearer with local developer and builder John Richardson fighting off interstate and foreign interest for the purchase. The residential subdivision is a key development site on Cairns northern beaches opposite the Smithfield shopping centre and part of the originally planned Smithfield Town Centre.

The site was originally pegged to carry an extension to the Smithfield shopping centre, including a theatre complex and unit development, until plans were blocked following the collapse of owner Capital Globe Group in 2010.

John Richardson's company has in the past been a strict housing construction business so it is easy to assume that this will too be the future for North Point Estate ...however watch this space as further details are clarified...

Smithfield North Point Sale Coup

Article printed in the Cairns Post - Wednesday 15th February 2012

LOW-profile developer and builder John Richardson has beaten off strong competition to acquire the strategic North Point Estate residential subdivision at Smithfield.

His company Richardson Plant Hire has bought the 18.4ha property alongside the Captain Cook Highway for $3.7 million plus GST.

The northern section of the property once formed part of the $500 million Smithfield Town Centre project proposed by developer Steve Pellegrino.

However, the Cairns Regional Council blocked the centre in March last year.

Northpoint has existing development approval for residential sub-division with mixed zoning, including residential 2 and 3.

A two-level display home is included. A section of the land is south of Stanton Rd while the bulk of the property is north of the road.

Mr Richardson, who owns David McCoy Homes, Ken Frost Construction and Cairns Key Real Estate, said he had yet to decide what he planned for the property.

He said he would meet Mr Pellegrino to discuss what options were available with the northern section.

Mr Richardson is also involved with the development of the Seaside at Kewarra 56-lot residential estate off Poolwood Rd, the 19.5ha Half Moon Bay Estate at the end of Reed Rd at Trinity Park and the Smithfield Village master planned community, also at Trinity Park.

Urban Development Institute of Australia Far North branch president Gerard Obersky said Mr Richardson was long established as a quality contractor in civil and building construction as well as a leading developer with a proven record.

"Never scared to have a go, he has been innovative and progressive," Mr Obersky said.

"John’s recent acquisition in North Point Estate is the strongest possible endorsement in the area by a local developer."

The property was sold through an expressions of interest campaign by Colliers International Cairns for Brisbane-based McGrathNicol receivers.

Managing director Stacey Quaid said there was keen interest in the property from throughout Australia, China and New Zealand.

He said the property was very strategic with a handful of short-listed offers considered by the receivers on behalf of the National Australia Bank.

Mr Quaid said Mr Richardson was an ideal buyer with many years’ experience in putting together house and land packages.

He said there was a shortage of residential land on the northern beaches and this would help meet demand.

"It’s fantastic that a local buyer is the new owner," Mr Quaid said.

The prominent development site was associated with murdered businessman Shaquil Haque.

The sale follows the collapse of the Capital Globe Group, the company headed by Mr Haque.

In February last year, McGrathNicol was appointed receivers by the National Australia Bank.

Mr Haque and his financial adviser Charles Young were shot dead in the Pakistan capital Islamabad in 2010.

View the Cairns Post article online here

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

National Housing Shortage to Fuel Unit Demand

A recent report produced by the National Housing Supply Council (NHSC) has reaffirmed signs that Australia’s chronic property shortage is set to be one of the key issues underlying the real estate market for years to come.

The NHSC’s report titled the ‘State of Supply Report 2011’ shows that Australia's overall shortage of dwellings currently sits at 186,800 and is projected to hit 640,000 by 2030.

In terms of sheer numbers, the largest housing shortfalls are in NSW and Queensland, says the report, with shortfalls of 73,700 and 61,900 respectively.

Key factors behind Australia's national housing shortage include:

• The country's high rate of population growth;
• A weak post-GFC construction market;
• Australia's ageing population;
• Significant growth in the number of lone-person households; and
• Significant growth in the number of households containing couples without children.

The report states that as a result of these underlying factors, the NHSC expects higher density housing to increase in popularity in the coming decades.

"Most regions are projected to see a greater relative increase in demand for flats, apartments and townhouses than for detached houses," says the report.

Far North Queensland is one of the fastest growing regions in the State. Between 2001 and 2006 FNQ had the third highest growth rate and absolute growth outside South East Queensland. This growth has largely been driven by net migration, with natural increases remaining relatively steady.

Current population projections for FNQ to 2031 are shown in the second graph. High, medium and low series projections have been prepared to consider a range of potential future outcomes.

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Key finding of the recent NHSC 'State of Supply Report 2011' report include:

• Despite weaker market conditions, the housing shortage continues to widen.
• Underlying demand for housing grew by an estimated 159,200 dwellings in the year to 30 June 2010 – slightly more than the 156,500 forecast in the 2010 report.
• Net additional housing supply  increased by 131,000 dwellings over the same period, below the 140,700 projected in the 2010 report.
• The gap between these measures of underlying demand and supply increased by 28,200 to 186,800  over 2009-10.
• The largest housing shortfalls in numerical terms are in NSW and Queensland, with shortfalls of 73,700 and 61,900 respectively.
• Relative to the size of its market, the largest shortfall is in the Northern Territory, where the Council estimates the shortfall to exceed 10 per cent of total underlying demand.
• Data from the states and from the Council’s analysis of recent building approvals data suggest that supply is likely to fall short of the medium-growth projections (meaning a larger gap) in the short term.
• Projections, based on trend building rates and household growth, suggest that this gap could increase to over 640,000 over the next 20 years .
• This growing gap indicates that housing production needs to lift well above trend to reduce the likelihood that housing shortages and poor affordability impact adversely on economic growth and standards of living.

View the full ‘State of Supply Report 2011’ report at the NHSC website HERE

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

No End in Sight for Tightening Rental Home Market

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As well predicted, the availability of rental homes throughout the region is becoming an increasing concern for prospective tenants. The Cairns Post today reported another decrease in the vacancy rate with an increase in median rents and the key economic indicators are clearly telling us that this trend will continue throughout 2012.

Building approvals in the construction industry remain at an alarmingly low rate; certainly not enough to accommodate the continually growing local population. Almost every day it seems as though I am hearing from prospective tenants who are finding it increasingly difficult to find suitable rental homes.

One must ask with median rents expected to rise substantially throughout the year and fewer rental homes available; will prospective tenants shift their sights toward the deflated sales environment currently offering an attractively wide range of opportunity?

Cairns Rental Houses in High Demand

The Cairns Weekend Post - 11th February 2012

PEOPLE hunting for a house to rent could be facing longer waits as vacancy rates in Cairns continue to tighten.

The latest Real Estate Institute of Queensland report says Cairns’ vacancy rate dropped from 3.1 per cent in the September quarter to 2.8 per cent in the December quarter.
The median weekly rents for two bedroom units and three bedroom houses recorded an increase of $5 or $10 over the quarter.

Despite a "slight" unit oversupply, demand for houses is strong with many agents beginning to exceed supply.

TNQ Rentals owner Karin Riley said her agency only had two vacant houses out of more than 450 properties on the books.

"Houses are doing extremely well and tenants seem to prefer a house over a unit at the moment," Ms Riley told The Weekend Post.

"The unit market is suffering a little but in saying that if the property is well presented, fresh and modern, they’re attracting people."

The latest Australian Bureau of Statistics housing finance figures found the number of investors in Queensland increased by more than 16 per cent over the month but the report could not provide a regional breakdown.

This return to investor activity, while still slightly below average, is also being driven by the lower interest rate environment that is now in play, REIQ CEO Anton Kardash said.

"After being in hibernation for most of 2011, investors are starting to return to the market with REIQ accredited agencies also reporting a more buoyant mood since about November," he said.

"These tentative signs of recovery, however, can only be sustained if confidence levels continue to improve. The key to this is having an interest rate regime that reflects and supports the economic reality of the majority of businesses in Australia."

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

Cairns Property Market - HTW Month in Review

Herron Todd White Cairns provide their analysis of current property market conditions in the company's national 'Month in Review' publication. Minimal change in general market conditions observed however positive outlook for rentals reaffirmed.

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THE Cairns residential property market remains steadfastly at the bottom of the property market cycle, and while there is light at the end of the tunnel, we are not expecting big things to happen in the market during 2012.

Conditions in the local economy are slowing getting better, but it is taking a long time for these to filter into improvements in consumer confidence which is needed to resurrect the local property market. The building industry also remains at a low ebb, with a dearth of new housing construction projects inside Cairns, particularly of units.

However one comfort factor is that vacancy rates for rental property have tightened further over the past twelve months. according to our Herron Todd White rent roll survey, vacancy rates for houses have come down from a trend level of 4.% in December 2010 to 2.2% in December 2011, while those for units have come down from 4.8% to 4.1% over the same period. In addition the December quarter saw average rents show an increase, rising by about $7 per week compared to September.

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Tight rental market conditions, rising rents and affordable property prices will provide the pre-conditions for the market to enter modest recovery mode during the next twelve months.

View the national report in full here

Peter Musso - Ray White Cairns Beaches - Licensed real estate agent selling property in Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach.

Parliamentary Hearings on Strata Title Insurance

Federal Parliamentary Inquiry hearings concerning the price rises for residential strata title insurance began in Cairns on Tuesday and will also be held in Townsville and Mackay in coming days.

Property owners affected by the rising costs have been called to present cases and representatives from the big three insurers in the Far North will also be in attendance to defend the rises experienced.

The hearing in Cairns on Tuesday was covered by ABC News and The Cairns Post - both publications printed the following articles on Wednesday:

'If the risk's high, the premiums will match, say insurance companies in FNQ'
The Cairns Post - Wednesday February 1, 2012

THE region's largest insurer has defended itself against growing community anger over price hikes, saying as long as councils allow development in high-risk areas, premiums will remain high.

During a tour of the Far North yesterday, Suncorp Personal Insurance CEO Mark Milliner said: "As long as councils continue to approve building works in these high-risk areas, which are cyclone and flood prone, then the inherent risk is high and the premiums will match."

Cairns Mayor Val Schier said insurance companies should not try to pass the buck on to councils.

"I actually think that the insurance companies are making excuses," she said.

Suncorp, including brands such as AAMI and GIO, ranks as one of the nation’s biggest insurers and has paid out more than $4 billion over the past year for claims from cyclone Yasi to the Christchurch earthquake in New Zealand.

In that period, the company has put up insurance costs by an average of 10 per cent around Australia, while residents in cyclone Yasi ravaged Cardwell and Hull Heads have reported rises of up to 30 per cent from Suncorp and other companies.

Mr Milliner said mitigating the risks was the only way of keeping premiums down for individuals in the long term.

He said councils needed to stop approving building applications in areas prone to cyclones and storm surges.

"We bottle insurance and price it according to the risk of each individual house," he said.

"I have always said the way to keep premiums down is to mitigate that risk – whether that is local councils stepping up and saying no to building applications in at-risk areas or if it is the State Government building dams to temper the flooding.

Suncorp Personal Insurance CEO Mark Milliner said as long as councils approve building works in high-risk areas – such as the cyclone Yasi devastated Tully Heads – homeowners will pay the price. Picture: MARC McCORMACK

"In the long run it will be mitigation that will keep the premiums from rising – if people continue to choose to live in high risk areas, they will have to pay high premiums."

When asked about building in areas like cyclone-hit Tully Heads, Hull Heads and the proposed development at Taylor Point, near Trinity Beach, Mr Milliner said the company had to cover the risk costs.

"One thing is for certain, the Far North will have another cyclone and when that happens our costs go up.

"As a business, we have to be able to pass on those costs to our customers, who are at risk and who will most likely claim from us.

"I think that is reasonable.

"If houses are built properly in lower risk areas, the premiums will be lower; it is simple.’’

'Insurers defend strata title costs'

ABC News - Wednesday February 1, 2012

Insurers have defended price rises for residential strata title insurance in north Queensland at a federal parliamentary inquiry.

A House of Representatives Committee began hearing evidence in Cairns yesterday and will head to Townsville tomorrow.

It is due to report in April on what has led to significant increases in insurance costs in recent years and whether the Government should intervene.

About 200 property owners attended the Cairns hearing yesterday afternoon.

All were angry at the massive jump in premiums and excess quotes for their units and apartments in the past few years.

They called for a 12-month moratorium on premiums and the establishment of a government-backed insurance company for Queensland, similar to the Territory Insurance Office.

Zurich Insurance spokesman Shaun Feely told the inquiry, prices had to go up to ensure future natural disasters could be covered.

"We've been operating in strata insurance for five years in north Queensland," he said.

"For every $100 we've collected, we've paid out $115."

The Insurance Council of Australia (ICA) says the State Government could have an immediate impact on premiums by removing GST and stamp duty.

ICA chief executive officer Robert Whelan says affordability is a crucial concern, but there are options to reduce the cost.

"An increased excess will reduce the premium but it also reduces the claims which continues to feed back into premiums," he said.

"We think they are practical ways of actually assisting people to be able to affect insurance in an affordable way and they're things that we could do virtually immediately.

The Unit Owners Association of Queensland (UOAQ) is calling for a freeze on strata title insurance premiums.

UOAQ spokesman Andrew Hayes says more competition is needed, with only one insurer - CGU - offering new policies north of Rockhampton for unit complexes over $5 million.

"We could put a moratorium in in the spirit of the issue not to put residential owners in more hardship until we actually can consider a model that is appropriate for the needs up here," he said.

"The point being is that it's all about being reasonable - these increases aren't reasonable."

Mr Hayes has told the inquiry the Government should consider allowing premiums to become tax deductable.

Cairns property owner Helen Reed says she rejects the insurance industry's claim that high premiums are a reflection of a building's age, structure and claims history.

"We have actually a house in Redlynch as well as a unit in Parramatta Park and we're paying more for our insurance in our unit, which is a smaller area," she said.

"The one in Redlynch actually included our contents as well so it's not risk-based as the insurance companies lead you to believe.

"Our building is only four years old, has no insurance claims whatsoever and it's gone from $3,000 insurance up to $16,000."

Peter Musso - Ray White Cairns Beaches - Licensed real estate agent selling property in Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach.