Keeping Momentum on Strata-Title Insurance Inquiry

A formal parliamentary report on insurance costs was recently submitted to the government detailing a series of recommendations in response to the inquiry meetings held throughout Far North Queensland. Very interesting was the final recommendation which calls for the government to "outline the plan of reforms it will undertake with the Queensland Government to establish a competitive and affordable insurance market for residential strata title insurance, with a focus on North Queensland..."

Insurers Face Fresh Scrutiny

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The Cairns Post - March 23rd 2012

THE pressure must stay on insurance companies and government if recommendations to address the spiralling costs of body corporate insurance are to have any chance of success, Far Northerners say.

Late Wednesday, the Federal Government’s Social Policy and Legal Affairs Committee released a series of recommendations in response to the inquiry that visited Cairns and Port Douglas in January.

Yesterday, chairman Grah-am Perrett said the committee had heard stories of "heartache, stress and despair".

Mr Perrett said a number of factors did not add up when looking at the increases, from the insurance industry’s claim reinsurance was to blame, to body corporate manager commissions, to the fact building codes had improved in the past 30 years yet a massive leap in premiums had taken place.

Leichhardt MP Warren Entsch, who pushed for the inquiry along with Cairns-based Queensland Senator Jan McLucas, said the recommendations "were not a silver bullet".

"I have been dealing with property owners who are struggling to keep their homes after being hit with strata title insurance increases of up to 1000 per cent," he said.

"Some people have had to borrow just to pay their insurance and if they’re faced with the same premiums next year, it’ll tip them over the edge."

Cairns Chamber of Commerce president Anthony Mirotsos said it was encouraging that the committee had put forward a substantive action plan with "tangible outcomes and deliverables".

"It puts insurance companies on notice that this is being investigated and we’re not just going to continue handing out cheques," he said.

Sue Chapman, manager of Verandahs Boutique Apartments at Port Douglas, said it was important to keep the pressure on.

"They’ve gone out and sourced information from a huge area, they’ve come to us, they’ve actioned it very quickly so now it’s absolutely vital that we keep the momentum going," she said.

Cairns unit owner Ian Jamieson saw nothing to alleviate the hardship people were facing.

"I can’t see the insurance companies reducing their prices so the crisis remains, it’s just bad news for investment in Cairns for people on fixed incomes."

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 Review by Herron Todd White

A current review of Cairns' property market conditions provided by Herron Todd White in their national 'Month in Review' publication March 2012:

Investors are sadly lacking in the Cairns residential property market at present. However with the market presently showing downward pressure on property prices and upward pressure on rents, rental propositions to investors in Cairns ought to be becoming increasingly attractive.

“Tight rental market conditions, rising rents and ‘affordable’ property prices are providing strong fundamentals for investors. Once the word gets around, please form an orderly queue.”

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In December 2010 the median house price in Cairns was $368,000 and the median weekly house rent $320. Twelve months on, in December 2011, the median house price in Cairns has headed south, to $332,000, while the median weekly house rent has headed north, to $330. Rental yields have thus improved significantly.

Vacancy rates for rental property have reduced considerably over the past twelve months, with the market now sitting at the lower end of the ‘balanced market’ range normally accepted as a 3% to 5% vacancy rate. Houses for rent are in short supply, with a vacancy rate of 2.1% during January 2012, while units recorded a trend vacancy rate of 4%. The overall market vacancy rate stood at 3.1%.

The rental market is expected to come under further pressure during 2012 because of on-going demand and the lack of new private rental housing construction. Tight rental market conditions, rising rents and ‘affordable’ property prices are providing strong fundamentals for investors. Once the word gets around, please form an orderly queue.

View the full 'Month in Review' publication 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.

The Future for FNQ Holiday Accommodation

Holiday style properties have historically been most attractive to lifestyle investors in search of their own property which they can use themselves and lease out in the meantime in order to cover costs, with the added benefit of long-term capital growth.

Unfortunately, a deflated international tourism market in the far north experienced throughout the past 3 years has diminished the ability of these holiday properties to cover those ongoing costs. Many holiday properties only barely manage to return enough each year to cover body corporate levies, council rates and other ongoing costs leaving owners with very little by way of net investment return.

The majority of investors who are purchasing holiday styles properties within the region are now purchasing with a long-term strategy in place. They focus on the high level of affordability of such properties relative to the overall market cycle and project for future earnings to be achieved when the tourism industry eventually returns to strength.

Without a long-term perspective it can be very difficult for purchasers to see value in these properties within current local tourism conditions. However, the latest Deloitte Access Economics’ Tourism and Hotel Market Outlook has brought some welcomed news stating that the accommodation industry in Cairns should start seeing gradual improvements throughout 2012 and projecting sustained growth up to 2014.

“The Tropical North Queensland (TNQ) region has faced challenging conditions in recent times, losing market share, particularly as the Japanese source market has declined. Occupancy rates and RevPAR (average yield per room) have fallen sharply since the onset of the GFC.

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However, our forecasts suggest a turnaround in performance for the TNQ hotel market, with occupancy rates to be flat in the first half of 2012, before increasing six percentage points – from 57% to 63% – by end-2014.

RevPAR is forecast to increase by 27% over the period 2011 – 14, however, again, this is off a relatively low base. Indeed, by the end of 2014 RevPAR for TNQ region is forecast at just $86, which is the lowest yield among the regions reported here.”

Download the full report here

It is expected that tourism industry growth will be fuelled by the emerging Asian economies of China and India. These markets also often prefer nature-based tourism whereby Far North Queensland is positioned to take advantage.

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 Beaches Video Market Update

Short video update on current market activity experienced in Cairns northern beaches.
Presented by Peter Musso - Ray White Cairns Beaches - 0425 713 700
Location: Coral Sands Resort - Trinity Beach QLD 4879

Subtitle: Hi everyone, welcome to my first video update for the year, we've been very busy so I'm happy to be able to report on healthy market activity throughout January and February. Buyer activity remains strong following on from the spike in activity that we saw late in 2011, typical for that time of year but good nonetheless that it has remained.

A change that we have noticed is fewer properties coming onto the market which will help to bridge the gap between supply and demand that we have seen in recent times. The majority of buyer enquiry is circulated around the affordable housing segment, between the $250,000 and $350,000 level, with demand for units slightly less however good for those that are priced to represent clear value within the marketplace and of course auction properties with no advertised price.

As predicted we are continuing to see strengthening rental market conditions with tightening vacancies and increasing rents, something I heard a buyer say last week was "with rents expected to increase further why shouldn't I buy?" This was music to my ears as it is the message that we have been trying to get across to the marketplace for quite a while now. Hopefully we see and continual shift in buyer perception in that direction.

If you would like a quick discussion regarding local market activity feel free to call me directly at any time, have a great day and thank you for watching.

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.