Herron Todd White Cairns - The Year Ahead

As one of the many avid readers of the CairnsWatch report released by Herron Todd White I have followed the data presented with keen interest each month in and out for over the past 5 years. In the December 2010 edition of the CairnsWatch report it was officially stated that the Cairns property market was at the bottom of its overall cycle. Two years on and the CairnsWatch report still confirms that Cairns remains placed in the same position within its cycle although a general decline in median values throughout the region has been seen within that time. 

Herron Todd White can be forgiven for perhaps being a little too optimistic in their assessment of the future for the local economy at the time - whilst many areas within Australia have seen great recovery following the Global Financial Crisis, Far North Queensland has not been so lucky and to say that local business conditions throughout the past 4 years “have been tough” is a severe understatement.

We can only remain positive, and due to several important local economic developments (discussed below) we are currently experiencing our highest levels of local business and market confidence since the GFC first affected the region in early 2008. Herron Todd White’s assessment for the year ahead follows…

The Cairns residential property market remains at the bottom of the property market cycle, but there is light at the end of the tunnel with some tentative signs of consolidation that will continue during 2013.

The local economy is progressively improving, aided by a much stronger tourism season during 2012 and the recent start-up of direct air flights to China delivering greater numbers of Chinese tourists to Cairns. 

However it is taking a long time for these developments to filter through to the improvements in the consumer confidence that is needed to resurrect the local property market.

The building industry also appears to be making a comeback, with the latest statistics showing a 39% year-on-year increase in the number of building approvals issued for new house construction. Even so, conditions in the industry are still tough and unit construction remains dead-in-the-water.

"....the Cairns residential property market remains at the bottom of the property market cycle, but there is light at the end of the tunnel...."

One push factor for the market is that vacancy rates for rental property have lowered considerably over the past 12 months and are now extremely tight. According to our Cairns 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 and 1.3% in December 2012, while those for units have come down from 4.8% to 1.9% over the same period. In addition rents are climbing, rising by about $30 per week for houses and $15 per week for units over the past two years. Tight rental market conditions, rising rents and affordable property prices are providing the right pre-conditions for the market to gradually regain some momentum during the next 12 months.

Click here to download Herron Todd White's national report for January 2013

Peter Musso licensed real estate agent at Ray White Smithfield 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, Kamerunga and surrounds.

State-Wide Market Analysis Provided by the REIQ

The Real Estate Institute of Queensland (REIQ) have provided a state-wide analysis of property market trends with the release of their quarterly Market Monitor report. 

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The report analyses median house, unit and land price movements over the January-March 2012 period and is arguably the most trusted source of such data within the Queensland real estate industry.

Very positive news has resulted from the REIQ's figures showing that the Queensland property market has turned around and posted positive results for the first time in 18 months. The report finds that house prices across the majority of Queensland have increased with sales numbers also up – in some cases significantly.

Three months ago when the REIQ analysed the December quarter data it seemed to indicate the bottom of the market had been reached because prices were stabilising.
The REIQ predicted at the time that the March quarter data would be even more positive and house prices across the state have duly started to increase.

Property prices have grown in most areas and some regions have also experienced substantial increases in sales activity, which is a hugely welcome turnaround.

And while the March quarter figures contain plenty of good news, perhaps the best piece of news is some very healthy results in Queensland’s tourism centres, which have struggled more than most over recent years.

More importantly, the report also provides an in-depth review of all major regional areas throughout the state including Cairns and I will post this analysis for your information shortly. Stay tuned!

Blog post article information sourced from the REIQ Market Monitor Report - March Quarter 2012

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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Click to Enlarge

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.

REIQ Cairns Quarterly Real Estate Market Review

House & Unit Markets

The median house price in Cairns dropped 5.6 per cent to $346,000 over the June quarter however over the year ending June the median house price recorded a 0 per cent change.

According to local agents, the June quarter continued to be impacted by low consumer confidence which was compounded by the poor tourism sector and the high Australian dollar.

The announcement that the principal place of residence concession on stamp duty would be removed from 1 August had also not stimulated the market in any meaningful way before that date.

Agents say the majority of people are just not in a position to buy because either they can’t secure finance; they aren’t confident about their jobs or the economy; or they would have to take too much of a financial hit if they sold their existing property now to buy something else.

They say confidence levels need to drastically improve and the Aussie dollar needs to stabilise before the market picks up in any meaningful way in Cairns.

Over the year ending June, Freshwater recorded median house price growth of 13.5 per cent to $499,500, but this was partly due to the varying quality of stock sold over the period.

Nestled between rolling hills, a national park and a conservation park, Freshwater is a quiet, leafy suburb, which is popular with families.

The area is well serviced by transport infrastructure – Cairns Airport is only 5km away and Freshwater Connection train station, which ferries tourists along the Kuranda Scenic Railway, is centrally located.

The median unit and townhouse price in Cairns decreased 2.4 per cent to $225,000 over the June quarter. There has been significant softening in prices of units and townhouses in Cairns with reports of units selling for close to their purchase price off-the-plan from the 1990s.

This coupled with a shift towards more affordably priced units has contributed to the reduction in median sale price over the quarter and the last financial year.

The new Majestic Palms complex at Yorkeys Knob however continued to tick over more sales. Popular with interstate investors, the complex adjoins the Half Moon Bay Golf Course and is close proximity to all amenities.

Vacant Land Market

The median price of land decreased 5.9 per cent to $168,500 over the June quarter. Local agents don’t anticipate that the Queensland Building Boost will gain much traction in the region given the general softness of the sales market would make it difficult for second and third home owners to sell their existing property to upgrade to a new home.

New house and land packages also generally remain out of the financial reach of first home buyers.

Rental Market

The median rent in Cairns for a two-bedroom unit remained steady at $250 per week between June 2011 and June 2010. The median rent for a three-bedroom house increased $10 to $310 per week over the same period.

The residential rental vacancy rate in Cairns remained steady in June, decreasing to 3.7 per cent from 3.8 per cent in March.

Local property managers say vacancies are taking about two to four weeks to relet with about two to five applications per vacancy.

Information sourced from the Real Estate Institute of Queensland Market Monitor report for the June Quarter 2011 (Issue 11).

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

THE AUSTRALIAN: CAIRNS ON THE COMEBACK

Writer for The Australian Terry Ryder reported today that Cairns looks ready to make a strong comeback in it's economy and property market.

Ryder notes major improvements to Cairns' airport and hospital, plans for the development of a $240 million dollar cultural precinct, major highway upgrades, large-scale mining related prospects and a rapidly increasing number of flights from fast growing international tourism markets.

The report comes as figures published recently indicate Cairns is one of Queensland's fastest-growing regions. Nearly 5,200 people moved to Cairns in the 2009 fiscal year, bringing its population to 164,356.

The 3.2 per cent growth put Cairns among the top four fastest-growing regions in the state, after Ipswich, Moreton Bay and the Fraser Coast.

Read full article

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