Get ready for the big rental squeeze...
Cairns will be on the brink of a rental crisis before the year is out if the city’s vacancy rate continues to tumble.
If investors do not flock back to Cairns in the next six months, agents say the tight rental market could force tenants to buy, which would push house prices up again.
Vacancy rates across the city’s rental houses and units continue to tighten.
The latest Herron Todd White Cairns Watch report found the April trend vacancy rate for houses had dropped to 2.4 per cent, while units recorded a trend vacancy rate of 3.9 per cent and the market overall 3.1 per cent.
Cairns Watch analyst Rick Carr said units were sitting above the “stress” level, but the availability of houses was tightening which could see a “blowout” in rental rates.
“We expect the rental market to keep tightening during 2011 due to ongoing population growth and the lack of new rental property construction,” Mr Carr said. “If the trend continues like it has in the past six months then by the end of the year it will be a tight rental market.’’
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Time now right for property market revival...Though the rental housing squeeze is not all bad news. While it makes it hard for those looking to lease reasonably priced properties it will force many to bite the bullet and buy.
They have a good incentive to plunge into the property market too with the State Budget announcing a $140 million program with $10,000 grants for owner-occupiers buying properties for less than $600,000, aimed at stimulating building activity and supporting construction jobs.
The rental vacancy crisis will also push up prices which have been at rock bottom for a long time.
Now is the time for canny investors to return to the market and buy homes, apartments or units for rent, with good returns and good value, before any probable price rises later in the year as rental stocks dwindle and before any new housing construction begins.
The low vacancy rate also could provide the trigger for new residential developments if the banks are willing to lend and developers are willing to take the risk.
While the details of what projects will go ahead under the Cairns Regional Council’s $4 million infrastructure discount scheme have yet to be revealed, it is believed some will boost housing stocks.
The only bugbear is the massive hike in stamp duty announced in the Budget.
Stamp duty will result in the fee climbing from $3000 to $8325 for a $300,000 home.
The changes mean buyers will pay the same rate for their family home as they would for an investment property.
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Time for action to start on $428 million worth of projects in Cairns...
WORK on three of the Far North’s biggest and most controversial projects will start within 10 months as the State Government yesterday vowed to turn promises into action.
Two Cabinet ministers will base their offices in Cairns from June 27 as community anger rises over the lack of action on major government projects in the Far North.
Main Roads Minister Craig Wallace and Transport Minister Annastacia Palaszczuk will oversee the progress of two of the region’s biggest projects with the $150 million Ray Jones Drive upgrade and the $38 million Lake St and City Place overhaul.
The Weekend Post can reveal both projects are slated to be completed by 2013, with $41 million worth of work on Ray Jones Drive allocated for the first stage of the upgrade this year, creating hundreds of jobs over the next two years. The start of work on the key projects comes less than a year before the state election.
Meanwhile, Cairns Regional Council expects the first sod to be turned on the Cairns Entertainment Precinct after the 2012 wet season.
After another round of community consultation in July and a public exhibition period for two concept designs, a development application to start work on the project will be lodged.
Mr Wallace said the Bligh Government was fully aware of the Far North’s dire economic climate and denied the projects had been delayed.
“We’ve got our final two bidders on the design work for Ray Jones Drive, we’ll make a decision and announce the winning design in September, so work is expected to start prior to Christmas and finished by the end of 2013,” he said.
“This year we’ve allocated $41 million for the project and we’ve started relocating our Roadtek depot to Cairns.
“This road will cater for Cairns for the next 30 to 50 years so we’ve got to do this properly, and as the funds have come through from the Federal Government we’ve spent them.”
Homes may have to be resumed by the State Government in the second stage of the upgrade, Mr Wallace said.
Ms Palaszczuk said the first $12 million of the $38 million City Place package was included in
Tuesday’s State Budget for the next financial year to ensure the project could start as soon as possible.
“Work will include designing and constructing a pedestrian and cyclist friendly bus interchange, where buses can move through City Place, linking services north to south and vice versa, as well as bus layover facilities away from City Place,” she said.
A council spokesperson said the “architectural rainforest” concept design for the entertainment precinct had received almost unanimous support as the preferred option.
“After the July community consultations there will be an exhibition period for the two concept designs and information will be presented to the State Government with a full evaluation of each design option from a technical, operational and cost perspective,” the spokesperson said.
“After the exhibition period a development application will be lodged and preparation of detailed and final designs will begin.
“In order to acquit the $40 million Commonwealth grant within the stipulated timeframe, it is hoped that works on the project will begin after the wet season in 2012.”
Cairns Chamber of Commerce president Anthony Mirotsos said the community and business leaders must keep the pressure on to ensure the projects were delivered in promised timeframes.
“The southeast corner and Townsville have had their fair share of funding, but even though our economy is in a worse state than other areas we still haven’t had our fair share of investment,” he said.“
Articles published in The Cairns Weekend Post 18th June 2011
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
Another factor affecting the rental market outlook in Cairns is a progressively tightening vacancy rate for rental property combined with the almost complete absence of new rental property construction. According to our latest Rent Roll Survey, vacancy rates in July 2011 stand (in year round average trend terms) at 2.9% for houses, 3.4% for units and 3.2% overall. As vacancy rates tighten further, we expect upwards pressure on rents as a result of demand factors as well as the rapidly increasing cost base of rental property ownership.
