Cairns market update
Cairns
building approvals have increased in trend terms by 47% between January
2013 and January 2014. While this is welcome news it is hardly boom
times for the local construction industry given that the increase has
come from such a low base. It really means that housing construction has
recovered from 20% of 'normal' to 30% over the past 12 months.
Furthermore all of the increase thus far has been in house construction,
apartment construction; is still non-existent.
The
Cairns property market is still in early days of recovery, and with the
wet season upon us, property and construction are in their traditional
quiet time of the year. Nevertheless both sectors should gain further
impetus as the year unfolds. Land sales have also picked up –
coincidentally also by 47% over the past 12 months – but again this
demonstrates the depths from which the market has come.
In
addition we are starting to see land sales taking place in estates that
were previously almost dormant as well as higher levels of sales across
the on-going estates. Land prices are starting to nudge higher, with
the median land price moving to around $125,000 in the southern suburbs
and $190,000 in the northern beaches.
In
the house and land package market, builders in the southern suburbs
appear to be most active in the $350,000 to $400,000 price range while
on the northern beaches, house and land activity appears to be more in
the $400,000 to $500,000 category.
Prime
house and land estates include Seaside, North Point, Half Moon Bay and
Smithfield Village on the northern beaches; and Silkwood Ridge and
Mountain View Estate on the south side. House and land sales are being
made to a combination of locals and investors with no real stand-out
categories. Builders are just happy for whatever sales they can make in
the current climate!
Commercial
The
industrial sector in Cairns is relatively small with areas close to the
CBD showing the stronger demand. The status quo has remained so far
this year with the market having come back from its peak of early 2008.
There has been a slowing in the rate of sales and yields have eased back
by about 10% to 15% from the record low levels observed at that time.
We believe yields for industrial premises at present analyse in the 8%
to 9% range, from the 6.75% to 7.25% range evident at the market peak,
though well leased investments to national tenants will still show sub
8%. Commercial agents advise limited availability of good quality
stand-alone warehouse stock with reasonable demand for these types of
premises.
Strata
titled industrial warehouses are also limited in numbers to both sell
and lease. The tight serviced industrial land supply situation that
previously existed was alleviated with the state government introducing
37 additional lots to the market at Woree in 2009. The state government
lots were initially slow to sell in line with the slow market
conditions, with only six sold between 2009 and June 2013, but our
understanding is that following a price reduction a further eight to ten
lots have since been placed under contract. Nevertheless we would
maintain that industrial land is adequately supplied for the foreseeable
levels of demand.
Due
to the downturn in the local economy and reduced demand from tenants
and purchasers, rents reduced after the GFC but have recently begun to
claw back some lost ground as the economy has slowly improved. There is
limited quality investment stock available for purchase in the Cairns
market. This will tend to support values over the short to medium term.
The outlook for the next 12 months should see the market tighten as
little new stock has been brought onto the market. A recovery in the
vacant industrial land market in Cairns may depend upon a more
widespread recovery in the local economy which appears to be underway.
Residential
Cairns
building approvals have increased in trend terms by 47% between January
2013 and January 2014. While this is welcome news it is hardly boom
times for the local construction industry given that the increase has
come from such a low base. It really means that housing construction has
recovered from 20% of 'normal' to 30% over the past 12 months.
Furthermore
all of the increase thus far has been in house construction, apartment
construction; is still non-existent. The Cairns property market is still
in early days of recovery, and with the wet season upon us, property
and construction are in their traditional quiet time of the year.
Nevertheless both sectors should gain further impetus as the year
unfolds.
Land
sales have also picked up – coincidentally also by 47% over the past 12
months – but again this demonstrates the depths from which the market
has come. In addition we are starting to see land sales taking place in
estates that were previously almost dormant as well as higher levels of
sales across the on-going estates. Land prices are starting to nudge
higher, with the median land price moving to around $125,000 in the
southern suburbs and $190,000 in the northern beaches.
In
the house and land package market, builders in the southern suburbs
appear to be most active in the $350,000 to $400,000 price range while
on the northern beaches, house and land activity appears to be more in
the $400,000 to $500,000 category. Prime house and land estates include
Seaside, North Point, Half Moon Bay and Smithfield Village on the
northern beaches; and Silkwood Ridge and Mountain View Estate on the
south side. House and land sales are being made to a combination of
locals and investors with no real stand-out categories. Builders are
just happy for whatever sales they can make in the current climate!
Source: Herron Todd White, accessed 8 April 2014, <http://htw.com.au>
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I
would also like to say a big thank you to First National Cairns Central
for sponsoring my touch football team. We play division 3 mixed at the
Cairns Pirates Club. How awesome do our new uniforms look!
