Confidence high for Cairns property market in 2016
LOOKING GOOD: Research Director Rick Carr from Herron Todd White let The Cairns Post on his Property Predictions for 2016. PICTURE: STEWART McLEAN

HE expectations
are high for property prices in Cairns for 2016. With major projects on the
horizon, including new residential high-rises C3 Towers and Nova 8, the city’s
first aquarium on Abbott St and Aquis still looming as a large contender,
property experts are predicting confidence will turn into dollars. If you are
looking to invest, buy your first home or potentially sell up to cash in, here
is what Cairns property experts are saying:

RICK CARR – Research Director at Herron Todd
White. 2016 predictions: Our expectations for 2016 are essentially for
“more of the same” as the economy continues to slowly improve. Sales volumes
will continue to slowly but steadily increase, and flow through to price rises
typically around the five per cent mark. There will be ongoing demand for
rental properties which, given the relatively slow rate of new housing
development and tighter lending conditions to investors, will keep the supply
of rental property tight and maintain upward pressure on rents.

Summing up
2015: The Cairns residential market remains in the “rising market” phase
of the property cycle but its position has become more balanced. There is good
demand for most residential property types. Sales volumes are showing growth,
but the rate of growth has eased during the course of this year, potentially as
a result of buyer resistance to increasing prices as well as tighter lending
conditions for investment properties. The number of properties being listed for
sale steadily rose throughout 2015, as increasing prices brought more vendors
into the market.

Prices for
houses typically regained 2008 peak levels in mid-2014, and prices continued to
rise mildly during 2015. The Cairns median house price stood at $410,000 in
September 2015, which demonstrated a 4.7 per cent increase since September
2014. The median price for units stood at $215,000 in September 2015, up 5.2
per cent from September 2014. However, the median unit price remained shy of
previous peak levels due to the impact of increased strata building insurance
costs and the tighter lending conditions.

There was good
demand for vacant land in most locations throughout 2015 but the strong rising
prices experienced throughout 2014 and early 2015 tapered somewhat over the
last six months.

Land prices now
start at about $130,000 per allotment and the median allotment price stood at
$198,000 in September 2015. Land price rises have been strongest over the last
12 months on the northern beaches, but have been less severe in the southern
corridor market due to its larger developable land supply and greater
competition between developers. In the rental market, vacancy rates remain
relatively low and there is modest upward pressure on rents. Our overall
assessment is 2015 was a year of continued growth and consolidation in the
Cairns market as a result of its steadily improving economy.

BILL CUMMINGS – Cairns economist at Cummings
Economics. 2016 predictions: Fundamental factors, such as a lower dollar
and lower interest rates, favour a rise in activity in 2016. But achieving
lift-off in construction and general business growth is proving slow. Latest
quarterly building approvals for residential dwellings showed good growth but
non-residential approvals were still low. In real terms, tourism is now getting
back above the peaks of the mid-2000s and 2016 can be expected to see an
expansion of capacity commencing through a range of projects, including Nova 8.
In this region, mining output bottomed in 2012 and since then has been moving
up, with the expansion at Weipa providing impetus as 2016 progresses.

However, there
is a real need for government to play its role. Local government is recording a
record capital spending program. By contrast the state government capital
budget for the Cairns region for 2015-16 is down 54 per cent on an already low
per capita budget from four years ago – representing an amount of $390 million
less in the region’s economy. State government processes in the region in
relation to projects like Aquis, seaport development and agricultural expansion
opportunities clearly need to be improved. Much will depend on a favourable
outcome at federal level in relation to the Pacific patrol boats contract.

Summing up
2015: The lift in US interest rates did not produce a further lowering of
the Australian Dollar many foreshadowed. The situation in primary industry is
mixed but lower sugar prices and the drought in the west are acting as