Debate rages over real estate market in latest Cairns Watch report
Tourism and the jobs market continue to improve, construction and retail sectors remain sluggish and the economic fortunes of the region are still mixed.
That’s the verdict in the latest Cairns Watch report by Herron Todd White.
But of all the results contained in the June 2017 report, compiled by analyst Rick Carr, the most striking is a change in Herron Todd White’s assessment of the local housing market and property prices.
The CairnsWatch last month created a certain level of uproar in real estate circles after Herron Todd White’s closely watched national property clock downgraded the Cairns real estate sector from a “rising market” to the “bottom of market” classification.
Conceding the controversial move generated “considerable interest, feedback and debate”, this month’s report shifted Cairns into the “steady state” position on the national property clock.
The report lists the May 2017 trend median prices at $414,000 for a house, $220,000 for a unit, and $213,000 for a block of land.
The number of sales during the March quarter of 2017 was “virtually identical” to that in the March quarter of 2016. There was a small rise recorded in the number of units sold over the period but that was offset by lower sales volumes of houses and of blocks of land.
“Our dilemma in Cairns has been that the increased volumes of sales and the rising prices experienced in 2014 and 2015 have tapered off, but we also accept that we are not in a classic Bottom of Market situation of languishing volumes and prices,” the report states.
“This month we have amended our clock to place Cairns at a Steady State position, taking account of the currently static market climate of steady volumes of sales, generally stable though sometimes volatile prices (static, up or down), and differentials in market performance between locations and sectors.”
SOLID JOBS GROWTH
In terms of the local employment market, Mr Carr said jobs growth had been strong over the past 12 months. But he warned the ABS Labour Force figures can be unreliable, with estimates derived from a sample survey of only about 500 Cairns Region residents.
“When analysed in more reliable trend terms, employment has shown strong trend growth over the last twelve months,” he said.
“The number of persons employed reached a seasonally adjusted trend level of 117,600 in May 2017, which represents an extra 9,300 persons in employment since May 2016.
“The Cairns region’s notoriously unstable headline unemployment rate came in at 5.4% in May 2017, compared to 6.7% in April 2017.
“Despite strong employment growth, the trend in the region’s unemployment is also temporarily increasing, as more jobseekers come out of the woodwork to look for work.
“We estimate a seasonally adjusted trend unemployment rate of 5.9% in April 2017, which is a very significant improvement from its April 2016 trend level of 9.5%.
“The Cairns Region’s unemployment rate is now well entrenched below the State average.”
AIRPORT NUMBERS STILL SOARING
In terms of tourism, the latest Cairns Watch shows it continues to shine.
“Domestic terminal passenger trends at Cairns Airport are continuing to achieve all-time record highs, while strong year-on-year trend growth continues to occur in international terminal passenger numbers,” the report reads.
“Over the twelve months to May 2017, passenger numbers have increased in trend terms by 4.8% at the domestic terminal, 7.7% at the international terminal, and 5.2% overall.
“Cairns Airport comments that domestic growth has arisen mainly from Brisbane, Melbourne and Sydney, with some additional contribution from regional services.
“Primary growth areas across the international network have been Hong Kong and Bali. The Bali flights in particular are being used by European travellers making stopovers.”
BUILDING APPROVALS STABILISING
Much has been made of the low level of building approvals in Cairns over the past 12 months, but the report finds the situation is looking “relatively steady”.
“Building approval figures for the Cairns urban area fell away significantly in the last six months of 2016, but now look to be relatively steady again, albeit at quite low levels,” the report reads.
“Even so, building approvals recorded for the month of April 2017 were at a post-2000 record low. Current conditions are indicating a trend of around 34 houses and 2 units being approved per month. In trend terms the April 2017 approval levels were 40.8% below those recorded in April 2016.”