Cairns is emerging as a real estate hot spot for 2015 as a weaker Australian dollar combines with recent development announcements and a surge in the local economy to restore confidence in the city’s property market.
Owner of local real estate agency RE/MAX Real Estate Cairns, Tony Williamson, said the city “came out of its slumber” in 2014. “Prices had fallen since 2007 but there were some major developments announced for Cairns, so confidence returned,” he said.
“We did three auctions of inner city properties in December and all three went significantly above the reserve which is something we haven’t experienced for a while. There were also a lot of registered bidders on each property.”
In the 2014 September quarter, sales rose more than 34 per cent in Cairns, according to figures from the Real Estate Institute of Queensland.
Record-low interest rates encouraged house prices to rise in 2014, up 7.9 per cent across the capital cities, according to CoreLogic RP Data. That had some flow-on to regional towns. Sydney prises were up 12.4 per cent and Brisbane 4.8 per cent over the course of the year.
Cairns recorded the greatest improvement in vendor discounting outside the south-east of Queensland.
The low dollar is expected to boost domestic and international tourism to the city. Mr Williamson said his company recently sold a block of land with a $120,000 reserve for $340,000. “We also did a deceased estate in Edge Hill and there were 23 registered buyers on one property,” he said.
A LOVE AFFAIR RENEWED
REIQ chief executive Antonia Mercorella said Cairns was ripe for growth.
“Cairns has emerged as the star performer of Queensland real estate and the prospects for 2015 are bright as buyers renew their love affair with the city,” she said.
“Over the September quarter 2014, preliminary house sales in Cairns increased by an impressive 38 per cent, with unit and town house sales also recording a strong 34 per cent rise.”
Ms Mercorella said sales over $500,000 had performed well.
“House sales in the $500,000-plus price bracket were up 48 per cent, reaching an all-time high of 95 preliminary sales – and there was also strong growth in the sub-$500,000 price bracket. Over the year to September 2014 the median house price in Cairns rose 6.2 per cent to $376,000 and average days on market are also trending down, reflecting the strong demand in the market.”
The proposed $8.15 billion Aquis resort and casino has helped to spur confidence in the market.
Not all agents are as buoyant about the market. Ray White Cairns Beaches principal Paul Stirling said the market turned around in Cairns in late 2012, was strong in 2013 and steady in 2014. He expected growth to continue in 2015 at a slower rate. “We’re coming of a low base in 2013, so we had to play catch-up to a lot of areas in Australia,” he said.
There are also differences between the housing and unit markets. Unit sales have plummeted due to crippling body corporate fees, caused by high insurance costs.
“The unit segment can be divided into three or four areas. We’ve got the mum and dad units, which are rented or lived in full-time and those body corporate fees are $4000 or under and selling quite well, but the units above $5000 in fees are harder to sell,” he said.
“In the holiday let market, they generally have more substantial body corporate fees, if they have a strong income the units are turning over, but not as well as they were say in 2005 to 2007. If they have only an average income and high fees of $16,000 to $20,000 then they have a slow turnover rate.”
Domain Group senior economist Andrew Wilson said the high insurance costs for apartments meant no new units had been built recently in Cairns.
“They have stopped building units, but the median price has now dropped below $200,000 so buyers will start looking at that market again,” he said.