Signs of life in property market
The Cairns property market experienced a much-welcomed turnaround from about July this year.
After a number of tough years, the market sprung to life with more buyers at open homes and, more importantly, more buyers prepared to sign on the dotted line.
The most interest is in houses priced from $250,000-$320,000 and we are also starting to experience multiple offers on well-priced homes. There remains plenty of demand for properties priced up to about $550,000.
The dramatically improved demand for property is resulting in a shortage of stock which is beginning to have an impact on price. Investors are finally returning to the property market, possibly spurred on by our strong rental market.
Demand for rental properties, with the resultant increase in rents, means some renters are calculating whether it is better value to rent or buy. Rents have been rising during the past 12 months, but property prices have been softening, so many renters are finding it is just as affordable to buy rather than to rent, plus they will have the added benefit of owning an asset in the long term.
A key part of this renewed enthusiasm for our property market was the return of the principal place of residence concession on stamp duty on July 1. Also, interest rates are heading down to where they should have been this time last year.
While the house market is having a renaissance of sorts, things still are not so rosy for our unit market.
Buyers are continuing to be put off by high insurance levies and, even if a unit is priced at the very affordable end of the scale, no one wants to pay thousands of dollars a year in body corporate fees – especially if the property is only worth about $200,000 or less.
While the latest Real Estate Institute Queensland (REIQ) median property prices were not available at the time of writing, in June the median quarterly price of vacant land in Cairns was $168,500 – an increase of 5.3 per cent on March.
In the year ending June, the median land price decreased 2.9 per cent.
The most popular suburb for land sales in Cairns was Smithfield, which recorded eight preliminary sales over the quarter.
REIQ data confirms that the Cairns rental market experienced a complete turnaround in activity with a vacancy rate of 1.9 per cent as at the end of June, compared with 3.7 per cent at the same period last year.
Reports have varied between agents from REIQ-accredited agencies, with most noting an improvement in demand despite increasing rents. Rental stock is said to be depleting due to more owner-occupier property sales and landlords opting to move into their investment properties.
Residential Tenancies Authority (RTA) median rents for September showed the median weekly rent for a two-bedroom unit was $260 over the September quarter – an increase of $10 per week on the same period last year.
The RTA median rent for a three-bedroom house was $330 per week – an increase of $30 per week on the September quarter last year.
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Upswing: There is some evidence of renewed interest in the local property market. Picture: THINKSTOCK