SSKB’s Development consulting service is about getting it right from the start. We are expert in strata schemes across Victoria, QLD and NSW, delivering body corporate and owner’s corporation levies that are ‘at market’ while identifying ways to increase developer’s margins even before construction begins.
SSKB operates four offices across Queensland, from Cairns in the Far North to the Gold Coast. Including our NSW and Victorian offices SSKB has over 26,000 properties under community management; we are well placed to provide accurate market intelligence to our developer clients and apartment owners.
The property market in far north Queensland has taken longer to recover than the remainder of the State. Cairns is beginning to show some strengthening in sales rates and price growth while Townsville is still experiencing a soft market with very little new construction underway.
In this article we compare the differences in performance of apartment sectors of these two northern cities. Pictured at right is the Nova 8 development by Aspial now under construction in Cairns.
Cairns Regional Council has a population of about 156,000 it is growing at a rate of 10% per year, or 1,500 people per year. Approximately 50,000 new residents are expected to move to Cairns in the next 20 years. Most of these will be accommodated in the development lands to the South of Cairns City.
Townsville City has a population of 174,500 people. Population growth is expected to add up to 125,000 people by 2031. So we can see from this that government analysts expect that Townsville will emerge as the stronger of the two northern cities.
The Cairns region is recovering after its unit market suffered from a serious oversupply through the impact of the GFC. Prices are rising albeit from a lower base price than Townsville. Over the June quarter the Cairns Unit median unit prices did not increase, but the number of sales rose 17%.
Table 2 shows rental yields are attractive in Cairns for apartments in the under $250,000 market. There are a small number of new apartments being added to supply but they have not yet had an effect on the median prices and rental rates continue to rise slightly.
Townsville unfortunately has not seen any annual improvement in the market over conditions. The quarter to June 15 recorded a market decline in the number of apartments sold.
The table below, courtesy of the REIQ shows the property price movement over the past year. The following graphs show these sales broken down by price category.
TABLE 1 – PROPERTY MARKET TRENDS – JUNE QTR 2015
|LGA||Houses (<2400)||Units & Townhouses||Vacant Land (<2400)|
|Median Sale Price||Annual Change||Sales QtrActivity Change||Median Sale Price||Annual Change||Sales Qtr Activity Change||Median Sales Price||Annual change||Sales Qtr activity Change|
Source: REIQ Quarterly Market Monitor September 2015
TABLE 2 – RENTAL VACANCY AND WEEKLY RENT
|LGA||Vacancy Rate %||Median Weekly Rent||Gross Rental Yield|
|House||2 Bed Unit||House||Unit|
Source: REIQ Residential Rental Survey for June 2015
Townsville has recorded slight tightening of the residential vacancy rate in the June quarter. Townsville agents have reported oversupply of units which has caused rents rates to remain low. House and unit rents are around $20 less than the same time last year. In contrast, townhouses in security complexes have held steady for 3 bedroom dwellings and with an increase of $10 per week for a two bedroom townhouse.
Cairns region rental vacancy has reduced to a new low of 2.7% at the end of June 15. According to the Residential tenancies authority weekly rents have remained stable in Cairns. While the vacancy rate would suggest a demand for new apartments to be built, median sale prices are still below $350,000, the sale price required for a new development project to be viable. So further strengthening in the apartment sector will give some confidence to these developers to begin construction.
Townsville is still suffering from a hangover of oversupply of stock and a lack of consumer confidence about job security it will take some months yet before the situation corrects.
Cairns, conditions are right for an increase in prices for apartment stock with supply tightening. Off the plan sales in the CBD are linked to the strength of the Tourism market , so continued growth in Asian visitor numbers will underpin this next building construction cycle.
SSKB works with Developers across all three states on the eastern seaboard, our community managers are well versed in trends in their local communities. Kerrie Young and the Development Consulting team are available to meet with developers at the inception of a new community or apartment project to use our experience to assist with the due diligence process.
SSKB’s New Projects manager, Kerrie Young is experienced in both Property Market research and Project sales and marketing. She maintains an overview of trends in supply and demand in the property markets in which our clients operate.
Kerrie Young AAPI FDIA – Developer Consulting Team New Projects Manager
Mob: 0428916411 firstname.lastname@example.org