It would seem that Far North Queensland’s property market is in a holding pattern with neither Cairns nor Townsville experiencing an influx of investor interest.
REIQ’s Market Monitor recently identified the regional rental market as experiencing a downturn due to challenges in the job market and low interest rates encouraging renters into home ownership instead of renting.
Townsville rents slipped in the March 2016 quarter by 2.3%.
Herron Todd White’s Month In Review (June 2016) said, “Confidence is the major issue, and until there are signs of an improving economy and jobs growth, our market will remain pretty static.”
According to CoreLogic’s regional market report released last month, sales activity across Townsville has been trending lower over the past few years and the most recent 12 month period is no exception, with 10.4 percent fewer transactions over the 12 month period ending May 2016 when compared to the year ending May 2015.
And the story is repeated in Cairns with both home and unit prices falling, according to DomainGroup data from May. The city’s median house price dropped 1.9 per cent to $407,000 over the March quarter, despite growth of 10 per cent in the past five years.
However, there is a thread of optimism in the region with more recent figures showing an uptick. In figures released by CoreLogic last month, there has been a 1.1 per cent rise in house prices and a minimal 0.1 per cent growth in unit values in the 12 months to May 2016.
“There has, however, been a relatively large drop in sales activity, with transactions 8.2 per cent lower than one year ago and the average time taking to sell houses lengthening by 12 days and units taking eight days longer to sell,” the report states.
However, Townsville is the city to watch, especially for investors priced out of the Brisbane market, according to Jas Mahil from the Mahil Group, because of the opportunities in both the private and commercial property sectors.
Infrastructure projects and public works are amongst the major projects in the region including a significant expansion of the Central Queensland University’s Townsville CBD campus which is expected to bring $10 .1 million into the economy during construction and, when complete, contribute $20.6 million each year and employ the full time equivalent of 91 people.
And just last month, The Queensland State Government approved another three public housing projects worth $3.3 million to start in Townsville this month.
But it’s not just the public sector which is investing in the region.
Identifying a strong tourism market, Mulpha Australia has bought the Rydges Esplanade in Cairns for $40 million, last month.
Mr Bunz said the figures highlighted that investors were turning their attention to leisure offerings as a result of both the current tourism boom and the tightly held nature of the major CBD markets.
“Market conditions are leading investors to consider regional Australian accommodation assets,” he said.
“In 2015, there were 53 hotel transactions across the country, with 60% of those involving assets in capital city markets and 40% related to regional properties.
“So far in 2016, 35% of acquisitions have been in the capital cities and 62% in regional and leisure locations indicating a shift in investor intentions.”
Mr Bunz noted that buyer interest had driven a tightening in regional investment yields, with Cairns properties trading on yields of between 5.88% and 9.3%. (Source: https://www.theurbandeveloper.com/cairns-tourism-boost-sways-mulpha-purchase/)
Down in Townsville, the ANZ affirms Townsville’s credentials as a vibrant and sustainable economic region, ‘if it can connect to the growing business, trade and investment opportunities in key Asian markets’.
In June the bank hosted its Opportunity Asia Forum, bringing together local business leaders to discuss the growing export and diversification opportunities for North Queensland into Asia.
Also in Townsville, businesses in the CBD are looking at proactive ways to rejuvenate the centre of the city. Currently there are 200 retail properties to lease in the CBD and more 1000 in the greater Townsville region.