Page 19 - Tropic Magazine Issue 11

Industry
Real estate

conditions are expected to stay tight or
stressed for some time."
Cathy Obersky from One Stop Property
has seen the best and worst of times in
local real estate but she hasn’t seen a
sustained period of under-supply like
this for a very long time.
"Every day we have a constant stream
Rental as anything of concerned and despondent tenants
searching for accommodation," Mrs
Many in the local property sector are Obersky told Tropic. "It’s this simple:
concerned the stressed rental market is 'the village is full'. We don’t even have a
getting worse as our population grows. stable to rent out behind the inn!
"The signs only support a catch-up of
new homes and apartments being built "In our experience, when we have a
A
bout six months ago, alarm bells for years, and small to mid-size the city’s future was bright. It was a to alleviate the sustained supply tenancy give notice we generally have
started ringing in property and apartment projects weren’t stacking up question of how restrained the pace and shortage. It is critical to understand we a new tenant in place for constant
development circles in Cairns. due to rising costs from Ergon, the NBN, scale of that growth might be. Hundreds have only seen 600 new homes being income security without any vacancy.
Headline economic confidence was council charges and state-imposed red of people need to move to Cairns over the built per year on average over the last We believe this will not change for
growing but the data showed the city tape. On top of it all, the banks were still next 24 months to deliver all of these 10 years, whereas the 10 and 20-year some time especially as we are now
wasn’t ramping up to cater for the treating the Cairns economy like it was projects and new services, but where will average before this period has been nearing the seasonality end of the
predicted growth. In particular, serious stuck in 2010. they all live? closer to 1000 per year. first quarter, tourism season and end
concerns were raised about the critically Fast forward to today, and those initial "Lack of supply and the ever-increasing of wet all pushing employment and
low rental vacancy rate and lack of new alarm bells are ringing louder. According cost of new construction, especially new job opportunity."
housing stock in the pipeline. The industry can see a to the most recent Cairns Watch report, with all the major construction already As Nicholas Slatyer from Belle
Property industry consultants were building approvals “appear to be heading underway in the city, will only place Property Cairns told us, the rental
joined by local building companies and perfect storm brewing that sideways to slightly backwards”. further pressure on rental rate market will be “very interesting
Herron Todd White analyst Rick Carr in could dampen our Approvals in December were 32.5% below increases. watch”.
voicing their fears about the bottleneck economy's evolution. the trend level recorded in December "The increased return fuels out-of-town “It isn’t uncommon for us to get 15 to
in the city’s immediate future. 2015. investor confidence and reinforces the 30 groups attending inspections of
Building approvals were going sideways, Meanwhile, vacancy rates have dropped financial commitments they will make well-located properties and almost
rental vacancy rates had been below 2% to a critically low 1.3% for units and 1.7% in taking advantage of the current every house and unit within 7km or so
Industry insiders feared the city’s for houses. transition period we are seeing in the of the CBD is over-subscribed,” he
housing supply wouldn’t cope with the "Rental vacancy trends are continuing to market. said.
projected increase in economic activity crunch down into stressed market “When will the next round of smaller
and population growth, fuelled by territory, with our latest survey results scale development happen? There still
Crystalbrook Collection’s hotel showing that the already tight rental isn’t the pent-up demand to sell any
construction program, the start of Nova vacancy rates are continuing to tighten apartments ‘off plan’ and even when
City, job creation via the NDIS, even further," CairnsWatch author Rick there is, who will be developing and
continued strength in tourism and other Carr noted. "Coupled with the low level of where will they build?”
projects on the horizon. new rental supply being created due to
In short, the industry could see a perfect relatively low levels of new housing
storm brewing that could dampen our construction and reduced levels of
Rick Carr economy’s evolution. No-one doubted investor housing activity, rental market >