Page 20 - Tropic Magazine Issue 11

Industry
Real estate

We live in
a free
market
system

Mayor Bob Manning
conditions are expected to stay tight or
stressed for some time." Mayor Bob Manning responds
Cathy Obersky from One Stop Property
has seen the best and worst of times in It’s a much better position to be in
local real estate but she hasn’t seen a economically to have a low rental vacancy
sustained period of under-supply like rate than to have a high one.
this for a very long time. That said, there is clear growth in the
"Every day we have a constant stream residential housing sector at the moment.
of concerned and despondent tenants There have been 510 residential lots created
searching for accommodation," Mrs this financial year to date in early March.
Obersky told Tropic. "It’s this simple: That’s a 21% increase on the same time last
'the village is full'. We don’t even have a Nicholas Slatyer year.
stable to rent out behind the inn! In the same time, we’ve had a 22% increase
"The signs only support a catch-up of on the number of residential building
applications for new dwellings. That’s an
new homes and apartments being built "In our experience, when we have a indication of responsive growth.
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 We live in a free market system that is
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 influenced by supply and demand. As
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. demand increases, supply will respond. We
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 are already seeing this.
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 We’ve got Mount Peter about to take off,
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 while Nova City and the GA Group will inject
predicted growth. In particular, serious stuck in 2010. they all live? closer to 1000 per year. first quarter, tourism season and end hundreds of new residential units into the
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 inner-city market.
low rental vacancy rate and lack of new alarm bells are ringing louder. According cost of new construction, especially new job opportunity." There is growing confidence within the city
housing stock in the pipeline. to the most recent Cairns Watch report, with all the major construction already As Nicholas Slatyer from Belle and we can expect this to continue as a
Property industry consultants were building approvals “appear to be heading underway in the city, will only place Property Cairns told us, the rental result of major commercial developments
joined by local building companies and sideways to slightly backwards”. further pressure on rental rate market will be “very interesting making investment opportunities become
Herron Todd White analyst Rick Carr in Approvals in December were 32.5% below increases. watch”. more appealing.
voicing their fears about the bottleneck the trend level recorded in December "The increased return fuels out-of-town “It isn’t uncommon for us to get 15 to Our previous incentive schemes – brought in
in the city’s immediate future. 2015. investor confidence and reinforces the 30 groups attending inspections of when construction activity was at its lowest
Building approvals were going sideways, Meanwhile, vacancy rates have dropped financial commitments they will make well-located properties and almost following on from the global financial crisis –
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 has achieved precisely what was intended.
Industry insiders feared the city’s for houses. transition period we are seeing in the of the CBD is over-subscribed,” he It started the ball rolling on a new wave of
housing supply wouldn’t cope with the "Rental vacancy trends are continuing to market. said. commercial construction, which has led to
projected increase in economic activity crunch down into stressed market “When will the next round of smaller the heightened activity that we now have and
and population growth, fuelled by territory, with our latest survey results scale development happen? There still which is having a broad flow-on effect.
Crystalbrook Collection’s hotel showing that the already tight rental isn’t the pent-up demand to sell any It should be noted that under our headworks
construction program, the start of Nova vacancy rates are continuing to tighten apartments ‘off plan’ and even when charges structure, we already provide a
City, job creation via the NDIS, even further," CairnsWatch author Rick there is, who will be developing and discount to residential developers by keeping
continued strength in tourism and other Carr noted. "Coupled with the low level of where will they build?” our charges well below (20- 27%) the
projects on the horizon. new rental supply being created due to maximums set by the State Government.
In short, the industry could see a perfect relatively low levels of new housing Follow the rental market These charges are invested in vital
storm brewing that could dampen our construction and reduced levels of infrastructure to support new development
economy’s evolution. No-one doubted investor housing activity, rental market > Cathy Obersky debate at tropicnow.com.au and a growing population. It wouldn’t be right
to ask ratepayers to subsidise these projects.