Cairns market tightening up with leap-frogging listing prices
We have a lot of investors in Cairns, particularly in the unit market. Many have wanted to get out for the past seven years, but just haven't been able to achieve the price they want so they have held on. The ones that have sold have either lost a lot of money, gone bankrupt and the bank has sold it out from under them, or they bought a while ago and although they didn't make a profit they didn't lose money.
To explain where I am trying to go I will use the two bedroom market. Right now you can buy a reasonable two bedroom unit for under $140,000. As these are being sold the cheapies are not being replaced. The people that have been hanging on waiting for the market to get to $140,000 consistently are now listing. This is a long way from where they were going from and it may take a while for these to sell.
When the ones at $140,000 sell the people that have been hanging on until the market gets to $160,000 will start to think it is time to sell and get out. These will list and again, although they may not sell immediately, as the cheaper stock gets sold they will start to look like the cheapest available and they too will sell.
To prove a point I will tell you about a townhouse at Tropic Gardens. It had been listed for a long time at about $150,000. It would have been at least 12 months and no real activity. In December this was sold for just under $150,000. A few weeks later an identical unit in the complex was listed for $199,000 and the agent tells me that the owners knocked back an offer of $175,000.
I am hoping that this leap-frogging of prices will bring the market back to 2007 prices relatively quickly. A lot is out of our control - investor confidence, the world economy, Aquis approval, tourism and the Cairns economy in general.
Here goes my predictions - these are based on if the Aquis project is given the green light and is to start in 2015 and not in 2014.
By this time next year we will see sale prices nearing the peak of 2007 prices. I actually think they will be higher but I am being conservative. By this time next year will we see rents go up by 10 - 20%.
Bedsit units are currently $175 per week - I believe they will go to $200 per week
One Bedroom units are currently $170 - 200 per week - I believe they will go to $200 - 230 per week
Two Bedroom units are currently $200 - $240 per week - I believe they will go to $230 - 270 per week
Two Bedroom duplexes are currently $220 - 250 per week - I believe they will go to $260 - 290 per week.
Houses will increase by at least the same rate, and may be even more as there are so few houses to rent currently. It is incredible some of the prices we are achieving for house rentals, and as the market tightens up it is allowing us to choose better quality tenants and achieve higher rents.
Linda Tuck is director of Cairns Property Ladder Realty, an independent real estate agency in specialising in property management, investment and sales expertise in the tropical Cairns region.
