In 2017 and 2018 everyone was confident Cairns would boom. The economy was improving; there were new hotels to be built, the convention centre was to be expanded along with the port which would mean more work and more people looking to buy. The Cairns median house price was even up 41.3% five years beforehand. To the experts, things looked promising.
Late 2018 and early 2019 saw experts reassess what was going on; the Cairns property market had flat lined. The expected growth didn’t happen. The population of Cairns has grown 10% but has had no impact on the property market. Experts suggest it’s because people are earning 10% less, counteracting the benefit of the population growth.
Higher Powers to Blame
And that’s what the underperforming Cairns property market comes down to – money. Thanks to the Reserve Bank and the government putting pressure on lending criteria and lenders being scrupulous in the loan application process, many home buyers are not approved finance.
Although Cairns median house price is only nine times the median local income, more affordable than the rest of Australia, the Australian Prudential Regulation Authority (APRA) announced in March that lenders must limit loans to six times the borrower’s income leaving many Cairns locals short. The average median annual income in Cairns according to the 2016 Census is $63,752. Multiply this income by six, and it falls well short of Cairns median house price of $414,000 if you are a one income family. Paul Sheldon of Sheldon Reality felt that if lending weren’t so tight, “Cairns would be having a mini-boom right now.”
There could be a number of factors contributing to fewer earnings including the drop in Tourism from 20 to 12 per cent. Cairns has moved from being a city that’s all about Tourism to a city that’s more about mining and agriculture.
A Good Time to Buy an Investment Property in Cairns
So, has the boom actually bust? Well, no because there wasn’t a boom in the first place and there won’t likely be a boom given the current economic factors. Cairns’ property market hasn’t busted either; people are merely looking to suburbs that are more affordable an where there’s more supply than demand and their happy to drive the distance. Babinda, 45 minutes from Cairns CBD and White Rock, are South Cairns suburbs growing in popularity. This may leave more opportunities if you’re seeking an investment property in Cairns CBD, less demand could mean you could grab an investment property at a great price and experience the lowest vacancy rates seen since 1994.