Cairns rental gap

RTA rental data for the September quarter were generally consistent with the previous quarter. There may be some early signs that declines in Townsville and more so Mackay are stabilising. Mackay could be the earlier indicator to watch here after the extraordinary gains in coking coal (steel) prices over the last year.

However the Cairns premium gap remains in the largest sectors:

rental1rental2

To graph that premium/discount directly for Cairns and Townsville in the mutually largest 3 bedroom sector:

rental3

Most of that gap in recent quarters has been the decline in Townsville. The median rent for a 3 bedroom house in Cairns has been flat since 2014. However in aggregate it amounts to a substantial sum diverted from alternative spending.

There are very significant differences between housing stock in Cairns and Townsville. The 1 bedroom unit sector is interesting. This has shown the highest rental growth of any sector over the last two years in Cairns. It is also a sector in Cairns which can be fluid between residential and tourism. The much smaller Townsville 1 bedroom rental sector is now at an equivalent median rental as Cairns. The only sector this happens and only a small discount to the Townsville 2br rental. I suspect this relates to more recent stock but a sector to watch.

Most recent building approvals commentary at Conus: Regional Building Approvals disappoint in Cairns but better in Townsville

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2 thoughts on “Cairns rental gap

  1. Interesting stuff Mark, you are correct in your summary of Townsville one bedroom market. Stock is still coming onto the market and getting good rents, one point of note is many of these are actually a split house, they essentially build a 4 bedroom house, three and one bedroom respectively, with split services, power, water etc, one garage for each side, small courtyard out the back, this would also effect rents which would be well above the standard one bedroom unit in the traditional sense.

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  2. Thanks Glen. The RTA provide some good data on bonds also but not number of outstanding bonds broken down to this category level. They do provide new bonds lodged each quarter and Cairns will typically be 2-3 times Townsville on this as it a sector with a relatively high proportion in Cairns despite close to zero new stock in recent years. A significant part of this in Cairns will be in strata buildings with tourism accommodation management, including studio apartments, where the stock can shift back and forward between residential and tourism depending on returns and management.

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