Yes, also confirmed by census data, some time ago Townsville surged past Cairns in rental bonds held by RTA. Now I have always thought this should be pretty good data given it is backed by statutory compliance. I don’t know what effect defence housing has on Townsville.  Have the number of rental bonds lodged in Cairns really not risen in the last five years?

How exceptional this is becomes clear after the task of sorting the regional data for large council areas in Queensland. This is over the five years to December 31:

What this seems to imply is that the decline in rental vacancy rates we have seen in recent years in Cairns is not because of more renters but restricted supply? I will come back to this in context of rental vacancy data from SQM and HTW and relatively high rents in Cairns.

Some of the Brisbane numbers are extraordinary relative to population growth and caused me to check some details. Postcodes 4101 and 4102 around Southbank and Woolloongabba rental bond growth above 25% over the last year.

Build it and they will come?

*Note: Sun Coast includes Noosa, and Rocky includes Livingstone.

Update: Moar rental bond stuff for Cairns

I just don’t get it. And the person that I am can’t accept it without query.

Rental growth in number of rental bonds lodged with RTA by LGA at December 31 2018.

Yr                  1 year                   3 year
Cairns             0.0%                    -0.3%
Mackay          1.5%                    10.4%
Townsville     2.5%                     7.3%

I’m not one to put the boot into Townsville today but proponents of an employment collapse in Townsville over recent years based on the ABS labour force survey numbers should have a hard look at the quality of the data.

It’s a while since I updated my rainfall spreadsheets for Cairns but what better time than now.

We are now over 1500 mm in Cairns for December and January. Be careful of the rolling annual average here as it includes the rain and floods last March which will roll out and so the annual average could be reversed quickly depending on the remainder of the wet season. This also follows a drier than average dry season.

Another way to look at this is monthly variation from average.

While December 2018 was not the highest rainfall it was the highest deviation from monthly average for some time and has been followed up in January. Interesting pattern and trends over the period. Last time the annual moving average was this far above the historical mean was the extreme 2011 La Nina event which brought Cyclone Yasi and widespread flooding throughout Queensland. Which is not where we currently are.

If you have followed the BOM ENSO, Weekly Tropical Notes and Cyclone Outlook it would be obvious that the BOM have flagged for some time higher levels of uncertainty for an atypical weak marginal El Nino cycle with limited historical precedent.

It will though be a tough trading environment for many businesses. The rain and floods last March brought a profit downgrade from ASX listed Experience Co with its suite of prominent local tour brands: Experience washed away in wet season.  EXP will report first half results in February which will hopefully include updated commentary and outlook.

On the other hand Tinaroo is approaching full capacity for the first time in a while.

Update: The BOM appear to have overnight cut back weekend rainfall forecasts for Cairns.

Cairns Airport passenger numbers for December deteriorated further. Domestic -3.3%, International -6.9%, Total -3.9% on last year.

That sends annual growth numbers into negative for the first time since 2010. The rolling annual peak in passenger numbers was actually back in March assisted by the lunar data havoc. The declines since August have been quite abrupt and not inconsistent with the recent overseas arrivals data for Queensland.

Sydney Airport bellwether also posted numbers last week with domestic down -2.6% for December. The impact of storm and weather was cited again as it was the previous month. International was also below trend at +3.7 with Chinese nationals (inc Hong Kong) +4.2%. The expectation should be that the earlier Chinese new year in February should boost the January numbers somewhat.

Source: Cairns Airport

November overseas arrivals data from ABS has flagged a few concerns. Much interest in the Chinese numbers where growth has stalled.

I deliberately post this with the original data as I don’t think any analysis can be valid without reference to the extreme seasonal volatility. ABS applies a specific seasonal adjustment around the lunar Chinese new year. However you can still pick out that diversions in the seasonally adjusted series from the trend will typically be around the spikes. Note also that the secondary peak in Chinese visitation appears in July which is also a peak in education arrivals. This had quite an impact in 2017.

Chinese new year shifts this year from February 16th to the 5th. So we should see increased activity in January but a less volatile data period than the extremes of last year.

While everybody has been looking at the Chinese data almost nobody has been looking at the holiday visitor data which has been flaccid as a not too impolite description for almost two years now.

Perhaps someone should ask the proliferation of tourism marketing bodies we have in Australia “where the bloody hell are ya?” However this is also where we run into the curious problem of why TRA has been unable to provide purpose of visitor data for the IVS since December quarter 2017 attributed to problems with benchmarking this to the ABS data.

The ABS have referenced in commentary issues with data around VFR (visiting friends and relatives) since changes in data collection from July 2017. Not sure what the problem is given that ABS provide a linked page with the relevant arrival form which is just tick the box.

This brings us to Queensland where promising data earlier in the year have crashed in the last two months.

I have gone back to the original data here looking for the source of why there was previously an apparent trend change in Queensland relative entirely to the reverse trend in NSW approximately following a change in data collection methodology from July 2017.

The surprisingly symmetrical head and shoulders type volatility in early 2018 is almost entirely related to lunar shifts around Chinese new year and Easter. This is where you need the ABS seasonal adjustment special sauce. However the shift downwards in NSW is most significant.

The methodology around this changed from July 2017. It was previously departure data based on state of longest stay. The ABS boffins have done their thing to backdate the new series with a warning beyond ten years. To overlap the series back ten years.

Some variation going back but it looks fine? When you go back and look at the arrival form at ABS it’s difficult though to avoid the suspicion that this may be lower quality data with the relevant questions framed as intended address or contact details?

Commentary and trend analysis at Conus: Disappointing Short Term Arrivals data for Queensland

Exuberant growth in Cairns SA4 player tolerance for pokie losses moderated somewhat in December. However still outperformed/underperformed the Queensland average. December monthly y-o-y growth:

Cairns SA4                                   +2.6%

Queensland                                 +1.2%

Cairns City SA2                         +17.6%

Cairns LGA – City SA2               +3.1%

Cairns SA4 – Cairns LGA           -5.6%

Innisfail SA2                              -15.4%

These are statutory reported numbers, not a survey. Not being a player I am intrigued by the volatility that sometimes appears. My perception has been of a steady regular trade, probably including gambling addicts, otherwise reflecting discretionary spending. Some numbers challenge that perception.

The Queensland gaming statistics don’t report any area with less than six venues to protect precious commercial confidences despite being derived from a public licence. This is why Cairns City SA2 is the only area within Cairns LGA with data available (ex casino).

Some of the numbers above are so derived for the area based on the available data. Until last year the numbers for Tableland Shire were withheld but could be derived from the other council areas within the Cairns SA4 area data. Mareeba has since fallen below the threshold so numbers can only be derived for the combined area even though they are withheld for both.

A curiosity is that on the Cassowary Coast they do have two SA2 areas above the threshold with six venues each:

Well they look reasonable and well correlated except for December 2017 when there was an extraordinary 19.7% jump in the Innisfail SA2 from the previous year. Must have been a good year for Christmas parties in Innisfail. It even usurped the traditional July/August peak everywhere else in FNQ. That is why the number for Innisfail fell again by  -15.4% in December this year.

Now is where it gets stupid because while data for Johnstone SA2 between these is withheld with only two small venues with ten machines each it can be derived from the other data:

Well at least one or both of them had a good tourism season last year.

Update Note: Just to clarify given that there has been an unusual amount of traffic on this Johnstone SA2 = Cassowary Coast Regional Council – Innisfail SA2 -Tully SA2

I struggle increasingly with how to deal with the National Visitor Survey (NVS and International Visitor Survey (IVS) from Tourism Research Australia (TRA). After further delays and confused communication the latest the latest results for both year to September 2018 were released last week.

Most disappointing was that there is still no purpose of visit data for the IVS. That is now a year where this has not been able to be provided despite ABS posting the relevant benchmark data with qualifying comment in the monthly overseas arrivals and departures series. I don’t see much point to the data without it.

As always the error margins when we get down to regional level always go missing in commentary. Here are NVS domestic visitor numbers for TTNQ with a  +/- 7.7% excel error bar based on information from TRA and on the most recent visitor numbers. this is a 95% confidence interval or 19 in 20 that it is within the range. Also domestic numbers from Cairns Airport.

I really didn’t expect the excel trend correlation here to be so close. I went for 7 years because data before that includes some extreme conniptions around the GFC and also some anomalous airport data around then.

These are not the same series and not meant to be the same. Domestic airport includes locals and also the greatest source of international arrivals. The trend though should correlate and it does, or at lease not be uncorrelated. Should be looked at in the context of growth which is what matters.

This is annual growth for TTNQ and dang isn’t it going gangbusters up double digits. That’s fine and usually the way we should look at stuff. However recent growth has obviously been significantly volatile compared to airport domestic. A problem with growth with volatile data like this is that it amplifies the statistical volatility.  So lets include annual growth compared to the previous quarter.

This is annual growth for the year to the current quarter compared with annual growth to the previous quarter rather than to the corresponding previous year. Meanwhile annual passenger growth at Cairns Airport while remaining just positive compared to the previous corresponding year have been declining on a rolling annual numbers basis (monthly or quarterly) since March for both domestic and international.

That hasn’t happened since the GFC aftermath in 2009/2010 albeit a lesser magnitude. December numbers from the airport shouldn’t be far away.

Post this week in AFR also of interest: Sydney Airport risks hit from Chinese tourism slowdown

Qld Residential Tenancy Authority rental and bond data has been posted for the December quarter. There were some delays on this last year and September quarter data is still missing but it’s good to see this valuable data return.

The narrative hasn’t changed much in our tropical metropoles:

Well at least the Cairns rental premium over Townsville has stopped rising but can the gap close? Does the Mackay recovery have legs?

Comparison of 3 bedroom house rentals for larger councils:

3 bedroom houses have been used for comparison as the largest overlapping segment between regions. Cairns has a relatively higher proportion of units more comparable with metropolitan SEQ than other regional centres.

Mackay and Gladstone at opposite ends reflects different timing of the coal and LNG development rollercoasters.

Gladstone tops the table on growth over one year but still remains the cheapest rentals. I may check out Gladstone on my imminent annual southern sojourn. Accommodation rates remain dirt cheap for high quality locations. Menu prices on my last visit at the Gladstone Yacht Club (aka Port Curtis Sailing Club) had failed to adjust from boom levels. Worth a stop just to check this. I have given up hope that the spaghetti bolognese with chips on my initial visit many years ago will ever return to the menu.

It is now five years since Noosa, Livingstone, Mareeba and Douglas Shires officially de-amalgamated in January 2014. Douglas was the most marginal on the QTC analysis at the time of the poll rated very weak (negative) with an estimated $403.92 in annual recurring costs to Douglas ratepayers.

I’m no expert on council budgets and residential ratepayers is an imperfect indicator but the Queensland Treasury Corporation (QTC) analysis doesn’t seem too far out based on the most recent 2018/2019 budget:

Cairns               Douglas           Premium ($)           Premium (%)
Minimum General Rate           $886.70        $1,005.00             $118.30                          13.3%
Cleansing (garbage)                  $375.64           $457.98               $82.34                          21.9%
Sewerage                                    $784.16           $888.50              $104.34                          13.3%
Water Access                             $264.98           $327.15                $62.17                          23.5%
Water /KL                                       $1.19                $1.45                  $0.26                         21.8%

Total (ex water usage)          $2,311.48         $2,678.63              $367.15                        15.9%

Water usage is discretionary but when an assumption is included the QTC number looks surprisingly good. Relevant rates and charges here were previously standardised across the Cairns Regional Council as far as I am aware. Of course rates in Cairns could be higher if the amalgamated council still had to carry Douglas. Differences also may reflect differences in policy and priority.

Further reading: De-Amalgamation in Action: The Queensland experience; Qld Councils & the 80/20 rule – 81% of Queenslanders live in just 12 out of 78 LGAs; Council mergers: Did they actually save us money?; BUDGET: Council to spend big on new projects as rates rise by 3.9 per cent; Small business being crippled by price hikes, says former Douglas Shire CEO

Note: there was a land revaluation in Douglas for the current budget while Cairns was deferred to this year. This makes comparison at different land valuations difficult and Douglas is a 2-tier split in median valuations between Port Douglas (inc Craiglie) and the rest of the shire. Will await updated Cairns land valuations in March but doubt this will help any comparison for the residents of Port Douglas.

Douglas shire sees increase in land valuations; Douglas de-amalgamation information

November numbers today from Cairns Airport posted the third consecutive monthly fall in domestic passengers down -2.6%. Have to go back to the post GFC period in 2010 for the previous occurrence. Domestic capacity expansion from Qantas in to Cairns is scheduled from March 2019.

Yet again there is no commentary from the Airport which would be useful, particularly international which was down -12.9% for November.

Numbers today also from Sydney Airport which was also negative -1.1% in November. This was attributed to a strong previous period and weather disruptions. The Sydney storms at the end of November did cause widespread delays and cancellations but without commentary it isn’t clear what impact this may have had in Cairns.

A positive in the Sydney numbers was an improvement in Chinese nationals (inc. Hong Kong) +7.6%. Hopefully that wasn’t all departures.