Increasing population will drive property price growth in Cairns above the Brisbane average over the next three years, according to a new report.
According to the organisation’s findings from its flagship Residential Property Prospects report “prices in North and Far North Queensland are starting from a more affordable base, while the downward trend in total listings is limiting the pass through of tight credit conditions”. Quarterly growth returned in both markets in the third quarter of 2023, with the median house price hitting $580,000 in Cairns and $410,000 in Townsville.
Oxford Economics Australia forecasts that the median house price will rise by near six per cent per annum in both regions over the three years to 2026.
This will see price growth outpace Brisbane, closing the price gap to the state’s capital.
The report said elevated home insurance costs in North Queensland had dragged on house price growth over the past decade, but the introduction of the $10bn Northern Australia Cyclone Reinsurance Pool in mid-2022 provides a potential upside for house prices via the reduction of insurance premiums.
Maree Kilroy, report author and senior economist at Oxford Economics Australia told the Cairns Post: “Recovering tourist flows and a firming investment outlook will sustain a tight labour market, contributing to higher rates of population growth and maintaining pressure on the housing stock, driving upwards pressure on property prices”.
The report noted that risk exists for the Cairns market as the impact of tropical cyclones plays through.
Ex-tropical cyclone Jasper caused a record level of rain resulting in significant flooding.
This will impact the dwelling stock, likely pushing some residents into the rental market in the short-term, the report said.
Ms Kilroy said: “Short term, Cyclone Jasper will add pressure to the rental market with households needing significant repairs to their dwelling seeking temporary rental properties”. “Longer term the cyclone will likely lead to expensive home insurance bills in North Queensland adds downside risk to prices.”
Ms Kilroy said in the last few years affordability had deteriorated more so in Brisbane (and more broadly South East Queensland) than in Cairns.
She said that since bottoming out in the December quarter of 2022, Brisbane became one of the strongest markets through 2023.
Advertised stock levels are running more than 30 per cent below average, while the volume of home sales is trending almost five per cent above average levels.
“The return of interest rate cuts from late-2024 should facilitate even stronger price growth over the two years to FY2026.” the report said.