Returns on rentals rise

Good news for investors as market gets back on track

CAIRNS investors have reason to cheer fresh market figures showing rising returns on rental properties, while competition among new tenants remains tight.

The median weekly rent for Cairns was $367 in the March quarter, which represents a 6 per cent yield on the market value of homes in the region, according to property data firm CoreLogic.

Median rents in Cairns rose 2.2 per cent in the 12 months to March, according to its quar- terly rental review, the strongest 12-month growth period since October 2016.

CoreLogic principal researcher Cameron Kusher said market conditions seemed to be getting back on track for the Cairns region.

Rising migration to North Queensland, without any big lift in new homes in the rental market, has helped to grow rental returns.

“In Queensland what you’re finding is there’s rental growth happening in most regions.,” he said. Seasonal factors were a big issue for Cairns property investors, Mr Kusher said.

“Probably the most challenging thing is to keep properties occupied for 52 weeks of the year,” he said.

Occupancy rates of Cairns rental homes remain high, according to the CairnsWatch report published by property valuer Todd Herron White.

Vacancy rates for February were 1.8 per cent for houses and 1.3 per cent for units, according to CairnsWatch, and are ex- pected to remain tight due to low levels of new housing construction and investor activity.

“Rental vacancy trends are continuing to wallow in stressed market territory,” the report said.

The Housing Industry Association blamed “a number of regulatory interventions” for a nationwide fall in new apartment projects starting in the December quarter.

Australian Bureau of Statistics data on building activity released Wednesday revealed a 12 per cent drop in new apartment and other non-house residential projects.

HIA senior economist Geordan Murray described as “somewhat concerning” the drop in new apartment projects starting and the build-up of projects waiting in the pipeline.

“With additional taxes on foreign investors and regulators clamping down on investor lending, investors have retreated from the market,” Mr Murray said.

“If we see investors return to the market and the approved projects continue to progress through to work on the ground, then residential building work could potentially make a stronger contribution to economic growth this year than we are expecting.

“Now is not the time to impose additional taxes or constraints on investors.”