A property developer with developments throughout the country has highlighted a region that has been massively overlooked in the discussions surrounding the recovering property market.
Given the company's national scale, Urbex general manager of realty Craig Covacich is “very familiar” with each of the regions within Australia.
“The media is focusing on Melbourne and Sydney as a driver of what’s going on in the market. But when you hear about those property peaks and troughs, it’s quite far removed and disconnected from what’s going on in the regions,” Covacich explained.
The country's gaze so heavily resting on New South Wales and Victoria has investors missing out on opportunities elsewhere.
“The media focus, if not the research and forecasting, on the health of the residential market is very much Sydney and Melbourne focused, but the effects of the credit squeeze in Cairns are far different from those cities," said Covacich.
“Cairns has been affected in that it created an undersupplied market, bringing the opportunity for investors to buy land and get construction finance to build new homes."
“Rent rates have gone up, the vacancy rates have gone down and Cairns has become one of the best investment opportunities in Australia.”
The coastal city has further become an ideal market for investors due to the shifting demographics of its population.
“The media talk around the market’s overexposure and the price escalation – that hasn’t occurred in Cairns. Price growth has not been significant. The population is quite stable. Fundamentally, the economy in Cairns is quite good," said Covacich.
“But the housing needs haven’t been addressed. Cairns is a younger market. They are limited by affordability restraints and a preference to rent as a lifestyle choice. They’ll come in and live and work for maybe three to five years, then they’ll leave.
“The emerging trend is the younger market wants to rent, but there’s a lack of accommodation pushing up rent rates. So the very reason they want to rent – it’s more affordable, they can live there for awhile to see if they want to stay there long-term – is not true.”
“In fact, in Cairns, it’s cheaper to buy a home and pay a mortgage than rent at the moment.”
To take advantage of the unique set of circumstances in Cairns, and the full range of opportunities in the market nationally, lenders and investors need to take a step back.
“Lenders need to look in a micro sense at every region, not a national view. That issue is not yet resolved,” said Covacich.
“Cairns is only in the early phases of investors starting to reappear on the mortgage books. But, if you have substantial equity and your lender is prepared to lend you money to build a rental property in Cairns, it’s a great proposition."
