Dear Kenneth:
Good to hear your response, and glad to know you are located in Singapore. How was the trip to Cairns? Your first hand experience will be highly appreciated. I had chances to invest in other cities in Australia (like Townsville, Canberra, etc.), but I found Cairns the best. It may be a little bit late now, however. You are right, it may peak sometime. In the long run, like 10 years, Cairns is surely a good place. The population has gone up 3000 last year (see previous post by others). If we assume 3 persons make up a family, then 1000 families came to Cairns last year, and thus need 1000 houses/units. According to REIQ, there were about 450 houses sold in the 3 months ended June 30, 2004. (I do not remember the number of units sold). Thus, the new settlers can take up to half-year's houses !
How are we sure that more people will come this year, and next year and beyond? I guess we can assume the following factors that will entice people to come:
(1) Weather (pretty good most time, at least 5C lower that Singapore on average)
(2) Good landscope/scenery (excellent, at least from photos and from my visit last March/April)
(3) Employment (as long as tourists keep coming, it will be good)
(4) Good facilities (buses, hospitals, university, schools, shopping malls, highways, etc., quite reasonalable for Cairns. I saw a few time on Singapore buses the advertisements for J. Cook Univ.)
(6) Affordable housing and food and other daily needs (Average house prices is about 245 K as of June 2004 by REIQ data)
I have a 4-bed room house, by God's grace, in Canberra which I estimate to be worthy of about A$450k to 520K. Similar houses in good locations in Cairns sell for about 350K. But I looked up the house hold incomes, and found no much big difference between Cairns and Canberra. Many households in Cairns make about 1000 $ per week, and in the area where my Canberra house is located, the income is also about $1000 per week.
By the way, I got the following news from the web. There is a fast train that runs from Brisbane to Cairns. Thus it brings in visitors to Cairns.
regards and by for now. shu
{ World's fastest on narrow tracks
November 17, 2004, Sydney Morning Herald
Australia's fastest train has been a popular and trouble-free way of travelling through tropical Queensland, especially for pensioners and backpackers.
Despite competing in an era of heavily discounted air travel, the high-speed tilt train service between Brisbane and Cairns had almost 70,000 passengers in its first year of operation.
Although the full price of a one-way trip from Brisbane to Cairns is $280, pensioners can travel for as little as $22.
The train completes the 1680-kilometre journey in 25 hours, seven hours less than the previous rail service.
Electric Tilt Trains were introduced in Queensland in 1998 and originally ran the 640 kilometres between Brisbane and Rockhampton, cutting a couple of hours off that trip.
The service expanded to the Brisbane-Cairns route last year, with a diesel-powered locomotive pulling nine carriages.
Tilt Trains use technology that enables them to take bends faster. They are the world's fastest trains running on narrow-gauge rail.
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In Queensland, they travel at speeds of up to 160kmh, and one Tilt Train in 1999 set a national rail speed record of 210kmh, beating the previous record of 193kmh by an XPT train in NSW.
The Tilt Trains had experienced just one minor incident, due to a switching error in 2000, before Monday night's crash near Bundaberg, which left more than 100 people injured.
Queensland Rail is the first rail network in Australia to introduce Tilt Trains.}
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Dear Yuan Shu,
1 Not to mention more domestic flights by Jestar from Cairns to Brisbane and vice versa this year, with further plans for more flights expansion from Cairns-Melbourne and Cairns-Sydney air routes in the near future.
2. I know also that the rental market is tightening at 2.4%, according to Herron|Todd White Valuers' data and my own ground observations. Hence, I am personally not surprised about the rental increase mentioned by some of the members.
3. While I am personally optmistic about the projected population increase in Cairns, I also think that the continued high employment figures its too largely dependant on its tourism industry. Another SAR or 9/11 bombing related events will drastically change the projected population outcome.
4. Furthermore, bearing in mind how the last prolonged (heavy) market correction in the Cairn property market from 1998 till 2002 following its last market/price peak in 1997, and the current feedback on the ground such as heavy price correction for the Northern beaches areas like Palm cove and Trinity Beach, Whitfeld etc and feedback from the real estate agents that what takes to be sold in 2 weeks last year is now taking 6 months to sell now, I rather act cautiously and err on the cautious side for my own assessment, rather than to continue to believe that this present property boom in Cairns will continue indefinitely.
5. To what I know too, the investors activity in the Cairns property market has also far exceeded the usual level, both from the southern inter-state and international property investors. Thus when a market correction takes place, we can expect these investors to suddenly exit from the market in successive waves, thereby adding to the price fall momenteum. Just be cautious and do your own due diligence before you invest. For those who have invested in Cairns, continue to monitor the market closely and do your due diligence and adapt your situation to the emerging changing market situation.
6. Well, I sincerely hope that my own assessment is "wrong" for the sake of those members who have invested in the Cairns property market. Nonetheless, it is just my own personal honest assessment on the Cairns property market. Do your own dilgience and decide for yourself how the Cairns property market is likely to move over the next 6-12 months time.
7. Thank you.
regards,
Kenneth KOH
