Cairns Region - Vacancy Rates: The Rental Market Squeeze

Title: Cairns Region - Vacancy Rates: The Rental Market Squeeze

Introduction:

Cairns, known for its natural beauty and tropical allure, has long been an attractive destination for residents and investors alike. However, recent trends in the rental market have painted a complex picture. While affordability has drawn first-home buyers, renters are facing challenges with vacancy rates plummeting and rental rates on the rise. In this article, we'll delve into the current state of the Cairns rental market and explore what these changes mean for residents and investors.

Affordability Draws First-Home Buyers

Subtitle: A Window of Opportunity

Affordability has emerged as a beacon of hope for many in Cairns. Lower interest rates during the pandemic period, coupled with government incentives, have propelled former renters into the first-home buyer market. For those who dream of homeownership, Cairns has become an attractive destination offering a window of opportunity.

Rental Market: Approaching a Crisis Point

Subtitle: A Challenge for Renters

While homeownership prospects brighten, the situation is less optimistic for renters. Industry observers have described the rental market in Cairns as "approaching a crisis point." The key factor contributing to this challenge is the vacancy rates, which are below 1% in nearly all postcodes in the Cairns region. Even the exception, postcode 4879 (including some northern beach areas), has only marginally higher vacancy rates, according to data from SQM Research.

Rising Rental Rates

Subtitle: Impact on Tenants

Rental rates continue to climb, placing additional strain on renters. In the year leading up to February 2023, 19 Cairns suburbs saw median house rent increases of more than 10%, according to PropTrack data. For example, Redlynch witnessed a staggering 12.7% increase, with tenants now paying $620 per week for a median-priced house. Unit figures in Cairns North soared by 19.6% annually, from $460 to $550 per week, while Trinity Beach experienced a 17% annual increase, reaching $620 per week.

Liz Brown, CEO of Access Community Housing, highlighted in April 2023 that these "significant rental price increases over the last two years" had placed "enormous pressure" on individuals and families.

Median House Rent on the Rise

Subtitle: Far North Queensland's Coastal Rental Market

In May 2023, the median house rent for the Far North Queensland coast reached $540 following a staggering annual rise of 25%. These figures reflect the tightening rental market that has persisted for over a decade.

Above-Average Rental Yields

Subtitle: Attracting Investors

Despite the challenges for renters, Cairns remains an attractive destination for investors due to above-average rental yields. Typical yields for houses in Cairns range between 5% and 6%. White Rock boasts the highest median yield for houses at 6.2%, based on a median weekly rent of $480. Additionally, some unit markets in Cairns offer even higher yields, with Manoora and Manunda leading the way with median yields of 8.8% and 8.9%, respectively.

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Conclusion:

Cairns' rental market is at a crossroads, with affordability luring first-home buyers while presenting challenges for renters. Vacancy rates below 1% and rising rental rates have created a complex landscape. Investors continue to be drawn to the region by above-average rental yields. Whether you're a renter, first-time buyer, or investor, navigating the Cairns rental market requires careful consideration of these evolving dynamics.