In July 2010 our thoughts were that a $500,000 property investment in Cairns would have secured a well located modern executive style dwelling typically renting for $430 to $450 per week. Alternatively the same amount would have purchased an above average quality unit in the Cairns CBD, located on the middle levels of a new high rise unit development.

Since July 2010 the Cairns market has experienced little change and $500,000 would have virtually the same purchasing power in today’s market as it did 12 months ago. If anything, the buyer in today’s market would have more bargaining power than 12 months ago, with Cairns still very much a buyer’s market. Indeed the investor at this price level would find a large range of sectors, styles and locations available to choose from. It would be hard to spend $500,000 on a brand new CBD unit, as there would be only a handful available due to the lack of current construction, but there is likely to be a good supply of near new established CBD units available at this price point.

The $500,000 mark in the Cairns market is relative to the current median price level of around $360,000 for an established house and $300,000 for a new unit.

With the Cairns still at the bottom of the residential property cycle investors will need to be prepared to hold for the long term and pay close attention to rental vacancy rates and rental returns in the meantime.

Source: Herron Todd white - July Month in Review