However there has been little movement in sale prices with prevailing prices still generally 5% to 10% below the price peak reached in late 2007 and early 2008. In addition, as much of the increased activity has been generated by first home buyers, movement has been concentrated at the more affordable end of the housing spectrum. Little change is expected over the next six months as the first home buyer impetus fades out and is progressively replaced by improved buyer confidence generally as the local economy stabilises and potentially starts to recover. The one exception is the holiday unit market which is being affected by heavy discounting of new apartments being carried out by some developers to clear stock.

Renovation activity seems to have picked up as an alternative to trading up. In part this also reflects better availability of tradespeople compared to their almost complete scarcity for domestic renovation work for the last five years prior to the start of this year. Increasingly too, as our weekend observations at the local Bunnings store attest, there are many people doing small scale DIY improvement projects themselves.

The failure of two groups comprising the mainstay of the Cairns unit construction and development industry does not appear to have impacted on the market as yet as a result of the quiet state of new construction around town at present. The real issue will be the capacity of the local building industry to fill the gap created in the industry once demand recovers to normal levels.

Source: Herron Todd White