No sign of improvement in Far North Building Approvals

This morning we saw the release of the ABS original regional building approvals data for June. As always, we need to consider this volatile series in light of the Conus Trend to make much sense of it.

In the SA4 regions of Cairns and Townsville there was little to get excited about. The Conus Trend for residential approvals in Cairns in June rose slightly to 81, but only after May was revised down from 86 to 80. In Townsville the Conus Trend remained stable at 79, although May was revised down from 86.

As we noted last week (see here), the tide for approvals appears to have turned somewhat in Queensland in recent months but analysis of the Conus Trend data shows us that the improvement is all coming in Greater Brisbane with the Rest of Queensland stable at best. In the past 6 months Trend approvals in Greater Brisbane are up 28% to 2,055 while in the Rest of Queensland they have fallen 4% to 1,486.

Within the Greater Brisbane area hot-spots in the past 6 months have been Brisbane-West (+82%), Brisbane-Inner City (+118%), Moreton Bay-North (+34%) and Moreton Bay-South (+45%).

Looking at the Local Government Areas in the Far North we see the Cairns Regional Council (incl Douglas Shire) area Trend at 57 (unchanged from an upwardly revised May); Cassowary Coast Regional Council Trend stable at 5 (after May was revised down from 6); Tablelands Regional Council (incl Mareeba Shire) Trend unchanged at 18. To our south Townsville City Council Trend came in at 69 (down from 71 in May which was itself revised down from 75).

The full set of Conus Trend data for the SA4 areas in QLD is available for download below. Please feel free to use this data (for non-commercial purposes) but we appreciate you acknowledging Conus when you do so.

Conus Trend Building Approvals QLD – June 2017

 

4 replies
  1. Glen
    Glen says:

    Pete it’s still hard to fathom the lack of improvement in the Cairns numbers, the disconnect between general business conditions and the lack of drivers for domestic dwelling starts is an interesting one. I read with interest in the latest HTW report that investors into the Cairns market are still at a very low 22%, with numbers like that it would be hard to envisage any improvement in the near future whilst relying on home occupiers.

    Reply
    • Pete Faulkner
      Pete Faulkner says:

      Agree Glen, it does appear paradoxical that the improvements being seen across the Cairns economy are not being reflected in residential building approvals. Rick’s comments abotu the lack of investors would certainly point to part of the reason for that. Thanks for the comment. Pete

      Reply
    • Mark Beath
      Mark Beath says:

      It would be interesting to have a breakdown on what proportion of those investors are local. I suspect the missing component would be ‘southern’ investors. Recent tax changes also included a crackdown on travel expenses for investors which is unlikely to be positive for Cairns even if warranted. The missing component in approvals is still units. Investors rather than owner-occupiers set the marginal prices for units. Cairns often rates highly on gross yield comparisons for unit investors. However when body corporate (which includes insurance) and minimum rates as a percentage of the property valuation are taken into account the net yield quickly evaporates back towards the average.

      Reply
      • Mark Beath
        Mark Beath says:

        BTW this week is the equivalent of last years census. A search on either rentals or accommodation in Palm Cove delivers very skinny responses. Yet at census a year ago there was 30% unoccupied residential dwellings on census night in Palm Cove?

        Reply

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