STABLE prices, tight vacancy rates and another cut to interest rates are all building a case for Cairns to become a city where it is cheaper to buy a home than rent one.
The Reserve Bank of Australia cut the cash rate another 25 basis points this week to 0.75 per cent and Cairns rental vacancies were 1.7 per cent, according to the Real Estate Institute of Queensland’s December quarter figures, after hitting a historical low last year of 0.9 per cent.
REIQ Far North zone chairman Tom Quaid said conditions meant the region was fast moving “in the direction of a mortgage being cheaper than renting for a lot of suburbs”.
“Headline rates under 3 per cent are now being advertised,” he said.
“We have gone from 12 months ago brokers saying, ‘if your rate starts with a 4 you need to talk to us’, to that number now being a 3 in some, but certainly not all, circumstances.
“If you are paying off a mortgage and on a variable rate – great news, it should now either become cheaper or you should be able to pay off your loan quicker.
“If you are on a fixed rate or lucky enough to have already paid it off and were more reliant on interest earned rather than interest paid, then (the latest rates drop) probably isn’t going to get you excited.”
But Mr Quaid said because interest rates had been low for a while, it was unlikely there would be a massive rush in new home buyers flooding the market.
“If you couldn’t afford to borrow money at 3.25 per cent then another .25 per cent is unlikely to make a big difference,” he said.
“It should add more confidence for people already looking to invest though, particularly with the volatility in the share market currently – bricks and mortar will often come back to the fore when we see big fluctuations here.
“For some, their bank may pass on all (or more likely, some) of the rate reduction automatically within the next month.
“For others, you might need to give your broker or bank manager a nudge.
Banks are looking for new business and this should be a great opportunity for homeowners to be making the most of.”
Across the city, there were plenty of homes listed for sale and rent which supported Mr Quaid’s claims.
For example, a renter could pay $480 per week for a three-bedroom, one-bathroom home at 63/91-93 McManus St in Whitfield or get their foot in the door of owning a home in the premier suburb with a semi-detached property at 1/5 Ireland Cres for $275,000, paying $1138 per month.