High body corporate fees are scaring investors away from Cairns, with insurance premiums driving costs up in the aftermath of cyclone Yasi over two years ago.
According to the REIQ’s December Queensland Market Monitor (QMM), Cairns recorded median unit price growth of 5.5 per cent to $205,000 over the December quarter.
The city also posted an increase in sales of eight per cent compared to the same period in 2011, according to Real Estate Institute of Queensland (REIQ) CEO Anton Kardash.
“While there has been an increase in demand for units in the Cairns region, discounting has been partly responsible for this rise in interest as the area is still struggling with high body corporate and insurance levies following Cyclone Yasi more than two years ago,” Mr Kardash said.
Associate director and property investment manager of LJ Hooker Cairns, Amanda Boccalatte, agreed that investors are being increasingly turned off by the fees, even though returns are at record highs.
“I think those high fees are affecting people’s desire to buy an investment property," she said.
“It’s funny because prices are quite low and it’s a great time to buy in Cairns. The returns, for the prices, are fantastic but people are just bawking at the high body corporate fees which is mainly due to insurance."
And while insurance companies continue to drive insurance costs higher, Ms Boccalatte believes there are some positive signs.
“The insurance is still going up, and they won’t come down until we get more competition. All the insurance companies just pulled out, especially in the body corporate market. So with nothing to choose from, they could charge what they wanted because they had the monopoly," she explained.
“But people are starting to realise that the return is really quite good now and we’re seeing them come back to the market.”