Cairns property prices to stay strong with falling interest rates economist Pete Faulkner says

Far North economist Peter Faulkner has commented on concerns property prices could crash by up to 50 per cent in the near future.

Property prices in the Far North will not crash by 50 per cent despite one international report.

Far North economist Peter Faulkner has dismissed concerns property prices could crash by up to 50 per cent.

“That’s not going to happen,” he said.

In a region where the rental vacancy rate is about 0.6 per cent, working professionals are struggling to find accommodation and the population continues to grow – Mr Faulkner says basic economic principles suggest strong demand will maintain strong property prices for some time.

It comes in response to bold claims made by American economist Harry Dent who suggested that property prices domestically, could slump by as much as 50 per cent following a crash in the United States.

“I don’t see any chance of house prices falling 50 per cent, straight out of the box,” Mr Faulkner said.

Far North economist Pete Faulkner says property prices will not crash by 50 per cent in the in the region.

“Every time we see house prices moving up, there’s always then talk of a price collapse, doom and gloom.

“We’ve got strong population growth, high demand for housing and interest rates are currently at their peak and likely to be coming down in the next three to six months.”

Mr Faulkner said for young home buyers early in their mortgage, there was no cause for concern over the long-term value of their asset.

“Unless you plan on selling pretty soon – whatever is supposedly happening with the market in the next six months really is irrelevant.”

Mr Faulkner said even with immediate cost of living pressures, which were reportedly forcing Australians to choose between essential services, a “worst-case” scenario of having to sell property during a crash wouldn’t be as dramatic as some reports suggested.

A housing development in Cairns, where property prices have increased about 50 per cent in the last decade.. Picture: Istock

“If you get a crash of 10 or 15 per cent, and you have to sell lower than what you paid, well, you’re still going to be looking for somewhere to live, with everything else on the market also down 10 per cent.”

Mr Faulkner said in stark contrast, median property prices had risen by about 50 per cent in the past decade, but the Far North was still deemed a “slow capital growth” region for most investors, hence the lack of new medium-density developments.

Mr Faulkner said adding to those woes was the general acceptance that “constructions costs are higher in regional areas than the cities”.

Nova City was a visionary residential project bound for the heart of Cairns city but failed to progress. More medium-density accomodation is required in the city. Artist's impression of buildings.

He said while there was no “straightforward” fix to make the region more attractive for investors seeking capital growth, the conversation of delivering medium-density housing for the local workforce needed to shift towards public housing.

“For a government, it wouldn’t be seeking a quick or high return on investment – it would be housing as an essential service. There is this stigma around public housing becoming ghettos, but not all public housing needs to be social or affordable.

“And for a government, it would be cheaper because a lot of those development and planning costs are in house.”

Mr Faulkner said the Far North would also need a cultural mindset shift to accept medium-density developments in a region dominated by Queenslander homes with backyards.

Originally published as Cairns property prices to stay strong with falling interest rates economist Pete Faulkner says