Why tactic used by metro investors is making home ownership harder for locals

New homebuyers priced out of Sydney and Brisbane are driving an upward property trend by investing in the high-end Cairns market. And it’s not great news for locals.

NEW homebuyers priced out of Sydney and Brisbane are driving an upward property surge by investing in the high-end Cairns market.

Desperate to get a foothold, southern investors are snapping up million dollar Far Northern properties to lease and then rent another property in major cities where homeownership is out of reach.

Increased competition and rising prices on the back of elevated demand has meant local buyers wanting to get on the property ladder are having a harder time.

New home development off Draper Road in Gordonvale. Picture: Brendan Radke

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Master Builders Australia in the three months to May this year recorded an uptick of 42 per cent for investor loans for new construction, while loans for an existing dwelling in Queensland skyrocketed 122 per cent.

Value Homes and Affinity Homes new home design consultant Rob Birchall said 40 per cent of his new home inquiries came from southerners looking to buy an investment property or move north.

“The biggest problem happening for locals is the same that happened to many in Sydney, Melbourne and now Brisbane,” he said.

“It’s one thing for houses to be expensive but another when they are no longer within reach.

“This forces locals to look outside of where they grew up to get on the property ladder.

“It’s sad, but definitely something I’m seeing happen in Cairns.”

New homes design consultants at Value Homes Robert Birchall and Hayley McKean at the Sugarworld Estate land release on Saturday. Picture: Peter Carruthers

With an average investor loan of $430,000 – $450,000 Mr Birchall said there was not much on offer at this price point in the Brisbane city area.

A return of 5 to 7 per cent on Cairns rental properties is an added incentive compared with about 1.5 per cent in Sydney.

The design consultant said it was not uncommon to get inquiries through Affinity Homes for home packages over $1m.

“I don’t think we have quite seen it as a trend (yet) but it’s driving the (surge) in the Cairns market and how that affects new homebuyers is it drives prices up,” he said.

“We are also seeing a large influx of southerners looking to build their dream home.

“You have a lot of people who find a block for $300,000 and want to build a $700,000 house.

“I speak to a lot of locals and houses at the low end of the market are out of reach.”

New home construction and house building under development at Mt Peter Estate in the Cairns southern growth corridor. Picture: Brendan Radke

Mr Birchall said some younger Cairns families were being forced into following suit and buying in an area their budget would allow.

“People in Cairns might start renting and buy an investment property in Townsville,” he said.

“Then on and on goes the cycle.”