Tourism markets feeling the pinch

Australia’s most popular tourism regions are hurting – takings from accommodation are down, occupancy rates are down, overseas visitor numbers are only creeping up (slowly) after the 2008 slowdown.  The Tourism Forecasting Committee (part of Tourism Australia) estimates that total tourist consumption is down 3.5% in real terms during 2009 – the worst downturn in the tourism sector since the outbreak of SARS back in 2003.

Takings and occupancy

Making matters worse is the fact that more domestic tourism is heading off shore thanks to the height of the Australia dollar (currently around .92 ($US)).  What was potentially once an expensive overseas holiday has become much more affordable thanks to the strong exchange rate.   Further to this, foreign travelers have much less buying power now in Australia which is another reason why our tourism numbers are down.  The net result is that there are more Australians taking overseas holidays and fewer overseas visitors holidaying in Australia.

arriving and departing

The downturn in tourism can be seen in many of Australia’s tourist centric property markets also.  Lower tourism numbers means fewer holiday renters which hits the hip pocket of investors in these areas hard.  Holiday rental yields are much lower as a result and in many areas value falls are yet to start their recovery phase.

For property professionals working in these regions, the real hardship is due to the minimal recovery in sales volumes.  Low sales translates directly to lower commissions for real estate agents, fewer properties to value for valuers, less conveyancing for the legal industry, fewer home inspections, etc.  The slow property market conditions are also likely to be felt in peripheral sectors – fewer home sales generally means lower sales of white goods, home furnishings and motor vehicles.  The graphs below provide some examples in a few of Australia’s key holiday centric markets.


Byron BaySurf CoastMargaret River

Like other market segments around Australia where prices have fallen, the soft market conditions in these largely tourism driven markets may mean buyers can snap up a bargain.  For investors or lifestyle buyers that arent seeking a rental yield, the long term capital gains in these market is likely to be quite strong once the tourism sector recovers.

Sometimes there is a different vibe ‘on the ground’ – particularly as our data is only up to October, so it would be interesting to hear the opinions of readers – particularly those located in tourism regions.  Are you feeling the pinch or are markets starting to turn the corner.   What will it take to see a turnaround in these markets and when is it likely to happen?

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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