On the surface, cruise ship arrivals may not seem to provide the sort of information a property investor needs. However, this statistic is a part of a larger story, giving insight into the local economies of some Australian coastal towns.
The mainland Australian areas with the largest international cruise ship arrivals, excluding capital cities, are Cairns, Fremantle, and Newcastle. One factor common to these areas and other regional-coastal locations is that tourism contributes heavily to the local economy.
With many property investors taking advantage of the lower prices of coastal regional areas as a means to get into the property market, it is important to know if the local economy is strong, as this information underpins property price growth.
Cruise ship arrivals relate to property in two ways:
- By bringing tourists who provide a direct, short-term influx of spending into a local economy
- By strengthening the tourism industry, which provides higher disposable incomes and employment to locals
In 2015-16, the Australian Cruise Association showed that cruise ship tourism provided a total of $779M worth of direct spending and $455.5M of indirect spending from international travellers alone. Similarly, in same time period, tourism provided direct wages to the amount of $302M, and indirectly $111.4M, as well as providing 5259 full time equivalent jobs around the country.
From a macroeconomic perspective, this form of tourism can fluctuate with the changing Australian Dollar. When the AUD is low, the buying power from overseas travellers is higher; tourists can purchase more Australian currency with their international currency, to then spend in the Australian economy. The opposite is true, allowing Australians to purchase greater amounts of international currency; for example during periods of 2011-12 when the AUD had more purchasing power against overseas currency, peaking at around $1.10.
Therefore, the more accessible the AUD is to travellers from overseas, the cheaper it becomes to travel Australia, which in turn, influences the amount of international cruise ship arrivals into these mainly tourism dominated locations.
Arguably, the second point is more directly related to property prices. As one person’s spending is another person’s income, the more that tourists spend in these areas, the more income locals have. And greater disposable income lends to greater consumer confidence, which is tied to people’s ability to take on debt and purchase property.
For major capital cities, because the industries are so diversified, this statistic has less of a direct impact.
As with anything property-related, one statistic can never provide all the information an investor needs. And whilst cruise ship arrivals may not play as large a role in investment decisions as other statistics, there is merit in analysing it as a part of a larger economic picture, particularly in towns where tourism encompasses a larger portion of the working economy.