Corelogic came out yesterday with a historical look at the Brisbane residential property market after the 2011 flood. It was a LinkedIn article for those who wish to chase it up.
The graph showed that values collapsed following the flood and didn’t return to “par” for a further 5 years. However, they also noted that Brisbane market was in a downturn prior to that flood (so just how much was the flood responsible for anyway). This time it is not just Brisbane but the whole of SEQ and much of NSW as well.
So my question is, what WILL be most likely to happen next? Various thoughts I have (and/or have read) are these:-
1. Properties on rivers and/or in flood zones will likely lose value – or even be demolished, allowing a more flood-proof building to be erected. In the meantime, values would most likely fall in those areas.
2. With values already heading stratospheric (in Bne at least) the need for more rentals will only exacerbate the current shortage of rentals (<1% vacancy rate) and the overall shortage of property for sale (refer the 20%+ growth in prices in the last 12 months). Hence, even higher prices?
3. On the flip side, after hearing of those floods, interstate migration might fall away significantly (especially as Vic gets a bit less restrictive re its current Covid rules). Would that temper some of the expected growth mentioned in 2 ?
What do you think? Will prices rise further in those areas, or only in areas NOT affected by floods? Or collapse overall? Will it be different for NSW vs Bne? Let’s hear you. :)
One further thought (perhaps unrelated to prices, but the floods have got me thinking further – will the State Govt start to look more seriously at building more dams. We really DO need them, both for watering a growing population, AND for flood mitigation. Brisbane’s current major dam (Wivenhoe) can only hold back 50% of the rivers that impact Brisbane city itself. It certainly helped this time by holding back the release of its floodwaters but the Bremer River feeds the lower Brisbane River and neither of these are dammed below Wivenhoe.
This time though, the weather event was over a HUGE area at once and it stayed around for many days (unlike earlier cyclones). Bne got 8 months of its usual 12 month rainfall total in just 7 days. No wonder things got flooded. One way or another, we need to spend lots of money to eliminate this problem – either resume all homes susceptible to flooding, or build another dam. If not either, then perhaps we all need to immigrate to another city. There must be 100 different answers to “what should be done”….
Benny
Devastating flooding brought about by outrageous weather conditions is hugely affecting real estate markets, as indicated by another review from the University of Waterloo.
Areas impacted by flooding have seen home costs decline by 8.2 percent by and large, specialists from the Intact Center on Climate Adaptation at the college said. That implies a normal home that would ordinarily sell for $713,500 is rather going for $654,993, a $58,507 decline.
The effect goes past resale costs. All things considered, home postings in impacted regions have dropped by 44.3 percent. It likewise takes around 13 additional days for a house to sell, the review found.
Analysts took a gander at five urban communities hit by floods, concentrating on impacts available a half year when outrageous climate occasions. Urban areas in the review included Grand Forks, B.C., Burlington, Ont., Toronto, Ottawa, and Gatineau, Que. The effect went from a 1.1 percent decline in home costs the entire way to 17.1 percent. Of the real estate markets contemplated, Gatineau, Que., experienced the greatest disaster for costs after floods in 2017.
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As long as insurers are willing to insure flood areas/properties, initial reaction is likely to be #1 (bit like when covid hit in early 2020 and there was lull), but would move to #2 between 1-2 years as people realise opportunities in the problem. Of course this is subject to funding situations in the market, building approvals and other factors
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