Effects of flooding on QLD property market

Flooding in QLD and the property market

Effects of flooding on QLD property market

Posted on March 11, 2022 by Mirren Property Investment

Torrential rains recently hit southeast Queensland, resulting in widespread flooding. For the second time in just over a decade, Brisbane’s flood-prone zones were covered entirely in water. This sparked many prospective buyers’ fears about purchasing properties in the area.

Though the market will face a hit in sale prices for properties affected by the flood, many real estate figures say that they’re likely to bounce back quickly within the year.

The historical data supports this. Since the last major flood event in Queensland in 2011, medians of flood-hit suburbs have been revealed to have more than doubled.

The hardest-hit suburbs like Graceville and Sta. Lucia displayed a drop in median house prices of 1.5% and 3.5% within a year of the 2011 flooding. However, by December 2021, those prices jumped to 107.7% and 101.3%, respectively.

According to domain head of research and economics, Dr Nicola Powell, the Brisbane real estate market is hot. Though the floods are going to hinder some sales, the demand for properties remains strong, and Brisbane is in a solid position to recover. Long-term home values will continue to stay resilient in an unshakeable market.

However, another recent report by CoreLogic, a property data organization, showed that property values in Brisbane took some years to recover after the 2011 floods. The report also showed that property values did not fully recover from their 6.1% drop until March 2014.

According to CoreLogic, the hardest-hit suburbs, like Chelmer and Kenmore, took between three to nine years to recover from the price drop.

Before the most recent flooding, the Brisbane real estate market was actually leading in annual property price growth in Australia. In the quarter to December 31, 2021, property prices were trending upward at around 8.5%.

People poised to buy properties in Brisbane may have experienced a psychological impact. Still, real estate research analyst Terry Ryder believes that the market will have a shorter recovery time than what it took after the floods in 2011.

The government will be pouring more funds into the development of infrastructure projects and associated projects to help prevent and mitigate similar events from happening in the future. Also, Brisbane was selected as the winning bid on July 2021 for the 2032 Summer Olympics. These will encourage the recovery and growth of the real estate market in Brisbane.

Also, the flooding may encourage a “mini-boom” in the local economy. Those affected by the floods will be able to claim insurance and will be spending that money on their own recovery, rebuilding, and renovation.

Real estate agents have also seen an influx of interstate and international clients looking to buy Queensland properties since last year.

With the country reopening its borders, expats are now returning to Australia ready to buy. Interstate buyers are moving north from Sydney for better work opportunities, the more affordable price of properties, and family connections.

The flooding will cause a rise in the price for more elevated properties. However, there will always be a demand to live in inner-city suburbs, even if they were the hardest hit. The same goes for the desire to live on waterfront property.

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