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The recent flooding in Queensland is not expected to have any material long-term impact on its local housing market, but the next few months could potentially hamper the stellar gains achieved amid the pandemic.<\/p>\n
BuyersBuyers co-founder Pete Wargent said while safety, repairs, and insurance are the key priorities of many property owners in the short term, the floods are not expected to make a significant dent in the housing market.<\/p>\n
\u201cOver the medium and longer-term, history shows that there will be a relatively insignificant impact on the housing market,\u201d Mr Wargent said.<\/p>\n
\u201cIn the aftermath of the 2011 flooding, there was a modest downturn in prices, although the market was already experiencing relatively flat conditions at that time, after a preceding boom\u201d.<\/p>\n
Brisbane is one of the two capital cities that have defied the slow down in price growth until last month, when gains eased slightly.<\/p>\n
February figures show that monthly gains in Brisbane slowed down to 1.8%. This, however, remains the strongest monthly price growth that outperformed the national figure at 0.6%.<\/p>\n
How might prices fare in the short term?<\/h2>\n
CoreLogic head of research Eliza Owen said the 2011 flooding in Brisbane could give a glimpse on how property prices perform over the next few months.<\/p>\n
\u201cFollowing the Brisbane floods in 2011, the city\u2019s dwelling values sustained a decline from January 2011 to January 2012, which bottomed out at a decline of 6.1%,\u201d Ms Owen said.<\/p>\n
However, it is difficult to isolate the impact of the flooding on, given that property prices in Brisbane were already trending lower even before the event.<\/p>\n
\u201cThis decline was triggered by a tightening in monetary policy amid a resources boom and Australia\u2019s recovery from the GFC,\u201d Ms Owen said.<\/p>\n
It is important to note, however, that flood-affected areas reported sharper declines during the period than greater Brisbane.<\/p>\n
Ms Owen said the short time frame between significant flooding events could affect the market by shifting buyer attitudes around housing in low-lying areas.<\/p>\n
\u201cIt could see markets with low flood risk attract greater demand over time and result in higher insurance premiums, which may dissuade buyers from areas vulnerable to flooding,\u201d she said.<\/p>\n
Furthermore, the recent flooding is expected to boost repair and renovation costs at a time when the building industry is already experiencing the heat from high demand and shortage on labour and materials.<\/p>\n
Five-year recovery<\/h2>\n
BuyersBuyers CEO Doron Peleg said the impact of the floods on property prices would become a \u201cdistant memory\u201d given Brisbane\u2019s potential for recovery.<\/p>\n
\u201cA few years ago, our market research showed that out of the top 20 suburbs impacted by floods in 2011, 19 of them outperformed the Brisbane house price growth benchmark over the following five years,\u201d he said.<\/p>\n
\u201cThe only exception was Pinkenba, which is quite an unusual suburb with relatively few transactions, being more impacted by other factors, such as proximity to the airport.\u201d<\/p>\n
Fig Tree Pocket reported the biggest five-year recovery at 53%, overshadowing Brisbane\u2019s 26%.<\/p>\n
Meanwhile, Bulimba, Yeronga, New Farm<\/a>, Indooroopilly, and Tennyson<\/a> posted gains of at least 40% over the next five years following the flood.<\/p>\n Mr Peleg said the gains posted in these areas debunk the perception that flood-prone areas experience long-term downtrend in price growth.<\/p>\n \u201cPart of the reason for this was that many of the suburbs were located close to the river, with water often being a drawcard for buyers in Australian real estate \u2014 most buyers were able to look through the risk of flooding as an infrequent event which they were prepared to deal with,\u201d he said.<\/p>\n \u201cIt also helped that some of these locations were subject to rezoning, which made them potentially attractive to investors and developers.\u201d<\/p>\n \u2014<\/p>\n Photo by @quirkydude on Unsplash<\/p>\n<\/p><\/div>\n![](\"https:\/\/fmsto.blob.core.windows.net\/cms\/images\/055\/0004_637818770367281430.png\")
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