As the muddy water recedes and the clean-up begins in Townsville, many will begin to wonder how the flood has affected their house price, whether the property was inundated or not.
After the 2011 floods in Brisbane property prices were watched closely. Everyone wanted to know what would happen to values after this once-in-a-lifetime event.
In the months immediately following the floods, many houses that were on the market were taken off the market, even if they weren’t flood affected. Vendors wanted to wait to see what would happen once the clean-up was completed and buyers came back to the market.
The market unmistakably lost some momentum and the sales volumes, which were already low in the preceding quarter, plummeted. While only 25 per cent of houses in Brisbane were flood-affected, the majority of the market was affected by buyer confidence.
The lack of sales transactions was a significant contributor to the fall in median house price across many suburbs, rather than houses selling for lower prices. In particular, the upper end of the market virtually ground to a halt. Nobody was selling unless they were compelled. This skewed the median house price down.
However, over the subsequent years we’ve seen prices recover and growth has returned, even to flood-affected suburbs.
For example, Bulimba was a flood-affected suburb with many waterfront streets going under. The quarterly median house price in December 2010 (the quarter just before the floods hit in January) was $1,150,000. In the March quarter it fell to $925,000 but within five years the growth level exceeded 30 per cent to reach a median house price of $1,217,500.
Hawthorne, also significantly flood-affected, had posted a significant 42 per cent growth to its median house price by 2016. And New Farm grew by 26.6 per cent.
Generally speaking people recognise that the 2011 floods in Brisbane were a once-in-a-lifetime event. Speaking to agents who were in Brisbane, working in the most flooded areas, they say that today it’s very rare that people will ask where the floodwaters came up to. As an event, it’s fading from view.
It would be fair to say, that Brisbane house prices have recovered and, in fact, they recovered quite quickly after the event, within five years. Growth levels have remained steady and consistent and buyers have clearly demonstrated confidence in the market in the seven years since that event.
The Townsville real estate market is similarly at a low point, as Brisbane was when the floods happened. Our growth was very small, just 0.1 per cent at the LGA level.
Prior to the floods, the REIQ’s view of the short term future of the market was cautiously optimistic. Jobs are needed in Townsville, but with the state’s economy recovering and the city’s vacancy rate continuing to tighten, now at 3.9 per cent, our hope was that a recovery trajectory was about to begin. Since that forecast, the city has experienced a once-in-500 year weather event. It’s hard to predict how the city’s market will recover. But using the Brisbane experience as a reference point, we can realistically hope that once the flood waters recede and the clean-up has completed, the market will return to pre-flood conditions, relatively quickly.
The thoughts of all at the REIQ are with you as you begin the long process of cleaning up and getting your city and your lives back.
|2010 (Dec Qtr)||2011 (Mar Qtr)||2016 (Mar Qtr)||5yr change 2011 – 2016|
Data: REIQ Queensland Market Monitor