How The Recent Floods will Impact the Brisbane Property Market

Experts are looking at trends that developed from the devastating 2011 floods. If those trends hold, then there is a chance that investors will not shy away from establishing a presence in the Sunshine State.

Investors are banking on robust returns on rentals in Brisbane as insurers look to relocate flood-affected customers in a city already struggling with low room inventory.

The industry is expecting a slight downturn in the market. However, this downturn is expected to be quickly followed by recovery.

The Aftermath

If trends from 11 years ago hold, cooling off in the Brisbane market is expected. Before these most recent floods, Brisbane was leading Australia in annual property growth, with prices rising 8.5 per cent in the last quarter.

Experts believe that the effects of these floods represent only a minor setback. While momentum will slow, ultimately, recovery will occur even faster than in 2011. In 2011 prices saw a significant rebound 12 months after the incident. In fact, between 2011 and 2021, some prices in some parts of Brisbane more than doubled.

Persons riding the fence on purchasing in areas prone to flooding may now decide to look elsewhere, and investors may wait until after clean-ups, insurance payments are issued, and repairs are done before making a move.

The Data

In 2011 hard-hit suburbs like Graceville and St Lucia suffered a slight drop of 1.5 and 3.7 per cent respectively. A short 12 months later, prices began to climb. By December 2021, prices had gone up by 107.7 per cent and 101.3 per cent.

It may seem logical to believe that investors and prospective homeowners may avoid flood-prone areas, particularly ones that have been hit twice in 11 years. However, the data shows that is not the case, and buying trends have bucked this seemingly conventional wisdom.

Property near water continues to be treasured by local, interstate and international property buyers. Time and time again, these buyers have looked past the risk of establishing themselves in these areas and have chosen to throw their lot in with the prospect of inevitable long term gains.

Why this Recovery May be Faster

Unlike in 2011, Brisbane is the beneficiary of unprecedented government spending on infrastructure projects and other projects associated with the upcoming 2032 Olympic Games.

This is not even taking into account the spending that will need to occur due to the need to both repair and improve public infrastructure damaged by the floods.

Disaster Ultimately no Deterrent to Buyers

The floods have undoubtedly had a dampening effect on the once-booming Brisbane real-estate market. However, the long term truth that property is a forgiving long term asset holds firm.

Experts in the industry have said that buyers will see the effects of the flood in the short term if trends they observed after the 2011 floods hold.

After 2011, 19 of the hardest-hit suburbs not only outpaced most of Brisbane, but they also outperformed their sales over the ensuing five years. Properties in some of the affected areas have seen an up to 52 per cent rise in prices.

Compounding the Housing Shortage

Premier Annastacia Palaszczuk dropped some sober numbers that undoubtedly shed light on what citizens and investment property owners will keep in mind as everyone begins sorting out the effects of the 2022 floods.

More than 1,400 homes had water creep in through the floorboards. It remains to be seen how many homeowners will need to be relocated with the help of their insurance companies.

Still, rent increases may be unavoidable in a city with hardly any inventory in the best of times. This is something that investors will be looking out for.

Construction Concerns

Another pillar of the property market, new construction, was another area that was under strain even before the floods. The perfect storm of demand (which obviously will not soften after this most recent tragedy), labour shortage, and increased building materials have hit the construction industry hard. This is similar to the Halloween hailstorm in October of 2020.

As a result, almost 40 per cent of construction businesses are struggling to make ends meet. Investors will keep all this in mind as this industry area continues to deal with backlogs and delays.

Navigate the Current Market with Experts

While there are many reasons to be optimistic about the future of the Brisbane property market, the current state of affairs highlights the need to operate with guides who can give you the benefit of both their skills and years of experience.

We at Sparrow Real Estate have over a decade of experience in the Brisbane market. We are fully attuned with trends and have the benefit of operating in a market affected by devastating floods before. If you are looking to buy or sell in Brisbane or need some advice on how to execute your plans best, get in touch with our team today for a FREE consultation.