The floods of recent weeks that caused devastation to more than 50 suburbs and 40,000 homes are likely to have an ongoing effect on the Brisbane property investment market, and while it’s a matter of waiting to see exactly what the effect will be, we can predict what might happen based on the Brisbane property investment market following the 1974 floods.
In the property values chart below, you can see that the value of Brisbane property decreased for five years in a row following the 1974 floods.
Table source: abcdiamond.com
However, looking at the chart below, you will notice that property values in Sydney and Melbourne decreased too, even though these cities didn’t suffer any natural disasters.
Table source: abcdiamond.com
The drop in value of Brisbane investment property is more likely to be as a result of national and international economic factors, rather than the floods. Having said that, Brisbane property investors and home owners are likely to be hesitant in coming months and years to buy property in low-lying areas and this will result in a decrease in demand for this property.
We have already experienced an effect on the rental market due to the floods. A lot of people who are displaced due to flood damage to their primary residence will now need to look at renting another home while repairs are being carried out. We have been inundated with calls from people looking for property to rent. This increased demand will place upward pressure on rent prices too, and therefore benefit Brisbane property investors.
Brisbane property investors with investment property in low-lying areas, however, may have reduced demand from tenants who choose to rather move to higher areas.
The 2011 Brisbane floods have affected thousands of people, and will not be soon forgotten. We may see a negative affect on property prices and even rental returns in flood prone areas.
Over the longer term this flood will become a distant memory, just like the 1974 flood when it comes to its effects on the Brisbane property investment market and will result in prices once again returning to the same level as the broader Brisbane property investment market.
well written, this is helpful information, thank you