Following the devastating January floods in Queensland, there are many lingering questions over what will happen to the local property market. Will the price of flood-affected homes plunge? Will homes located in higher, dryer parts of Brisbane attract a premium? Or will the entire property market stand still until the rebuilding is complete?
It may well be too early to tell as yet, but property investor and renovator Geoff Doidge, of the Reno Kings, experienced the 1974 floods.
“My recollection is that there were ‘no go’ property zones for years after the ’74 floods. For a period, the areas that were heavily damaged in the flood affected suburbs lost value and everyone was ‘gun-shy’ of any serious rains for some years,” he said.
“The flood maps were compiled and were used as an optional paid search when you bought a house. Discovering your house had been flooded in ’74 was a definite reason to crash the contract.”
He said the building of the Wivenhoe Dam became a circuit breaker in this process.
“It was commonly believed that if your property ‘just’ flooded in ’74 then it would now be ‘flood free’ because of Wivenhoe,” he said. “Gradually though memories faded and there was the beginning of the massive migration into Brisbane by interstate and overseas people who had not experienced the devastation of ’74 and to whom these areas looked cheap.”
Mr Doidge, who has a property portfolio in excess of $25m, said he would proceed with extreme caution when looking for flood-affected bargains.
“Personally I wouldn’t be tempted to buy a ‘bargain flood affected’ property. Just because we have had a 1-in-100 event… that is just a statistic … it does not mean it can’t happen next year…or the year after. Keep that in mind,” he said.
Buyer’s agent Justin Eslick from Brisbane company Investigate Property said the Brisbane property market, in particular the rental market, had been fairly stagnant for over 12 months prior to the floods.
“This will change. It is a lot easier for a tenant to walk away from a flood affected property than it is for an owner. These tenants will seek higher ground,” he said.
“We are already seeing this with commercial property where some businesses are looking to relocate, even if it is short term. There may also be an influx of interstate workers who can secure good employment as the result of the rebuilding process, such as tradespeople.”
“So the rental market is likely to be very buoyant. This may well translate to local investors buying rental properties as they recognise the opportunity.”
However, he thinks interstate investors may shy away as people may mistakenly believe all of Brisbane was affected.
“This is most certainly not the case. A lot of areas have flooded and in a bad way, but most of these areas are low lying areas that regularly flood (obviously not to this level), or at least they did before our recent drought period,” he said.
“The majority of Brisbane is high and dry. In fact there was hardly any flooding east of the city. Most flooding occurred to the South and West where the Brisbane River snakes around, creating peninsulas which are usually low lying.”