Given the size and magnitude of the recent flood emergency, just how the floods will affect the local property market is hard to know.
After the Brisbane floods of 2011, some flood impacted suburbs experienced a 6-10 per cent loss in value, so we can guestimate a 10 per cent devaluation on flood affected areas within our region as buyers step back from the market.
However, we want to stress that these decisions are likely to be temporary. Drawing again from the Brisbane flood experience in 2011, the decline kicked into recovery mode some ten months later and had fully recovered within three years. We do expect there will be a bounce back locally over time as cleanups conclude and the community rebuilds. Whether you believe it was a one in 100-year flood; or one in 500 years; or one in 3,500 years – things will recover.
In the short term, buyers are likely to be more interested in higher positioned suburbs that were unaffected by the flood, such as East Ballina, Lennox Head and Alstonville. We can expect that demand and price rises are likely in these areas as buyers respond to the flood aftermath.
How the flood impacts rentals also remains to be seen. With the area in what is now a severe housing crisis, rents may be unaffected from within the flood zone. If we draw again from the Brisbane experience of 2011, none of the affected suburbs saw a decline in rental value. Instead, rents rose some four per cent within the first year. A more likely scenario is that rental prices outside of the flood impacted zone will continue their upward trajectory.
Prior to the flood event, the local world of real estate was still very busy, with strong demand, but not at the intensity levels that we experienced last year. Good properties were achieving excellent prices; whereas middle of the road properties were selling well, but not achieving the outlandish prices of their luxurious cousins.
Interest rates are on the rise for the first time in forever. Particularly longer-term fixed rates. This is likely to affect the market moving forward as buyers start to feel the pinch of increased mortgage repayments.
View more in my Autumn newsletter which contains links to flood assistance sites.