One year after floods, Queensland property market showing signs of tentative recovery

One year after floods, Queensland property market showing signs of tentative recovery
One year after floods, Queensland property market showing signs of tentative recovery

The Queensland property market has a long way to go to get back to full health one year on from the natural disasters that devastated the state, but housing confidence is slowly returning. 

The January 2011 south-east Queensland floods and northern Queensland cyclone one month later killed 35 people and affected more than 500,000 square kilometres of Queensland, including low-lying parts of Brisbane, Ipswich and the Lockyer Valley and up North, Cairns, Townsville Tully, and Innisfail.

The Queensland floods resulted in 58,463 claims totalling $2.4 billion, while cyclone Yasi resulted in 72,203 claims amounting to $1.33 billion. An estimated 15% of claims are still to be processed, with insurers warning premiums will soar should flood cover become mandatory.

The hard data shows that Brisbane is still struggling.

Last week, as part of his mid-year budget update, Queensland Treasurer Andrew Fraser adjusted his forecasts for housing investment, with the state still struggling to attract property investors.

“The dwelling investment outlook has softened since the budget, when investment was forecast to partly recover by 5.75% in 2011-12,” Fraser said.

In its most recent monthly update, the RP Data-Rismark index reported that Brisbane remains, alongside Melbourne, the weakest capital city, with values down 1.7% over the three months to November on a seasonally adjusted basis.  Brisbane house prices are down 9% from their peak and 7% for the year to November.

Real Estate Institute of Queensland chief executive Anton Kardash says the property market is “currently transitioning from a very tough 2011 into a market characterised by increasing buyer enquiry, sales activity, and confidence levels, and the extension of the boost will add to this more positive state of play”.

The REIQ September 2011 quarter report (its most recent survey) noted some signs of green shoots, with the preliminary number of house sales up a healthy 17% compared with the June quarter. Some regions recorded substantial jumps in activity as buyers finally started to foray back into the market.

“What these figures show is that it appears it took about six months for our property market to begin to heal from the natural disasters earlier this year,” says REIQ chairwoman Pamela Bennett.

“Activity in most areas improved markedly in the September quarter compared to the first six months of this year, but we mustn’t get ahead of ourselves given sales activity is still about 20% below where we were this time last year.”     

While the median house price in Brisbane reduced 2% to an even $500,000 over the period, the number of preliminary house sales was up 13%. 

 


 

Up north there are also signs of recovery, with the Fraser Coast, Bundaberg, Rockhampton and Cairns all recording double-digit growth in the number of house sales over the September quarter.

The most recent Property Council of Australia (PCA)-ANZ Property Industry Confidence Survey of industry players found housing confidence had risen above the national average for the December 2011 quarter, after a very glum reading in September.

The improvement has been noted by Kathy McDermott, executive director of the Queensland branch of the PCA, though she says much more needs to be done to aid the state’s recovery.

“There was a nice improvement in confidence in the December quarter, but the market is still very distressed and needs support,” she told Property Observer.

The Property Council of Australia alongside the Housing Industry Association, Master Builders Australia and Urban Development Institute of Australia were united in their call for the state government to extend the $10,000 building boost available for those buying or building new homes.

This plea was answered last week, with the stimulus scheme extended to April.

Figures released by the government show the scheme is gaining traction, with more than 500 people applying for the grant between December 30 and January 11, taking total application numbers to 3,700.

Fraser himself noted the state’s housing market is still doing it tough, particurlarly in attracting property investors.

“Civilian population growth slowed further to 11,200 persons in September quarter 2011, dampening owner-occupier demand. Lower demand has seen the ABS measure of Brisbane house prices fall 5.2% over the past year,” he said. 

“While this benefits housing affordability, weaker prospects for capital gains and greater uncertainty since the escalation in the euro debt crisis have weighed on investor demand since the budget, as has ongoing tight credit conditions. 

“These negative effects are expected to be partly offset by the positive impact from recent cuts in official interest rates and the Queensland government’s Queensland building boost grant, which is to be extended until 30 April 2012. With the surge in business investment expected to generate higher migration levels and stronger employment growth next year, the expected recovery in dwelling investment is forecast to strengthen in 2012-13.” 

There has of course been very real recovery and progress, with photos released last week showing Brisbane suburbs close to the Brisbane River that were under water and mud a year ago now completely cleaned up and back to their pre-flood state. 

The city has cleared mud and debris from 460 kilometres of the stormwater drainage network, with 23 damaged CityCat and ferry terminals back up and running, 38,000 trees planted and 403 out of the 406 flood-affected parks restored. 

Brisbane City Council has committed to providing free advice and assistance to help residents restore properties affected by the floods. 

Outside of Brisbane, some of the worst affected regions are also recovering, notes Lucinda Coates Macquarie University’s Natural Hazards Research Centre.

“As part of a voluntary land-swap initiative, Lockyer Valley Regional Council is now giving flood-impacted residents the option to move to a new land parcel located adjacent to Grantham but outside the flood zone. At the time of writing the first residents are moving into their new homes, and 70% to 80% of residents are expected to eventually relocate.

“While this is the first time a local government authority has assisted a disaster-struck community this way, it’s certainly not the first time an Australian town has been shifted to higher ground to avoid floods,” she says.

Photograph by Erik K. Veland

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

Comments

Be the first one to comment on this article
What would you like to say about this project?