Flood-affected Queensland homes lose 30% of value
The recent Queensland floods have triggered residential price discounts of between 30% and 40% for inundated dwellings.
Properties that were not as heavily impacted were being discounted between 5% to 20%, according to the estate agency CB Richard Ellis.
Queensland’s “two-speed” economy will mean the state’s residential recovery will only occur in the medium, rather than the short term, according to the CB Richard Ellis forecast.
As the nation’s worst performing capital city, Brisbane’s median house value has fallen during the year to March 2011 by 2.9% to $447,500, according to Residex,, which noted a 14% contraction in the volume of house sales and 12% for unit sales over the past year.
The resource-related growth in the state would be the fundamental driver for a residential recovery in the medium term.
However, the short-term property environment remained subdued in the wake of recent natural disasters and weak tourism numbers that had impacted the state’s growth in 2011.
The report noted the timing for the Queensland economy was “terrible.”
A lag in mining-related growth after the GFC meant buyer optimism had been falling in most residential price brackets across south-east Queensland, given cost-of-living pressures and concerns about rising interest rates, CBRE regional director of residential mortgage valuations Tom Edwards says.
“This has led to falling sales volumes, extended marketing periods and minimal demand across the region,” Edwards says.
The impact of the recent Queensland floods is also becoming more tangible as sales evidence in the affected areas is collated.
“Earlier observations we made concerning value impacts have been maintained, with discounts of 30% to 40% on underlying land values being recorded for properties with inundated dwellings.
“Minor discounts from 5% to 20% have meanwhile occurred for properties that were not as heavily impacted,” Edwards says.
In regard to the overall south-east Queensland market, the CBRE report highlights that buyers in all price brackets are being very selective and are only targeting properties with strong marketing features such as proximity to public transport, public infrastructure and good levels of residential amenity.
“The prestige sector on the Gold Coast has seen particularly steep value declines, with units in this market also under significant pricing pressure,” Edwards says.
“Sales volumes have contracted substantially, with higher quality units on the Gold Coast suffering given the very high levels of available stock.”
CBRE’s report highlights that the outer metropolitan suburbs of Brisbane, consisting predominantly of new housing estates, have also been under strain.
On the flipside, properties situated within 10 kilometres of the Brisbane CBD with family-oriented attributes and good land sizes have performed quite well, albeit with reduced levels of buyer interest.
“Specific projects that have been impacting the residential markets include the Airport Link and Northern Busway, which are expected to assist prices in the longer term but which have negatively impacted on the market around the construction zones in parts of Kedron, Lutwyche and Woolowin,” Edwards says.
“The Gold Coast light rail project many also provide some impetus for price growth for areas that benefit under the proposal.”
CBRE’s global research and consulting manager, Sam Reilly, notes that the recent Queensland government announcement of a $10,000 grant for any person buying a new dwelling or signing a contract to construct a new dwelling between August 1, 2011 and January 31, 2012 is a positive, albeit temporary, initiative for the struggling Queensland construction industry.
The impending abolition of the stamp duty concession currently available for the purchase of a primary place of residence from August 1, 2011 is, however, far more noteworthy, Reilly says, as purchasers would see an increase of 56% in stamp duty charges on the purchase of a $600,000 home.
“There will be some relief for purchasers of a new home under the $10,000 Building Boost Grant until 31 January 2012 but after this date the new stamp duty regime will remain in place, placing further pressure on the subdued Queensland residential property market,” Reilly says.
The rapid reduction in tourist numbers is also a concern, with the high Aussie dollar triggering employment concerns for the Gold Coast, Sunshine Coast and north Queensland tourism industries, according to Reilly.
Despite the difficulties, the report noted that Deloitte Access Economics recently forecast real growth output of 4.3% per annum from 2011 to 2015, with Queensland leading Australia.
