Why the 2011 flood impact on the property market won’t be the same as 2022

[lwptoc]

By Adam Empringham, Image Property

As soon as the floodwaters receded across Southeast Queensland, the rhetoric started on the event’s impact on property prices.

According to the State Government, in Brisbane, fewer than 1,500 properties had water above their floorboards this time around. Compare this to 2011, when that figure was about 23,000.

Of course, dozens of suburbs experienced some sort of flooding in their streets and in yards and garages, which would have been frightening for tens of thousands of people

Research has just started to be released comparing the two Brisbane floods and the potential impact on housing market.

CoreLogic’s research on the east coast floods and housing markets is honest about the difficulty of assessing the likely impact so early after the floods.

However, the report clearly shows that the market conditions now are very different to 2011.

“It is difficult to isolate the impact of flooding on property values, as Brisbane dwelling values were already trending lower from mid-2010. A tightening in monetary policy triggered this decline amid a resources boom and Australia’s recovery from the GFC,” the report said.

Conversely, in early 2022, Brisbane – and the wider southeast corner – generally have the best market conditions of any capital city in the country.

The most recent CoreLogic Home Value Index found that the median house value in Brisbane had increased in value by 4.5 per cent in January and February and was up a staggering 32.8 per cent over the year ending February.

Likewise, the median unit value had risen by 2.9 per cent in January and February and was up 14.4 per cent over the year ending February as well.

Compare these 2022 results with Sydney and Melbourne, where median house prices have only nudged up by 0.8 per cent and 0.5 per cent since the start of this year. Unit values in both cities have also fallen over the past two months.

Supply still constrained

We also need to consider the low level of property listings that remain a key element of our region’s strong market conditions.

In February, according to SQM Research, there were fewer than 17,000 properties listed for sale – the lowest level in more than a decade for a normal month that isn’t impacted by seasonal factors such as the Christmas holidays.

If we look at the data from February 2011, a very different metric is presented, with the number of total property listings on the market back then nearly 28,000. There are currently 40 per cent fewer listings for sale in Brisbane than there were at the time of the 2011 floods.

As we all know, property prices will keep rising when there is more demand than the supply available.

While there was a temporary pause on some open homes because of the natural disaster, our agents are busy answering phones from potential buyers from around the nation who are not concerned in the slightest about the Brisbane floods as they continue their search in the housing market.

Rather, they remain committed to purchasing in the hottest region in the country and are not going to let the floodwaters dampen their desire to own a slice of Sunshine State real estate.