Sunday, January 16, 2011

How will the flood impact property prices in Brisbane?

See this story from Bloomberg. Some extracts:

Property sales will slow significantly over the next month as residents focus on assessing damage and put purchase decisions on hold, said Rod Cornish, Sydney-based head of property research at Macquarie Group Ltd. Buyers are also likely to turn more selective about where they buy properties, avoiding low-lying areas that have been particularly hard hit, he said.

The property market in Brisbane will take some time to rebalance prices, said Gerard Baden, principal at a Century21 Australia real estate franchise in West End, a southwestern suburb of Brisbane that’s bounded by the river on three sides.

“If someone’s selling, what the neighbors’ house sold for last month wouldn’t matter,” Baden said. “And we’ll have a two-speed market. Those properties affected by water, and those that aren’t.”

Brisbane-based Ray White Group has seen “hundreds” of tenants evacuated from properties it manages in the state, said Tony Warland, Queensland chief executive officer for the group.

The Australia also has a story. Some extracts:

The floods are expected to further slash property prices in the southeast, with more than 26,000 homes in Brisbane damaged and the rebuilding process expected to take months. SQM Research managing director Louis Christopher said the residential market in the state's capital was already weak and would be damaged by the worst floods in nearly three decades.

Most property experts said yesterday that it was too early to estimate the exact effect on prices, but all agreed there would be a negative impact on values.

"The immediate impact is going to be that houses which have been impacted directly by the floods that require repairs will likely be taken off the market," Mr Christopher said.

"The floods are going to remind buyers of the risks of buying near the floodplains. There is the risk some of the most prestige areas are going to take a hit because buyers are aware of the risks now of buying there."

Some of the most affluent suburbs in Brisbane -- New Farm, West End, St Lucia, Indooroopilly, Graceville and Chelmer -- have been the most severely affected by the floodwaters. Residex managing director John Edwards said the higher-priced areas would suffer a greater price hit compared with flooded suburbs in Brisbane's outer west and close to Ipswich.

"I think we are going to find that the big pricing adjustments will be the higher-cost areas that are along the river's edge," he said.

Property consultant Michael Matusik agreed in this story that the prestige riverfront market would recover fairly quickly, but said the markets most affected would be low-lying suburbs close to the river that were flooded.

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