The flagging Brisbane property market was not forecast to make substantial gains in 2011. Optimistic forecasts pinned rises at less than five per cent. Property analyst Michael Matusik said the flood was a "game-changer", one that would place a hold on normal market conditions, but only temporarily.
He said the properties completely inundated in low-lying suburbs away from the river, including Rocklea, Oxley and Archerfield, would see a substantial decline in value, but only if they were put on the market before being totally restored.
Meanwhile, the value of the 850-odd exclusive riverfront properties would remain largely unchanged, he said.
"This property is tightly held and most owners are likely to renovate and stay put. Values along the Brisbane River, I don't think are likely to change much," he said.
Still a target
RP Data analyst Cameron Kusher believes future buyers would be motivated by "lifestyle choices" in suburbs including Rosalie, Paddington, Milton, Chelmer and Graceville.
"Buyers will still aspire to buy in these suburbs," he said. "I believe many residents will decide to stay put and rebuild their lives. If people do decide to up and sell they will be in the minority."
Immediately after the 1974 flood many cashed-up investors bought distressed stock, renovated and sold for massive profits after construction of the dam began, Mr Matusik said.
"It does involve risk, but [a risky] investment often means high rewards," he said.
Mr Matusik said dwellings partially flooded last week, which were put on the market at a 15 to 20 per cent discount from 2010 prices, made for a wise buy.
"For fully flooded homes, discounts over 30 per cent would be worth looking at. This assumes that improvements are actually made, via physical barriers and improvement management systems to help alleviate future flooding."
Mr Molloy warned the financial sector's value of flood-damaged properties was yet to be determined.
However, Mr Matusik said he suspected interest rates would fall by 25 basis points in the coming months, "correcting the unnecessary hike last November".
The rental outlook for tenants and recently displaced flood victims is bleak. Up to 10,000 flood-damaged households are estimated to be looking for temporary accommodation. This combined with the annual influx of university students hunting for rental accommodation will surely push up rents.
"Those investors without landlord insurance might elect to sell their properties, which presents an opportunity for those willing to take a risk.
"A mass investor sell-off, however, could have a marked negative impact on values across the city, making [predicted rent rises] of five to eight per cent very bullish."
Sales to sink
The volume of sales is expected to decline, contrary to last year's predictions.
"The overly negative commentary about the flood's impact on property across the region is likely to batter confidence, which in turn could see inquiry and sales decline further," Mr Matusik said.
Yet Mr Molloy said buyers on the ground were expected to be forgiving.
"The outpouring of community spirit has restored a social confidence in our suburbs. People will remember that for many, many years to come," he said.