brisbane what is going to happen now?

[Andrew_A]

2011 a prediction.

I will paraphrase Jim Rohn as it's the best answer I can give to the thread's original question.

The year ahead will be just like the years before, opportunity mixed with difficulty.

Or as Niels Bohr predicts

“Prediction is very difficult, especially about the future.”


Focusing on what you can control and how you react to what unfolds in 2011 will be important I believe. There is documented history from 1894 and 1974 as a hint, though there are sure to be plenty of new twists as well.

 

[Craiginqatar]

I feel the rental market will pick up considerably while people need to wait for insurance payments, re-mortgaging and contractors to move in and fix the mess. There are many people affected and these things don't happen overnight. Owners of flood damaged houses will need somewhere to stay if their place is uninhabitable and repairs could take a while. The rental market in a few weeks could be inundated with people.

 

[Sunfish]

I bet the rental market will pick up considerably while people need to wait for insurance payments, re-mortgaging and contractors to move in and fix the mess. There are many people affected and these things don't happen overnight. Owners of flood damaged houses will need somewhere to stay if their place is uninhabitable. The rental market in a few week will be inundated with people.

Can you understand why the term "Ambulance Chaser" comes to mind? You may be right, I don't know. What I DO know that nothing is as simple as it seems.

The median price of property in greater Bris WILL drop significantly. I don't feel like giving a real explanation. Will rents rise in an environment of dipping prices?

 

[Craiginqatar]

I'm thinking back to the fires the Canberra Region had several years ago and rents went up considerably as people require accommodation. It could be the same in Brisbane as these things unfortunately take time.

In any case, my heart goes out to the victims and their families.

 

[skater]

I was 14 and houses on the river belonged to the rich back then, just like now. I think many riverside houses now are owned by wealthy people who were around in 1974 and, like myself, know that river front properties (think New Farm, Chelmer, you get the drift.... expensive suburbs - especially right on the river) will always be out of reach of the "average" homeowner.

I am happy to be proved wrong but a house worth $3M last week isn't going to be sold next week for a song because the owners know it will always be a valuable property.

People in their 40s and 50s who can afford to buy riverfront properties would very often have lived through the 1974 floods or have family who did so.

I actually think that in 2011 most people who live in a premier riverfront property has bought there, inherited it or made the conscious decision to take the risk. Back in 1974 there possibly were more people who didn't have a memory of the last big flood but anybody buying over the past 35 years does so knowing there is threat of flood. If I could afford to buy on the river I would take the risk.

Although I'm not in Qld, and have zero direct knowledge of the immediate area, I would still agree with Wylie. Why? Riverfront is a desirable location. People who buy riverfront, buy with the knowledge that rivers can and do flood from time to time. They really don't care and will still take the risks. I have two examples of conversations I have had with people looking to purchase something.

Yesterday, I was a the home of a friend who is renovating. They want to sell up and buy a riverfront home. She showed me something that would be desirable to her on the banks of a river that floods regularly. All I could see was an old home that needed a heap of work in an inconvenient location with a very, very expensive price tag. It did have beautiful views, and was right on the water. I asked "Are you concerned about flooding?" To which she answered that flood levels might get into the house, but there is a top floor, so we can always put valuables up there if it floods. It's the risk you take, to live here.

Another was when I was looking to buy some property in a Regional area. I was talking to the Real Estate Agent and asking about flood zones, because I didn't want anything that was likely to flood. I was told that the flood areas are the prime areas in town and that people will pay a premium to live there. They were used to floods and just did not care. When I looked at the map of flood affected areas, I noticed that the Agent was right. The premium priced property was all in the flood area. You could easily buy something newer and much nicer not much further away for a huge discount.

Now, in saying this, I believe that CS2 might be correct that there could be a few that have bitten off more than they can chew and want to offload their properties quickly, and if you are in the right place at the right time, you might just get a bargain. But by and large, I think properties will always be desireable in those locations.

 

[Giddyup]

Property prices continuing to double every 7 to 10 years is an unrealistic expectation.

Right on! I'm getting a bit sick of people sticking their head in the sand and chanting 'property will double every 7 - 10 years'. If you need to say this to make paying for over priced property bearable, then good luck... because in the next 20 + years you are going to be in trouble.

 

[wylie]

Now, in saying this, I believe that CS2 might be correct that there could be a few that have bitten off more than they can chew and want to offload their properties quickly, and if you are in the right place at the right time, you might just get a bargain. But by and large, I think properties will always be desireable in those locations.

You made a good point here. Anybody who has stretched themselves will possibly sell at a discount to rid themselves of a problem. But this would happen no matter the trigger. The fact that thousands of people suddenly have problems will not help the market, in my opinion (and I'm no expert).

My point is that I know (and know of) several very financially savvy people who have chosen to buy premium river frontages. Knowing the financial calibre of these people, none of them will need to sell due to this flood.

If we had stretched ourselves to buy on the river, we would be in trouble. Hence, we have never stretched ourselves to do this. I imagine there will be people in both camps, but even if we stretched to get on the river, we would tough it out because I believe river frontage property will always be desirable.

 

[Gremlin]

I was 14 and houses on the river belonged to the rich back then, just like now. I think many riverside houses now are owned by wealthy people who were around in 1974 and, like myself, know that river front properties (think New Farm, Chelmer, you get the drift.... expensive suburbs - especially right on the river) will always be out of reach of the "average" homeowner.

I am happy to be proved wrong but a house worth $3M last week isn't going to be sold next week for a song because the owners know it will always be a valuable property.

People in their 40s and 50s who can afford to buy riverfront properties would very often have lived through the 1974 floods or have family who did so.

I actually think that in 2011 most people who live in a premier riverfront property has bought there, inherited it or made the conscious decision to take the risk. Back in 1974 there possibly were more people who didn't have a memory of the last big flood but anybody buying over the past 35 years does so knowing there is threat of flood. If I could afford to buy on the river I would take the risk.

Bear in mind that the vast majority of properties inundated in the past week that are at the other end of the scale to premier riverfront property. They are in working and middle class suburbia areas of places such as East Ipswich, Booval, Bundamba, Goodna, Jindalee, Sinnamon Park, Oxley, Rocklea, Moorooka, etc. A small minority may have taken a conscious decision to buy a waterfront prestige property in Fig Tree Pocket, New Farm or Chelmer with a calculated risk that it might flood. A larger proportion were simply looking for an affordable place to call their own and to raise their families. It's hard to see a potential buyer in Goodna not marking down the price of those houses that went under versus those that did not.

 

[wylie]

Gremlin, I agree but my comments about prices not dropping was aimed at those prestige riverfront properties. I agree that in the short term nobody will be rushing to buy flood affected properties, unless it is at give away prices. Why would they buy at give away prices unless they think prices will rise again in time?

Even those families in "ordinary" houses would have to weigh up the cost of selling a badly damaged house which will hardly bring a premium. When they factor in the sell costs and costs to buy again, I would guess most will clean up and move on as best they can.

I guess some will simply walk away and take what they get and I guess some will never be able to afford to buy back in again. But the "get right back up" spirit is strong and the thousands is volunteers would buoy many who might otherwise give up.

 

[Barty]

It amazes me that think what is happening in Queensland could be avoided through planning.

We don't call it the river city for nothing - most of the oldest and most expensive suburbs are near the water. To vacate low lying areas near the water would be like reclaiming Sydney's harbour-side suburbs. Possible but hardly practical.

In central and south west Qld it is worse. These areas are pretty much dead flat and the towns are built on rivers because thats the water source. When rivers break their banks the water goes forever because its flat and there's no getting away from it.

Anyone buying property in Brisbane in certain suburbs will always do a flood check when buying. I've bought and sold in suburbs that flood for the past 15 years and I know where the water goes to the meter - just do the checks and talk to the old timers. Most people have a pretty good idea of the risk they are carrying, which is why there are very few people in Brisbane saying "why me?" or "what a surprise". For this reason I believe flooding risk is built in prices in Brisbane and there will be no long term impact - same as after 1974.

The only truly surprising aspect of these floods is in Toowoomba and surrounds. Flash flooding has happened before in those areas but its rare and by definition sudden, unexpected and dangerous.

In terms of the rental market I'm already seeing an impact. There will be a short term drop in vacancy rates as flood affected properties are temporarily taken out of the system and affected home owners who don't normally rent have to do so. Coincidently I changed over tenants in my property at oxley this weekend and was easily able to get new tenants within 24 hours with no break.

These affects will correct in time - probably in six months going by how long friends of mine estimate they'll be able to move back in to their place in Sherwood.

 

[bene313]

Right on! I'm getting a bit sick of people sticking their head in the sand and chanting 'property will double every 7 - 10 years'.

Well, it might happen. Who knows what the future holds? Personally I don't necessarily think that property will double in the next 10 years, but I make sure I hold some in case it does.

 

[sash]

Well lets put it in perspective.....at 4% per annum....assuming someone on say 64k will earn about 83k in 7 years time with compounding.

So yet.....one can assume that a person who has a 300k house could afford to pay about 500k for a house.

Me too.

Is your boss going to be paying someone else twice what you are currently paid to do the same job in 7 years?

You will be lucky to get 4% per annum when gaining additional experience in the same job.

 

[mattnz]

Well lets put it in perspective.....at 4% per annum....assuming someone on say 64k will earn about 83k in 7 years time with compounding.

So yet.....one can assume that a person who has a 300k house could afford to pay about 500k for a house.

No that is the expectation for the individual, who is now 7 years older and has more experience. The person who is 7 years less experienced than you, trying to buy an equivalent house to what you were purchasing 7 years ago hasn't received any additional salary.

 

[marg4000]

After 1974 riverfront property DID drop fairly dramatically. After all, we don't know that there won't be another flood next month, let alone next year. I recall riverfront houses in Jindalee selling for substantial discounts.

However, as memories faded the prices did recover. 10 years later we were kicking ourselves for not picking up a bargain. 35 years later we would have been multi-millionaires from this one purchase - until 2011 !!!

I think this time is a little different. 1974 was an out-of-the-blue event after 80 years (since the previous big flood). This time it is 40 years, with no guarantee when the next flood will come. This time the issue is when, not if. All flood-affected property values improved after Wivenhoe Dam was built mainly for flood mitigation. Since then it has morphed into a water storage facility.....

So you pay your money and take your chances. But I expect the value of flood-free properties to outpace the flooded ones for quite some time. Likewise with rentals, a previously flooded property will be less attractive while memories are vivid.

The BCC has an excellent website listing all properties and their 1974 flood levels, I expect in time this will be updated with recent data.
Marg

 

[mattnz]

One key consideration is that people won't be able to get insurance for floods in flood prone areas, which will mean they can't get loans, as banks won't lend against an asset which isn't insured and is high risk. This alone would send asset prices down in a hurry.

 

[agent007]

This is all a big lie that I have seen many times and heard property spruikers use on a regular basis.

Lets say that extremely conservatively, property prices in England were on average only 2 pounds 900 years ago. Assuming that property prices doubled only every 10 years since then, that is 90 periods of 10 years. The calculation then becomes 2^90 = 1,237,940,040,000,000,000,000,000,000 pounds!!

This is more money than there has ever been on earth, just for a single house and actually clearly proves that the compounding effects of doubling every 7-10 years is impossible to have happened!

Well, the calculation is not that easy. Several other variables need to be taken into account like the concept of a house and its measurements, the medium used to exchange goods and services, etc.

 

[agent007]

One key consideration is that people won't be able to get insurance for floods in flood prone areas, which will mean they can't get loans, as banks won't lend against an asset which isn't insured and is high risk. This alone would send asset prices down in a hurry.

I guess that this also mean that there would be people with negative equity as entire subs will be downgraded. Will this also imply that as some subs are downgraded others are upgraded?. After all, a significant chunk of stock has either been downgraded or taken out of the market.
Does any one know what happened during 1974?

 

[csc2]

I
Does any one know what happened during 1974?

there was huge discounting happening after '74 in brisbane...took some years to recover to a point where and agent wasnt so worried about flooding and buyers started to forget also.

go ask any long term agent, they will tell you exactly what i am saying.

people underestimate what this flood will do to the r/e in brisbane in many areas.....it has a flow on effect

keep in mind the 74 flood wasnt the biggest by a long way....there was one in the last 1890's i think that was massive.

times have changed so much in brisbane, the number of people living in flood prone areas has increased dramatically since '74, therein lays the problem.

you can blame successive BCC's for allowing it to happen...

the dam wont stop a really big flood from happening and really sorting out Brisbane one day...

buy about the 1890's flood to be sure you have a good chance of never going under....

 

[csc2]

Here you go, get to know Brisbanes flood history.....

There are many areas of Brisbane that can go under with big floods.

It could have happened this week if one of those cyclones off the coast had hit the south east...one day it will happen and many new suburbs will go right under without question, never mind the CBD.

http://www.bom.gov.au/hydro/flood/qld/fld_history/brisbane_history.shtml

 

[agent007]

there was huge discounting happening after '74 in brisbane...took some years to recover to a point where and agent wasnt so worried about flooding and buyers started to forget also.

go ask any long term agent, they will tell you exactly what i am saying.

people underestimate what this flood will do to the r/e in brisbane in many areas.....it has a flow on effect

keep in mind the 74 flood wasnt the biggest by a long way....there was one in the last 1890's i think that was massive.

times have changed so much in brisbane, the number of people living in flood prone areas has increased dramatically since '74, therein lays the problem.

you can blame successive BCC's for allowing it to happen...

the dam wont stop a really big flood from happening and really sorting out Brisbane one day...

buy about the 1890's flood to be sure you have a good chance of never going under....

What about the areas that didn't flood in 1974? Did they went also down in price, remained at the same price or went up?