2022 Brisbane Flood
March 2022
The 2022 Brisbane Flood should really be called the 2022 Eastern Seaboard Flood because the weather event that caused this calamity was so much more widespread than just our city. From Maryborough and Gympie, the Sunshine Coast, here in Brisbane, through Logan and the Gold Coast and now northern NSW, there are history-making flood level records being broken up and down the seaboard. And its not over yet! Over the 6 days to last Monday, Brisbane recorded 792.8mm of rain. To put that into perspective, that’s 2/3rds of our annual rainfall in less than a week.
I’m sure there are plenty of other sources of information about the flood you can find elsewhere, so I will keep my comments in this newsletter focused on what we think this means for our local real estate market and what we think will happen from here. Before we talk about real estate though, let's first pause and acknowledge the tragedy it is for many people who lost everything in this flood. Individual property damage is catastrophic and in many cases its notably worse than the 2011 flood. We all thought that was the worst we’d see for 100 years but alas not and so our hearts go out to those affected.
In terms of what we thought would impact the local real estate market this year, lets have a roll call of the events that were already on the calendar:
1. Covid - we’re still managing the lingering effects of this global pandemic, especially the lockdowns and how badly these have affected many businesses, especially small businesses.
2. Federal election - elections always impact the real estate market because its seems most buyers and sellers pause to ’see what will happen’. This election is more significant than many.
3. Interest rates - expected to hit later this year, all the financial pundits have already factored in interest rate rises. With many homeowners unfamiliar with interest rates going up in their entire lives, this will be a shock to many.
4. War - talk of a world war is surely premature, but I recall that’s what they first said after that minor royal, Archduke Ferdinand was assassinated in a faraway country. What I mean is, this could turn ugly.
This week, we added a major flood to that roll call.
The thing is, this flood brings to a head many of the worst aspects of these issues. Covid has already dramatically impacted the supply chain and delayed construction projects all over the world, including for us here in Brisbane, not to mention the double-digit percentage rises in the costs of materials. With so many properties lost or damaged, insurers and others with capacity will take up any slack putting extreme stress on an already over-stretched supply chain. It's likely that the costs of building materials and labour will put upward pressure on prices. This flood also means that many rental properties are also damaged BUT so many fewer options existing for dislocated residents to move around, there will likely be a housing shortage. This shortage will also put upward pressure on the average cost of rentals and will take a long time to work through the system.
So, what does this mean for our local real estate market in the short term?
I think buyers will be more cautious about buying flood-prone property but except for those affected, prices will rise again this year. Buyers will factor in the skyrocketing costs of renovation, making completed product comparatively more valuable. I don’t think the stock levels will return to historical averages either as sellers find it difficult to buy the next property and so hold on to their other properties in response. This will mean less choice. Nonetheless, I can also see how things might turn and turn quickly. If it happens, I think cashed up buyers will be in the strongest position to take advantage when this happens. If you need to sell a property to put yourself in that strong buying position, assuming you have some else to live, I think it’s still a good idea to sell now.
In other words, sellers, what are you waiting for?