Australian Property News

Flooded properties to bounce back in value

Posted on Friday, January 28 2011 at 6:59 AM

Investors affected by the recent floods in Brisbane may discover their property's value increases again sooner rather than later.

National Property Research says engineers, geologists and hydrologists are already considering new mitigation strategies. This means riverfront properties will eventually get another layer of protection that in theory should put another flood event on a much smaller scale. National Property Research says in the short term, properties that went under will probably experience a softening in value, but riverfront properties that stayed dry will probably attract a premium.

"The outlook will improve throughout 2011, assuming that there are no more events of similar scale and ferocity," it says.

"Insurers are either going to be the hero or the villain. They will, to a large extent, determine what happens to values in our riverfront suburbs through policy decisions."

National Property Research says there are also some other positive opportunities for Queensland.

"The most obvious is the localised injection into the construction sector," it says.

It also points out the difficulty comparing the 1974 Brisbane flood to the 2011 flood. For many flood-affected homes in Brisbane, the levels peaked and dropped within two days. In 1974, however, the city was flooded for one week and didn't have 24-hour media resources or mobile phones to help during the event.

"The expected damage to property in the 1974 floods was $980 million, as estimated by the Australian Insurance Council. Insurance cover was only $68 million."

National Property Research says it will be fascinating to see if the ratios are so far out this time.

"In 2007 dollar terms, should such a flood like Brisbane 1974 ever be repeated, this represents an insurance loss of $1.8 billion and a simply staggering uninsured loss for both government and the affected community."