REIQ says worst possible time for floods as ‘four Sydney Harbours’ rain down
REIQ says worst possible time for floods as ‘four Sydney Harbours’ rain down
The Real Estate Institute of Queensland has said the floods that are ravaging the state, as well as New South Wales, could not have come at worse time for property owners and the sector as a whole.
Authorities estimate that the equivalent of more than four Sydney Harbours have been dumped on just two dam catchment areas in southeast Queensland since the first rains hit over a week ago. The volume of water that has inundated the entire two-state flood zone is incalculable.
The already-dire situation threatens to deteriorate further, with more rain and hail expected in coming days. The impact on the property sector and longer term effect on the market are also as murky as the floodwaters.
REIQ CEO Antonia Mercorella said many properties would be rendered unfit to live in and in some cases, require termination of the lease agreement on the grounds of non-livability and, for others, temporary relocation, both adding to the strain on housing.
“The timing of this major flood event couldn’t be worse; it will displace tenants and owner-occupiers and diminish levels of rental stock at a time when we are experiencing incredibly tight vacancy rates across all corners of the state,” Ms Mercorella said.
“We also know that tradespeople and building supplies are rare as hen’s teeth in the current market, with a pre-existing backlog of enquiries for various standard renovations, repairs and building works – meaning flood affected property job enquiries could be joining the back of an already long waitlist.
“These wait times could mean it’s some time before we see properties repaired or ready to re-join the rental pool.
“This will only exacerbate the rental crisis which means an enormous amount of stress on tenants and on property managers who were already under strain over the past two years due to COVID-19 impacts and undersupply issues.”
The Insurance Council of Australia has issued a Catastrophe Declaration and provided advice, in conjunction with other bodies, for those seeking information about insurance and related procedures.
The REIQ also referred tenants experiencing hardship a range of available government assistance options (refer to end of this article).
As tens of thousands of Sydneysiders were ordered to “get out now” or put on evacuation alert late on Wednesday evening, the Real Estate Institute of New South Wales (REINSW) issued a list of support services available in NSW as well as Queensland.
Whether or not wary buyers will avoid areas affected by this year’s flooding is as opaque as the muddy rivers swirling through owners’ hallways and bedrooms.
Doron Peleg, CEO of BuyersBuyers, argued that the floods would become a distant memory relatively quickly in terms of Brisbane’s housing market dynamics.
“A few years ago our market research showed that out of the top 20 suburbs impacted by floods in 2011, 19 of them outperformed the Brisbane house price growth benchmark over the following five years,” he said.
“There was a perception after the floods that flood-prone areas might be perceived negatively or experience poor capital growth, but that did not prove to be the case.”
“Part of the reason for this was that many of the suburbs were located close to the river, with water often being a drawcard for buyers in Australian real estate and most buyers were able to look through the risk of flooding as an infrequent event they were prepared to deal with.”
“It also helped that some of these locations were subject to rezoning, which made them potentially attractive to investors and developers” Mr Peleg said.
BuyersBuyers co-founder Pete Wargent said there were risks and investors could shy away from huge insurance premiums.
“Generally speaking, for investors we tend to avoid flood-prone areas for investors, because the insurance premiums can be high, and there is less of a ‘sleep at night’ factor,” Mr Wargent said.
“There may also be challenges upon resale of the property, if there is a perceived risk of flood impacts, or if the property shows up as an elevated risk on flood risk assessment maps.
In the aftermath of the 2011 flooding, there was a modest downturn in prices, although the market was already experiencing relatively flat conditions after an earlier boom.
“Over the following five years, detached house prices in Brisbane recorded price growth of about 25 per cent, so there wasn’t really a discernible negative impact from flooding,” he said.
While previous floods have not hit property prices, a growing perception that once-in-100-years flood events are happening once a decade may, however, soon permeate the psychology of prospective buyers.
Time for cooperation
As tens of thousands of people waded through muddy waters where their houses and businesses once stood undamaged, Queensland Deputy Premier Steven Miles said on Wednesday (2 March) that the clean-up operation was underway in many places.
“It's clear that the flooding disaster emergency here in the southeast is not over yet, but the recovery process has begun,” he said.
“Early estimates suggest that the damage bill for this disaster could be up to a billion dollars.”
Urgent repairs are already underway on the state’s public transport network which effectively ground to a halt as the water rose.
With extraordinary strain also being placed on property managers, the REIQ’s Ms Mercorella called on the community to be mindful of the ongoing demands on property management businesses.
“We ask that property owners and tenants be mindful of the heightened demand on property managers during natural disaster events and understand that response and processing times are likely to be delayed and prioritised based on needs and emergency situations,” she said.
“Property management is a mammoth job and while there may appear to be quick fix solutions to damages, it’s important to consider the scale of enquiry your property manager may be processing.
“Unfortunately, in a widespread natural disaster such as this, there is no standard communication protocol or response time from property managers given each agency is in a unique position in terms of staff resourcing, size of their rent roll, the number of affected properties they’re managing, and in some cases whether their offices or personal residences have been impacted too.
“It is also quite difficult to assess the extent of the damage while the situation is still unfolding for many, so what we ask for is patience and understanding from all parties in a tenancy.”
Help is available
Tenants experiencing hardship can seek assistance from government assistance packages:
- Australian Government Disaster Payment - Tenants may be eligible for the Australian Government Disaster Payment, where affected individuals can claim $1000 per adult and $400 per child via the Services Australia website or by calling 180 22 66 if people don’t have access to the internet or a computer.
- Australian Government Disaster Recovery Allowance - The Disaster Recovery Allowance (DRA) is a short-term payment to help people if a disaster directly affects their income, available for a maximum of 13 weeks. More information is here or by calling 180 22 66 if people don’t have access to the internet or a computer.
- Joint Queensland/Commonwealth Emergency Hardship Assistance grants - Emergency Hardship Assistance grants help cover the costs of essential items, such as food, medication and clothing. Grants of up to $180 are available per person and $900 for a family of five or more. More information is available here or by calling the Community Recovery Hotline on 1800 173 349 to get information or apply for the grants and access to support services over the phone.
- Joint Queensland/Commonwealth Essential household contents grant - Tenants may be eligible for financial assistance to provide a contribution towards replacing or repairing essential household contents, such as beds, linen and whitegoods, that have been lost or damaged in a disaster. Grants of up to $1,765 for single adults and up to $5,300 for couples/families. More information is here or by calling the Community Recovery Hotline on 1800 173 349 to get information or apply for the grants and access to support services over the phone.
- Tenants needing temporary accommodation - Tenants who need accommodation support should call 13 74 68 or go to the Queensland Government housing website.