One year after floods, Queensland property market showing signs of tentative recovery

The Queensland property market has a long way to go to get back to full health one year on from the natural disasters that devastated the state, but housing confidence is slowly returning. 

The January 2011 south-east Queensland floods and northern Queensland cyclone one month later killed 35 people and affected more than 500,000 square kilometres of Queensland, including low-lying parts of Brisbane, Ipswich and the Lockyer Valley and up North, Cairns, Townsville Tully, and Innisfail.

The Queensland floods resulted in 58,463 claims totalling $2.4 billion, while cyclone Yasi resulted in 72,203 claims amounting to $1.33 billion. An estimated 15% of claims are still to be processed, with insurers warning premiums will soar should flood cover become mandatory.

The hard data shows that Brisbane is still struggling.

Last week, as part of his mid-year budget update, Queensland Treasurer Andrew Fraser adjusted his forecasts for housing investment, with the state still struggling to attract property investors.

“The dwelling investment outlook has softened since the budget, when investment was forecast to partly recover by 5.75% in 2011-12,” Fraser said.

In its most recent monthly update, the RP Data-Rismark index reported that Brisbane remains, alongside Melbourne, the weakest capital city, with values down 1.7% over the three months to November on a seasonally adjusted basis.  Brisbane house prices are down 9% from their peak and 7% for the year to November.

Real Estate Institute of Queensland chief executive Anton Kardash says the property market is “currently transitioning from a very tough 2011 into a market characterised by increasing buyer enquiry, sales activity, and confidence levels, and the extension of the boost will add to this more positive state of play”.

The REIQ September 2011 quarter report (its most recent survey) noted some signs of green shoots, with the preliminary number of house sales up a healthy 17% compared with the June quarter. Some regions recorded substantial jumps in activity as buyers finally started to foray back into the market.

“What these figures show is that it appears it took about six months for our property market to begin to heal from the natural disasters earlier this year,” says REIQ chairwoman Pamela Bennett.

“Activity in most areas improved markedly in the September quarter compared to the first six months of this year, but we mustn’t get ahead of ourselves given sales activity is still about 20% below where we were this time last year.”     

While the median house price in Brisbane reduced 2% to an even $500,000 over the period, the number of preliminary house sales was up 13%.