As I write this we have just experienced weeks of floods in Queensland, culminating in the peak of the Brisbane River early this morning flooding thousands of homes. Hundreds of thousands of people across the State have been affected including the tragic loss of life by these devastating events. Yet in the face of the adversity the strong and stoic people of Queensland are responding in a way that makes me proud to be a Queenslander as, before even the worst is even known, they are already focused on the rebuilding task at hand.
As investors we need to take that lesson on board and look not just at the current circumstances but what it means for the future and there are many positives that will come from this event once the worst has passed.
The immediate effect has seen increase in the price of some of our exports due to the constraints on supply from our mines and farms. After such devastation there will be years of rebuilding costing billions of dollars. With this sort of investment comes jobs, opportunity and confidence. So while the media is discussing the negative impact on our economy (which will be significant), this is likely to be short lived, merely delaying the growth of our economy rather than stunting it.
Queensland has always been a popular place for people to migrate from within Australia and around the world. While the immigration and migration numbers have been lower in 2010 than the 5 year trend, there is evidence that this is again increasing and the rebuilding effort combined with the mining boom will attract both workers and business to the State.
Queensland, at a macro level, has seen a relatively benign property market in 2010 impacted by a number of factors, including the reduced rate of migration. With these numbers already on the increase it will place further pressure on supply, likely to be exacerbated by the homes destroyed as a result of the floods and an anticipated reduced demand for property in flood affected areas over the next 3-5 years while it’s still fresh in people’s memories.
There is hope in the midst of the devastation.
A message to our clients and other property investors…
Many of you may be concerned for you investments. Don’t be. While this event was catastrophic and the unique set of circumstances that caused it unforeseen, the majority of the flooded areas have been prone to flooding in the past. This is a key consideration in the identification of the areas and estates in which we source property for our clients.
Much has changed in the hydrological (water/land) considerations in planning for land estates since the 1974 floods in Brisbane (and I’m guessing this will change again in the wake of the last few days events). So, while we can complain about the additional costs of land due to the standards that have to be met, its times like these that we can see it for the practical investment it is.
None of our estates experienced any flood event outside of intense local rain. None of the properties we manage have had any damage with the exception of some of the newly planted gardens being washed away (expect some cost here around the $500-600 mark) and the greatest effect will be the likely delays in construction for those properties not yet completed due to the rain.
In addition, with each of these estates located in population centre’s where there is significant growth and investment occurring and while we can’t yet forsee the full effect of the floods impact on the State, we anticipate that the ongoing investment in these areas, combined with the investment to occur across the State bodes well for the next 5 and 10 years.
The other silver lining is likely to be this… areas that were not flood affected are likely to become more attractive in the short term with investors looking for peace of mind.
If you have any concerns at all about your investment properties or any questions on the predicted impact of the last few days on our industry, please feel free call your coach or our office.