QLD Townsville Flood

Hi all,

Looking for advice on property post the current Townsville floods. My wife and I are moving to Townsville in a few weeks for work and as the floods hit were in the final stages of negotiating on a property located in Idalia to live in. We loved the area and the house was to become our family home. We withdrew the offer at the beginning of the flood to ensure we didn't end up with an insurance nightmare during settlement. We've since been advised by the agent that the property was cm from water entering the house and only the yard and garage were affected.

Given the majority of the suburb was inundated, would it be assumed that the Idalia property market will now fall bringing down the value of the property we were in the process of purchasing (creating a financial risk that we may never get a return on the purchase in the future if we eventually decide to return to SE QLD) or will it retain its value and become a great selling point in future as the house that survived the 1 in 100 year flood...

We wonder if the property will now gain interest after sitting on the market for months given it was mostly unaffected or will the suburb stigma of flooding turn buyers away?

Should we hold off to see how the market plays out (risking missing out on the home)?

We understand suburbs affected in the 2011 Brisbane floods did recover but Townsville is obviously a different market being regional.

Any advice would be appreciated to see if we are chasing our heart too much in the purchase.

 

I'd be wary of anything close to a flood/storm surge zone in Northern Australia.

The extreme weather will get worse and the insurance will be outrageous.

I'm sure the house is lovely but there will be others....on hills, high and dry!

 

Regardless of the flood, do you think an investment in a regional town like Townsville is wise?

Why not just rent to start with and reassess in 12 months?

 

As a Qlder, I wouldn’t buy anything north of say Gladstone due to the weather.

Not that I would buy in Gladstone either.

Like @JohnPropChat suggested, rent in Townsville and buy somewhere else.

 

Hmmm, I would be cautious, at the very least call a few insurers, give them the blunt story and ask what premiums they will charge...also what the premium would be afterwards if the house did flood.

 

Do not buy in Townsville..Most of the town will be uninsurable going forward.

 

Kieran, have you looked at the current trends in rental yields and prices in Gladstone? It appears to be becoming a fair investment again...?

Interested to know why you wouldn't buy / look at in current cycle. (maybe a topic for another forum!)

Moo - had family in Kirwan very lucky to avoid the water. Hope things work out okay for you.

 

I don't think that will be the case, it will be no different to Brisbane or Toowoomba or anywhere in the country which has had a major flood. Once the initial over reaction goes away flood risk will be assessed on a suburb by suburb, street by street and individual property basis.

Flood maps will become more detailed and conservative and for those in the wrong locations premiums will become extremely expensive if available at all.

 

Buying after the flood when everyone is jumpy and prices depressed could be a shrewd move. Many people who got into Brisbane and Ipswich after 2011 did well.

 

The short answer is No.

Main reason is that we are in retirement phase, not accumulation phase.

If we were in accumulation phase, the answer would still be No. There are only three locations that I would buy in, namely:- Brisbane, Sydney and Melbourne. I could be tempted to look at GC and SC. For a regional, then it would be Toowoomba as I know it.

Gladstone doesn’t and probably never will tick enough boxes for me, as a B+H investor.

 

I personally would definitely not buy this property and I feel you've actually dodged a bullet by not having signed the contract prior to this event.

1. Sentiment plays a big part in demand and the demand for property in Townsville, at least in the short term, will be very low on the buying side.There is now a perfect storm (no pun intended) that will cause Townsville property to suffer in some regard. Remember, it was already not performing that well for those who have bought in the last few years and with the lending issues at the moment and now this, you will be entering a market that is ripe for further downside.
   
   
2. If you are considering renting, rental demand has already gone through the roof and prices will rise in this regard, at least in the short term.
   
   
3. There is no risk on missing out on the home. If you are worried about risk, look at what you know versus what you don't know. You don't know that another "perfect" home won't be around the corner. In fact this is now likely and probably at a cheaper price. What you do know is that "risking" missing out on the home is a perceived risk whereas buying the home is actual risk and by making this post you clearly are well aware of them.
   
   
4. More people will want to sell in addition to those who were probably planning to sell anyway. If anything, this will probably increase stock levels and present more opportunities for you in the next 6-12 months where you can take your time to assess the market and find properties that also weren't affected by flood.
   
   
5. I understand the instinct to feel that because the property wasn't greatly affected by flood that it will hold its value but this isn't correct. Firstly, it was definitely affected by flood and any future flood mapping will show this. As a buyer myself, this would rule out every buying this property, not to mention future insurance costs.
   
   
6. I don't know the prices in the area you're looking at, but markets are a mixed beast and generally work in concert. Unless that property has something very specific going for it in the first place, it will be dragged down with other prices (assuming they do fall) whether it was individually affected by the floods or not (and it was anyway). You've already said yourself that the property has been sitting on the market for months before the flood. Do you think someone is going to rush out and buy it now?

As I said at the start, I wouldn't be buying this property. You have been handed a card to not rush and I would now play it. Of course, emotional buying doesn't work this way but ask yourself the question and put your one-year older self in the seat. "Do I wish I'd have held off now that prices have dropped X%?"

Cheers

- Andrew

 

The cost of cylone insurance should be understood before buying anything north of the tropic of capricorn.

 

My quick guess is, yes, prices will drop substantially in the short term, particularly in impacted areas like Idalia so you could save significantly if you find something else (and dodge a huge negative equity risk).

Unfortunately all the flood impacted people don't have the same opportunity so lucky to be you.

 

By the way, if anyone is wondering about the types of houses that were flooded in Townsville, I came across this INCREDIBLE video that will make any home owner cry

https://www.facebook.com/video.php?v=2692708780769499

Streets and streets of beautiful new 2 to 3 year old houses, many "forever homes" no doubt, just lost all their value just like that (not to mention unlivable for a period).

The video seems to have been shot in the OPs suburb of Idalia

So sad

 

^^^ Nightmare.

What is involved (cost and work) in making something like this habitable again?

 

Very bad for those impacted and I do feel for them.

My gut feeling is Townsville could be screwed for a looooong time. These events are becoming more frequent and more intense. But let's not alarm anyone hey?

 

The only example I can give is in Brisbane 2011 ..Rocklea prior too the floods they were around the 330k mark one week after those investors that had to sell because of way the insurance covers were set up that , did not cover that type of flood the low point was 175k ..Those properties would have needed 100k to fix and unless you had some basic building skill that was maybe the best way out..

Townsville will be different ,the humidity would be a real problem and plus it's in cyclone alley everywhere up that way is the same..

Rocklea now many years later are back in the 425k plus ,Yeronga riverfront did drop over 40% Dutton park the same West End not so much the ucv land values stayed in the same as before the flood..

The real problem was Suicide once the insurance would not pay ,I know one person in one of the streets that went down that path as that was his only escape..

 

Mold is already making a huge appearance and will be a major problem in Townsville now.

- Andrew

 

That sort of property should never have been permitted to be built in Idalia. That area is a known flood zone!

Something is seriously and fundamentally wrong with town planning up there.

Heads should roll for this.

 

Gee, that footage from the boat going through those suburban streets is eerie. Building low set houses in areas like? So dopey. Especially after a couple of hundred years of high set Queensland houses.