Home price risk warning: Cyclone and wild weather impacts

Property punters are watching on to see if Queensland’s property market can weather the storm in the wake of Cyclone Alfred.

Wild weather and cyclones have made buying and selling property mission impossible of late. Flooding through Brisbane and other parts of Queensland has led to significant insurance ramifications that could impact property prices and could also deter buyers.

The Brisbane market has been strong in recent years. PropTrack data shows that property prices grew 10.2% to $870,000. But clean up efforts are now underway after powerful winds, heavy rain and flash flooding lashed the coastline, making life particularly tough for anyone with a house current listed for sale.

Insurers have received more than 22,000 insurance claims from policyholders across southeast Queensland and northern New South Wales following Cyclone Alfred.

While the majority of claims are from Queensland, claim numbers across NSW are expected to increase in coming days, according to the Insurance Council of Australia.

Weathering storms

How deep the impact will be on Queensland’s property market depends on who you ask.

While Brisbane’s property market has always shown resilience, the increasing frequency and intensity of natural disasters could change investor sentiment, according to Australian Property Investor founding director Belinda Botzolis.

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Insurance companies placing embargoes on new policies across a 400km stretch of coastline spanning from Noosa to Byron Bay means home buyers who have recently purchased could be unable to secure home and contents insurance until the embargo is lifted, she points out.

While embargoes like this are a common industry practice, they are a stark reminder of the growing financial risks associated with home ownership in disaster-prone areas, Ms Botzolis explains.

“The question isn’t just whether Brisbane’s market can survive another disaster – it’s weather buyers and investors will continue to view the city’s property market as a safe bet,” she pointed out online recently.

True impact

PRD Real Estate chief economist Dr Diaswati Mardiasmo conducted some analysis on property prices in QLD in previous floods to get a picture of what property buyers and sellers can expect moving forward.

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Having analysed the market after the flood in northern NSW and parts of Brisbane in 2022, Dr Mardiasmo discovered that median house and unit prices fell the year after the floods, before bouncing back again in 2024.

The floods, which occurred in March 2022, resulted in thousands of households being told to evacuate as the Hawkesbury River, Nepean River and Georges River began to rise after 100mm of rain fell in parts of Western Sydney. Another heavy deluge inundated Sydney streets again five days later.

While immediately after, a price drop is evident and experienced, due to the undersupply of houses driving greater demand, prices pushed back up again.

“For most places, prices even surpassed the median price of pre-flood in 2022, but not all- Ballina, Byron and Lismore haven’t quite surpassed the pre-flood prices yet, but certainly is on a growth phase,” Dr Mardiasmo says.

The good news is that homeowners had more time to prepare their properties for the cyclone due to early warning systems, she says.

A flood damaged outdoor building on the NSW north coast. Picture: Getty

“The only issue that people might have is that higher insurance premiums to cover them next time, which can be a deterrent for buyers. However, considering the scarcity of new homes, this shouldn’t have too much impact,” she says.

Meanwhile, Ray White analysis suggests that many high risk areas continue to command premium prices, despite the risk of floods or natural disasters.

Chief economist Nerida Conisbee says the benefits far outweigh the risks for beachside and coastal properties, which will always be in demand.

Blip on the radar

Property market analyst Simon Pressley is adamant that there will be no change to property values in cyclone affected suburbs.

Whether it’s a natural disaster, a global health pandemic or the Olympic Games, he admits that emotions can run high for a short period of time in the lead up and just after these events.

Rising flood waters in Brisbane, Queensland. Picture: Getty

But at the end of the day, the biggest influence on property markets is economic performance, he says.

“These events come and go quickly, and there’s a small percentage people who are adversely affected by it, but there will be no change up or down as a result of this event. This will be a distant memory and the sun comes out,” Pressley says.

“There will be media images of flooded homes, but they won’t mention the fact that it’s the one street that always floods after heavy rains,” he says.

While Cyclone Alfred attracted a lot of mention attention, the fact is that there are several significant weather events every year.

“People need to remember it’s just weather. All those households still need a place to live after the clean up efforts,” Pressley says.