Floods and the economic crisis have had a severe impact on property prices in parts of Australia with areas badly affected seeing prices fall and in some cases homes becoming unsaleable, research shows.
Analysts from RP Data have found that Australia’s luxury suburbs, coastal strips and flood regions have been hardest hit as median values have fallen by up to 46% in the last year.
Point Piper, long regarded as Australia’s most expensive suburb, has seen median prices fall by 37% to $1.17 million in the 12 months to the end of December 2011.
Vendors were also forced to cut prices by almost a quarter in premium postcodes including Surfers Paradise on the Gold Coast and Western Australia’s millionaire’s row Peppermint Grove.
RP Data senior research analyst Cameron Kusher said buyers were still smarting from the 2008 global financial crisis, with share market hits and other personal financial losses weighing heavily on wealthy Australians and retirees.
‘Since the GFC people aren’t moving around as much to those once popular sea change and tree change areas. They’ve lost a lot of money and are rebuilding their wealth,’ he explained.
The areas with the top 10 price falls of the year include Mittagong in the New South Wales Southern Highlands and Golden Beach in Victoria.
But it is properties in flood affected North Booval, a suburb of Ipswich near Brisbane, which has experienced the worst price fall with houses dropping by 46.3% to $154,000.
Kusher said that some homes in Ipswich’s flood hit areas were now unsaleable but said buyers had short memories when it came to natural disasters and if sellers cut the price enough, any property will sell.
‘If it doesn’t flood for another five years buying activity will return to those areas,’ he said.
He pointed out that while prices dipped in the towns affected by the Victoria bushfires and Cyclone Larry in North Queensland, sales volume and prices picked up within 12 months.
Kusher said property prices had also been affected by slower interstate migration, particularly in Queensland, New South Wales and Victoria.
Properties in cities are likely to recover first, according to Australian Property Monitors senior economist Andrew Wilson.
‘Perth and Brisbane remain on track for a recovery in median house prices this year with healthy increases in buyer activity from the low levels of 2011,’ he said.
‘Sydney and Canberra should provide the usual solid results over the year reflecting the chronic underlying shortage of accommodation in those centres,’ he added.
He believes buyers may remain cautious in Melbourne with the local economy set to struggle in 2012 but sales are expected to lift in Adelaide. Although somewhat volatile, Darwin should also finish 2012 with encouraging housing market results, he added.
The boom in the resources sector will boost some regions, particularly in central Queensland.
‘The Gold Coast may also surprise while Newcastle and Orange in New South Wales and the Macedon Ranges region of Victoria should continue to attract significant buyer interest,’ said Wilson.