Victorian floods: Impact of deluge on house prices and how it will affect the property market

Knee-deep floodwaters have put Victorian home sales into disarray as experts warn owners the deluge could affect property markets for years.

21 Oakland St, Maribyrnong, has been damaged by flooding but remains on the market while the owner assesses and fixes the damage –

Knee-deep floodwaters have put Victorian home sales into disarray as real estate experts warn owners the deluge could affect property markets for years.

In regional areas, agents have cautioned some owners will be left with a bigger mortgage than their home is worth after being inundated and warned banks are stalling sales by up to two weeks to investigate if homes have been damaged.

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PropTrack figures show among the 177 Brisbane suburbs where more than 23,000 houses were impacted by floods in 2011, some had up to 41 per cent wiped off median house values in the year following the storms.

Economic research executive manager Cameron Kusher said although Queensland prices had been in decline before the floods, places including Yeronga, Rocklea, Oxley and Fairfield “did take awhile to bounce back”.

But Mr Kusher said the “blue-chip inner city” areas, similar to Maribyrnong in Melbourne where the median house price is currently $1.02m, had eventually recovered.

One of the affected streets in Maribyrnong. Picture: Tony Gough

Cleaning crews are starting to load up rubbish into trucks around the streets effected by flooding in Maribyrnong. Picture: Tony Gough

The high-end Brisbane suburbs included Chelmer, where medians fell from $862,000 to $610,000, and riverside Indooroopilly where medians dropped from $790,000 to $700,000.

“In Melbourne, people will be a bit cautious initially about purchasing in these (affected) areas, but I think they will recover pretty quickly,” he said.

Mr Kusher said homeowners should also expect higher insurance premiums.

Hocking Stuart Yarraville agent Fernando Costa said floodwater had damaged flooring and appliances at a recently renovated house for sale at 21 Oakland St, Maribyrnong.

Home contents line the footpath in Oakland St Maribyrnong after the Maribyrnong river broke its banks and flooded nearby houses on Friday. Picture: David Geraghty

“There was up to knee-high water all around the property, lots of homes in the street were affected,” he said.

The owner has decided to leave the property on the market while assessing and repairing the damage.

Wangaratta’s Garry Nash & Co. Real Estate director Garry Nash said badly flood-damaged properties’ values would decrease.

“There will be, I think, pretty major ramifications for a lot of people whose mortgage loan is higher than the value of the property,” Mr Nash said.

Mr Costa said section 32 vendor statements for Maribyrnong homes made it clear if properties were located in a flood zone.

Stockdale & Leggo Shepparton director Scott Butler, whose agency manages the city’s Strayleaves Caravan Park, said he expected demand for accommodation there to increase substantially as residents were forced out of flood-damaged homes.

The home at 21 Oakland St, Maribyrnong has been damaged by flooding.

Inside the 21 Oakland St, Maribyrnong home which is on the market now.

The bathroom at the Oakland St, Maribyrnong home.

Three of Mr Butler’s buyers, all investors, have also had Wyndham St, Shepparton purchases stalled by their lenders who want to investigate impacts from flooding, despite waters only reaching the homes’ front lawns and tenants still residing in them.

With prices from $350,000-$370,000 each, the sales were due to be ticked off on October 18, but “the bank was saying its not going to approve anything for two weeks”.

“Now these poor buyers are just waiting,” Mr Butler said.

“It’s just making people’s lives even more stressful.”

He was unsure which bank was involved as he was dealing directly with the broker.

10 Pelican Lane, Maribyrnong, has not been affected by flooding but the open for inspection on Saturday, October 15 was cancelled.

Cardamone Real Estate owner Peter Cardamone said about 20 rental properties the agency managed across the Shepparton and Mooroopna region had been hit by floods, leading to a surge in people needing emergency and alternative accommodation.

“Even prior to the floods we had a shortage of rental properties, this disaster has put a huge amount of pressure on not just our tenants, but also all other agencies across the Goulburn Valley,” Mr Cardamone said.

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Originally published as Victorian floods: Impact of deluge on house prices and how it will affect the property market