Home' API Magazine : August 2014 Contents 92
API AUGUST 2014
AUGUST 2014 API
In December 2012, just one month before
the flood, it was listed for sale at $320,000.
It was withdrawn from sale before the
cyclone hit and later transacted for a
mind-boggling $25,000 in October 2013.
Mike Schipper, a valuer with Herron
Todd White, also witnessed these lowball
sales taking place.
“ A lot of the flood houses got sold up for
very cheap money, anything from $40,000
to $50,000 for a gutted house, and they’re
slowly being done up at the moment,”
“ People would get insurance payouts for
the damaged house and then they were
selling them for substantial discounts
but when you put it together with their
insurance money, it wasn’t too bad an
outcome for them.”
He observed “quite a few local people”
taking advantage of the bargain buys, as
well as “people coming up from Brisbane
every few weekends to do them up” .
“ It seems like it was a lot of investors,”
“ T here are still quite a few houses
vacant at the moment that some people
just didn’t want to go back to and I’m not
sure what they’re doing with them.”
Schipper says the initial challenge for
his firm was valuing flooded properties
because there were no comparable recent
sales to use as a benchmark.
“ We had offices in other parts of the state
that were flooded previously and most of
the evidence they were showing us was
20 to 30 per cent of pre-flood value and as
it happened, here right at the start, it was
probably closer to 40 to 50 per cent.”
Sadly, property owners weren’t the only
victims. Businesses also suffered, some
closing their doors for good.
Robert McPhail was one of them, making
the decision to walk away from the
Bundaberg branch of Herriots about eight
months ago. He has since relocated to
Cairns where his family is based, saying
there simply wasn’t enough activity.
“ T hat market is good but it’s got no drive
in it. It’s a very conservative retirement
environment and it’s really driven by that
retiree mentality,” he says.
“ It’s a great city. It’s got a food bowl that
could service the whole of Australia.
“ T he market’s showing signs of picking
up but I think the negativity of the floods
really does have an impact.”
While the recovery is slow, Schipper
says it’s definitely under way.
“ We’ve found in the past that it’s
probably about two years before values
come back to where they were pre-flood;
A close call
When the water levels rose in parts of
Bundaberg last January, Tom*, a local of
14 years, knew his house would be safe
because “it’s miles away from the river”. He
was also confident his block of four units
at Bundaberg South wouldn’t go under, but
admits he was surprised by how close the
“You’ve got the road and about 40
metres of allotment depth and the water
was up to there,” he says.
“There was a metre or two in height to
go (before it came into contact with the
building) so there would have needed to
be a lot more water.”
Tom bought the property as vacant land
for $200,000 about four years ago, built
the units and today rents them out under
the National Rental Affordability Scheme.
He estimates the entire property, which
is on one title, would be worth about
His other investment, a former housing
commission house at Stafford Heights
in Brisbane, was purchased for $410,000
a year ago. Tom believes it would fetch
around $480,000 today.
Invests: Bundaberg South, Brisbane
Properties: 1 house, 4 units
Strategy: Long-term hold
“It’s got potential as it has a good outlook,
ability to value-add by building an ensuite
onto the main bedroom and a deck out the
front of the house which would double as
covered car accommodation. Also once
all of the housing commission has been
sold there it will be a different suburb,
especially with the new tunnel gaining
quicker access to the city.”
Tom intends to hold all of his properties
long term to benefit from the likely capital
And while he would consider buying
in Bundaberg again – “it’s a big enough
town and there are always good property
investment opportunities” – Tom says
confidence in the region has been hit hard.
“It’s still tough out there. It takes the
town a long time to get over something
*Name changed for privacy reasons
The Insurance Council of Australia (ICA)
says the damage bill for ex-Tropical
Cyclone Oswald, which covered damage
from January 21 to January 29 last year,
topped an estimated $987 million.
Most of the 89,518 insurance claims
came from the Wide Bay area, of which
Bundaberg is a part.
“Ex-Tropical Cyclone Oswald not only
affected Bundaberg and other
communities in northern Queensland, the
flood waters also flowed all the way into
New South Wales. But the scale of the
damage caused in NSW ($121.3 million
in insured losses) was notably less than
that experienced in Queensland,” an ICA
“The reason for this was that more
flood-prone communities are protected by
flood infrastructure in NSW.”
Built in the 1950s and 1960s, flood
mitigation in places such as Grafton had
done its job and protected many
communities for several generations.
“Without mitigation, Grafton could have
easily have been as severely affected
“This highlighted the importance of
investing in physical mitigation measures,
such as levees, dams, barrages and
drainage work, where it’s feasible to do so.
“A relatively small investment to build
a levee around a mid-size town may be
recouped many times over the life of
In areas where mitigation has been com-
pleted, such as Charleville in Queensland,
insurers have responded by slashing the
cost of new home and contents policies.
Suncorp has reportedly announced an
average $400 reduction, and in Roma an
average 30 per cent reduction in
premiums is expected following the
construction of the first stage of the
town’s levee. The ICA’s recovery team
spent almost six weeks in the Bundaberg
and Maryborough region last year and
handled more than 200 enquiries.
“The small number of denied claims
compared with previous flood
catastrophes is evidence of the large
increase in the number of residential
policies being sold with flood cover in
2013 (above 91 per cent nationwide,
compared with only three per cent in
2006) and the greater certainty provided
to consumers following the introduction
of the standard definition of ‘flood’ in 2012
after first being advocated by the industry
in 2008,” the spokesperson says.
Flood protection infrastructure
THE STATES // QLD
Links Archive July 2014 September 2014 Navigation Previous Page Next Page