5 . Floods
This month , flooding impacted large parts of the eastern coast of Australia , spreading down from Brisbane to Sydney . Looking back at previous natural disasters , we can see a fairly consistent timeline as to what happens to the market . Initially , rents start to rise as there is a shortage of homes available for people that need to repair or rebuild their homes .
In the 12 months following the natural disaster there are usually far fewer sales taking place , particularly if owners in the area are well insured and there ’ s significant government support to rebuild the area . By the three year mark , homes have been rebuilt and ideally there will have been significant government spending to minimise the chance of a similar event occurring . Home values typically increase as better and safer homes are built in place of older homes .
Within five years , provided the natural disaster hasn ’ t re-occurred , house price growth is typically following the local market or is being driven by other factors such as population growth .
6 . Rising construction costs
Rising construction costs were a major contributor to inflation in 2021 . And at this point , it doesn ’ t look like this growth will slow anytime soon . There are a lot of problems that will take some time to solve including :
1 . Supply chains are blocked and this is pushing up prices of imported goods , and also restricting supply .
2 . Timber prices have gone up significantly as a result of bushfires . In New South Wales , half the state ’ s timber plantations were impacted and this is now resulting in significant shortages .
3 . Labour shortages are a problem and it will take some time to get migration back to levels to solve this .
4 . Increasing demand for building is coming at a time of restricted supply - HomeBuilder led to a flood of new projects , we have seen record approvals for home renovations over the past 12 months , major infrastructure projects such as the Olympic Games are creating greater demand . Most recently , the floods will require more builders in the clean up and rebuild of impacted areas .
We ’ re already seeing the fallout from this . ProBuild has gone into administration and a number of smaller home builders are having trouble with fixed price contracts that were put in place last year . We ’ re going to need more housing once borders reopen , however it will take some time for new projects to be completed as a result of this , prices and rents will be further pushed up .
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