It’s been, for good reason, hard to see any news in Australia this past week other than the devastation and tragedy of the Queensland floods. As the clean-up and recovery begins, there are so many far-reaching consequences that it seems to me to be a constant surprise to see the numerous knock on effects these floods will have, not just for Queenslanders but for all Australians and even abroad.
One such effect is that house prices in Queensland are likely to fall. Apart from the obvious problem of damaged or destroyed houses losing value, the suburbs and towns that were most affected by the flood will most likely experience a devaluation simply because people will be wary about moving into an area that is obviously susceptible to flooding – no matter how rarely this happens – it’s a natural psychological consequence.
And another effect is that mortgage repayments may go unpaid. Clearly, the financial effects of the flood devastation will cause a great deal of strain for numerous households across Brisbane, and this means they may not be able to meet their regular mortgage repayments; for banks, if they are forced to foreclose on damaged properties, they won’t be able to recover the full value of the home. Mortgage insurance, which is supposed to cover the banks in the case of mortgage defaults, apparently doesn’t apply to cases where flood damage is involved, so that’s little help this time round. Experts say that defaults or difficulties in paying mortgages at the level that might be experienced in Queensland is significant enough to affect the entire Australian mortgage market and its global position.
As if the flooding hasn’t been traumatic enough, it’s pretty sad to see that there are so many possible negative consequences to come out of it – but our thoughts are certainly with those affected most.