Mines, floods, contaminants and bombs!
By Justin Eslick
Maybe you have heard about the recent collapse of a mine shaft, West of Brisbane, which has affected a number of homes, even resulting in some being uninhabitable. This is a sad story that will devastate some home owners, especially seeing as the area affected is largely working class.
What is also sad is that the suburb may now be tarnished by the event, with houses in streets that weren’t affected now likely to be ‘associated’ with those that were, causing investors to steer clear, at least for a while. It won’t always be the case, after all, this has happened before in the same suburb back in the 1980’s, and investors did return eventually. There are similar scenarios to this that will play out in time, just like they have in the past.
It is amazing how forgetful some people are. The great flood of 1974 caused much mayhem and destruction throughout Brisbane. Hey, I was not even born then, yet I am well aware of the devastating effect that the ’74 flood had on people, property and prices. This is why there are some suburbs I treat with much caution and why I always carry out a flood search for every property I investigate, not just those near creeks.
One of the worst areas hit by this flood was the Brisbane suburb of Rocklea. Just one look at a simple street directory will show you why – there are creeks galore meandering throughout the suburb and not many residential streets, suggesting a bigger problem like flooding. A drive through the area reveals that it is terribly low lying in parts – the Ipswich motorway has even been built up higher than the surrounds to account for this, again a pretty sure sign.
Buyer beware… your feet may get wet!
Despite the issues, there are still people buying in the suburb without doing their searches, there are agents that can’t tell you whether the property they are selling floods, and prices for some of these houses are no different than properties outside of the flood zone.
Now don’t get me wrong, not all of Rocklea floods, but certainly plenty of it does and by a long way. The building standard for housing construction in Brisbane is to keep habitable floor levels 500mm above a 1 in 100 year flood event (i.e. the 1974 flood), yet there are areas in Rocklea that flood in a bad way every 5 to 10 years. Just because we have not had a major flood event for a long time, does not mean it is now okay to purchase these affected properties!
West End is a very popular and very expensive part of Brisbane and is another area heavily affected by flood. There is a riverside area of urban renewal where upmarket units are currently being constructed that was well under flood waters in 1974. So as not concern anybody too much, it should be noted that these buildings are being built with flood levels in mind, so perhaps your feet won’t get wet if you are inside your apartment during a major flood, but I would be very selective about where I park my car that day!
How to halve the value of your property in 24 hours!
Which leads me to ask the question, do you want to know a good way to halve your property value in just one day? Buy a flood affected property now and settle the day before a major downpour. You could get lucky, it may not flood for many years, but it will eventually and when it does...
It can’t happen again can it?
And for those who still don’t believe it can happen, take note of this. Brisbane’s last major flood event was in 1974. Prior to that the last major event was in 1898. But did you know, that between 1840 and 1900 (so a 60 year period), the Brisbane area experienced eight major flood events? On a positive note there have been some mitigation work done to minimise the effects of these events, but when nature wants to let loose with some rain, there isn’t much we can do about it!
Mining Boom or Gloom?
Buying flood affected properties is not that dissimilar to buying properties built over disused mine shafts. In both cases you can carry out a search to clarify whether your property is in a flood area or built on a mine. In both instances your property, at least while you own it, may never be affected by these events and will continue to grow in value over time. In both cases people have become forgetful as time goes on and no events occur, meaning that the prices being paid do not properly take into account the negative nature of the mine or flooding. And in both cases you can have an immediate, unexpected and devastating event occur that instantly devalues your home.
Make sure you do what sensible investors do…carry out any searches before buying the property and more importantly listen to what the searches are telling you.
If there are issues that will cost you dollars work out an adequately adjusted price to compensate you for the risk.
Two other similar searches can and should be carried out on certain properties as they can have similar consequences. You should always check your property against a contaminated land registry, especially if you are on a busy road, on or near a past or current service station site, located near industry, both past and present and located near waterways that may be polluted, such as those near industrial areas. Removing that pollution may mean big bucks and big delays!
The other search is what we call a UXO – Unexploded Ordnance Search. This is very area specific and relates to the purchase and/or development of land that has previously been used for military purposes, such as the Northern beaches of the Sunshine Coast between Peregian and Sunshine Beach, which was used for target practice during the Second World War. Unlike the other scenarios, this one is generally easier and cheaper to deal with. A UXO search involves a registered person carrying out checks with a highly sensitive metal detector and then the removal of any suspect items. The advantage in a lot of cases is that once a UXO search is carried out, the property is then removed from any Contaminated Lands Register.
The moral of the story here is not to avoid looking in areas affected by mines, flooding, contaminated lands and UXO’s, but to ensure you carry out appropriate searches and make adequate allowance for any risks associated with these properties, otherwise you may find your property value ‘explode’, but not in a good way!
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