Property markets in bushfire ravaged communities across Victoria are expected to recover in as little as two years.
New analysis by PRD Research indicates that even with increasing measures to control the spread of COVID-19, the regional hubs caught up in fires earlier this year should recover by 2022 or 2023.
Some local agents believe they will be seeing price gains before the end of this year.
PRD Research chief economist Dr Diaswati Mardiasmo said after indexing property prices and economies in communities affected by bushfires in the past, including Black Saturday, she had observed home values trending into positive territory within a few years.
“There’s always differences depending on the fires and whether it is a total wipe-out, and how quickly insurance comes into play,” Dr Mardiasmo said.
“But there is hope after bushfire.”
Data for the Nillumbik Shire, where a number of homes and lives were lost during the Black Saturday fires in 2009, showed the median property price index had begun rising again by the end of that year.
Dr Mardiasmo said a lack of data for the Murrindindi Shire, which includes Marysville and Kinglake, had made it difficult to index recovery there, however the Herald Sun last year revealed Marysville was in a record-setting property boom a decade later.
The analysis also covered the 2003 Canberra bushfires, 2011 Perth Hills bushfire and the Pinery bushfire of 2015.
“And if you look at the median price, none of them have gone to a lower level than a year prior to the fires,” Dr Mardiasmo said.
“In terms of East Gippsland you will see a slow down or maybe stable figures, then in the next two or three years it will start picking up again.
“But it takes other people (not locals) to buy into the area to take away the shock.”
Those willing to buy into affected areas should look for markets that had achieved low vacancies and high rental yields in the years ahead of the fires, she advised.
Towns and homeowners directly affected by fire were likely to take longer to recover, but would benefit from returning economic activity in the region surrounding them, Dr Mardiasmo said.
Harcourts Bairnsdale’s Michael Enever sells homes in a number of the affected communities and said he predicted an about 50 per cent reduction in the number of homes for sale in some areas would drive prices up before the end of the year.
“Yes, it stalled things in the immediate aftermath, but before the end of January I put five properties under contract in East Gippsland, and we’re a small office,” Mr Enever said.
“As far as the real estate job goes, it’s pretty much normal and actually quite strong. I predict prices will rise by the end of the year.”
In Lakes Entrance, about 40km from the fire front, investors were currently snapping up homes with good rental returns to avoid the share market’s woes, according to Gary Henry Real Estate’s Phillip Dunn.
However, Dr Mardiasmo warned that as efforts to control the COVID-19 virus spread, so too could the timeline for a recovery.
“If you had asked six weeks ago I would have said 18 months to two years, but right now I’m being cautious and saying two or three years — but only because of coronavirus,” Dr Mardiasmo said.