If you had visited the town of Mogo on the south coast of NSW during any other summer holiday, you would find a bustling little town full of quirky retailers and happy tourists. This holiday season was very different. If you visited Mogo this Christmas, you might have been scared for your life, as a hellish storm of hot wind and blinding flames lashed through the bone-dry countryside.
Like Mogo, much of Australia was ravaged by unseasonal fires that have destroyed nearly 200000 square kilometers and counting. We are told that worst is yet to come, and with records being broken around the world for extreme weather events, it seems hauntingly true that we are in for more heartache.
The property destroyed in this event may be the easiest loss to deal with; homes can be rebuilt, and material objects replaced. Much more tragically, dozens of Australian lives have been lost, coupled with an estimated billion native animals killed; we are living through one of the worst natural disasters we have ever seen.
A disaster as destructive as these 2019/2020 bushfires has catastrophic effects on not only individuals but communities and society. So far-reaching and immense are the effects, that interest rates have been forced to an all-time record low, a positive of this low-interest rate is very cheap home loans, especially from Newcastle Permanent. Cheap home loans are good for some who can afford to re-mortgage and rebuild, and its good for anyone looking to enter the property market.
Whilst thinking about the best mortgage rates during a national tragedy seems a little cold, low interest allows Australians to dust themselves off, and get back to work quicker. The fires are not over yet, and there is still much work to be done, but it is good to know that at least interest rates are low!
Smoke rises, prices fall.
Property values in bushfire affected areas will fall dramatically as the property has literally gone up in smoke. The recovery effort will take years, and in some areas, the landscape might not ever recover. Affected businesses will not be able to trade or make any income, affecting not only their employees but supply and demand.
Data from Victoria’s black Friday fires shows a sharp decline in property values for years after the event, only to see a rapid increase again as the area is rebuilt with better quality homes. Prices may indeed recover or even surpass those of the surrounding areas, but it takes many years.
Whether prices will recover after this bushfire season remains to be seen. While many residents will be keen to rebuild, the majority are underinsured and will not have the finances to rebuild straight away. Low-interest rates will allow residents to mortgage at a lower rate but will end up owing more.
These recent bushfires have been devastating and revealing. We have seen how unprepared our government is to deal with such disasters, and as such, we have lost faith in our leadership. A lack of faith in leadership spells bad news for the strength of the economy.
We have also learned that many locations we have built upon are becoming unsuitable due to climate change. As less land becomes habitable, the habitable land becomes increasingly valuable. Whichever way you slice it, natural disasters are bad for business.
Property prices have traditionally recovered after times of crisis. In some cases, the value of the land has increased over the average. Tragedies will always bring the best out in Australians, and we always rebuild. Worryingly, these recent bushfires have shown us a glimpse of a grim new future. Property prices seem less and less important.
We are entering an era where climate-related disasters are increasing in frequency and severity, and we should be focussing ways to prevent further damage. If we look after the earth and our neighbors, maybe then we will see property prices rise again.