Fall in property prices after disasters only for short-term

Q: Home prices drop after natural disasters but typically recover rapidly, providing buyers an opportunity for gains.

Neeraj Rao,

31st December 2015

Real estate News in Mumbai

chennai

natural disaster low property prices

fall in property prices after disasters

vishakhapatnam

hudhud

price fall

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Replies (3)

Yes, buyers should consider a few things before jumping on an direct bargain. While every micro market has shown recovery in the long term, there are still many instances of slow recovery.

david.m,

31st December 2015

Comment

Hello Himani,
But sales may increase in nearby regions that were not impacted by the flood. Hurricane Katrina in Baton Rouge is the best example of it. It's nearby satellite communities saw a 48% jump in sales volume over year.

Franklin, Goa

31st December 2015

Comment

But at the same time it bounce back quickly to the pre-disaster levels. After the 2005, Tsunami, there were huge predictions that the passion for owning a home missing in Chennai would take a change and demand would fall by over 60-70%. But actual data on coastal property prices in Chennai shows that prices, which fell to half after the Tsunami, recovered to earlier levels within 2 yrs.

Himani,

31st December 2015

Price fall in property offer an opportunity for bottom fishing. This can be an opportunity for both buyers/investors to get short-term returns. But for long term investors or end users, it makes sense to only buy at safe locations, as it will guard them against any similar disaster.

Franklin, Goa

31st December 2015

Yes, and one can expect a discount of 4-8% for homes in the flood zone compared to non-flood zone homes. Price appreciation was as high as 9% y-o-y in areas that did not flood. Also developers whose projects did not experience water logging during a flood could appreciate well.

Lokesh Patwa,

31st December 2015

It's true. The recent example is cyclone Hudhud that hit Vizag in October 2014. Prices dropped after the cyclone and investors quickly moved to Krishna, Guntur and Prakasam districts instead of Vishakhapatnam. Realty markets of Chennai is another example, flood hit regions get affected as home buyers and developers postpone their commitments or look elsewhere for home buying.

Awar Ali,

31st December 2015

Comment

I agree with you. Moreover, lack of buyer interest, another reason why prices fall is due to loss of infrastructure which leads to lower property value. Jobs and business growth also suffer that drags property prices.

Himani,

31st December 2015