Homes inundated with floodwaters in McGraths Hill in 2022. Picture: John Grainger
Looming flood threats have spooked home buyers in an array of NSW areas, including parts of Sydney, squashing property values by hundreds of thousands of dollars in many instances, new data shows.
The alarming findings were revealed in a Property Value Flood Risk report by PropTrack and the Climate Council, which measured where floods had the biggest impact on home values.
Some 600,000 NSW homes were located within flood prone regions where the prospect of rising water levels dragged on home values – a financial hit that totalled $14.2 billion, the data showed.
Houses in Sydney’s Pitt Town-McGrath Hill region in the city’s outer northwest were revealed to be the most vulnerable properties to flood in all of NSW.
Flood risk in the emerging outer region near the Hawkesbury River had suppressed home values by an average of nearly 9 per cent, or about $363,500, compared to neighbouring areas that didn’t flood.
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Pitt Town includes a lot of recent home builds near the flood plain of the Hawkesbury River. Picture: Sam Ruttyn
This was a bigger impact than the flood risk in Lismore in northern NSW, along with nearby Ballina – both areas where devastating flooding washed away many homes in 2022.
Flood risk in Lismore had pulled down the market value of homes by about 8 per cent, or an average of $112,000 compared to other nearby areas not susceptible to flooding, the report showed.
Threat of floods wiped about $92,000 off the value of Ballina homes, or about 5.4 per cent.
Nationally, a typical three-bedroom, two-bathroom house in a flood map area was deemed as worth $75,500 less than neighbours not covered by the map.
It should be noted that these figures represent current market values, usually driven by long-term buyer perceptions, and do not represent the actual damage caused by flooding events.
Prop Track senior economist Eleanor Creagh noted that risk of floods did not weigh on values in every area within a flood zone.
PropTrack senior economist Eleanor Creagh said values in frequently flooded areas could remain suppressed for varying reasons.
They ranged from higher insurance premiums, a history of physical damage or simply perceived risk, Ms Creagh said.
She said many of the regions where the flood risk had the most significant effect on values were areas that experienced a flooding event in recent years.
“There’s some variation about how the market perceives flood risk,” Ms Creagh said.
The research found that around 600,000 homes nationally, about 30 per cent of those subject to flood map overlays, were unaffected — likely due to homebuyers being willing to overlook the risk in favour of other lifestyle benefits.
Climate Council councillor and economics expert Nicki Hutley told the Herald Sun that the impact of flood risk in certain areas was a pause for thought.
“I’ve been surprised at how much value is being foregone in terms of people’s homes,” Ms Hutley said.
“And while prices in these areas do keep rising, they certainly don’t rise as fast. While people’s home prices aren’t going backwards, the risk will have stopped things from having gained a certain amount of value.”
She added that it was only a matter of time before more extreme weather events caused further flood issues for Aussie homes.
“And that risk pricing will grow as people become more aware,” Ms Hutley said.
The research used PropTrack was based data on recent sales, renovations, geographic flood data and wider market trends. The report included value estimates for all dwellings in an area.
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