NSW flood risk: suburbs losing hundreds of thousands in value – realestate.com.au

Looming flood threats have spooked homebuyers in many NSW areas, including parts of Sydney, causing property values ​​to fall by hundreds of thousands of dollars in many cases, new data shows.

The alarming findings were revealed in a Property Value Flood Risk report from PropTrack and the Climate Council, which measured where flooding had the biggest impact on home values.

About 600,000 homes in NSW were in flood-prone areas where the prospect of rising water levels hit home values ​​- a financial hit totaling $14.2 billion, the data showed.

Homes in Sydney’s Pitt Town-McGrath Hill region, in the city’s far north west, were found to be the most vulnerable properties to flooding in all of NSW.

Flood risk in the emerging outer region near the Hawkesbury River had depressed home values ​​by an average of almost 9 percent (or about $363,500), compared to adjacent areas that did not flood.

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Pitt Town contains much recent housing development near the Hawkesbury River floodplain. Photo: Sam Ruttyn

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This had a greater impact than the flood risk in Lismore in northern NSW, along with nearby Ballina – both areas where devastating floods washed away many homes in 2022.

Flood risk in Lismore had reduced the market value of homes by around 8 per cent, or an average of $112,000, compared to other nearby areas not prone to flooding, the report found.

The threat of flooding has wiped out about $92,000 from the value of Ballina homes, or about 5.4 per cent.

Nationally, a typical three-bedroom, two-bathroom home in a flood map area was considered worth $75,500 less than its neighbors who were not on the map.

It should be noted that these figures represent current market values, mostly driven by long-term buyer perception, and do not represent the actual damage caused by flooding.

Prop Track senior economist Eleanor Creagh noted that the risk of flooding did not weigh on the values ​​in every area within a flood zone.

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PropTrack senior economist Eleanor Creagh said values ​​in frequently flooded areas could remain suppressed for a variety of 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 flood risk had the biggest impact on values ​​were areas where flooding has occurred in recent years.

“There is some variation in how the market perceives flood risk,” says Creagh.

The study found that about 600,000 homes nationally, about 30 percent of those covered by flood maps, remained unaffected — likely because homebuyers were willing to overlook the risk in favor of other lifestyle benefits.

Climate Council councilor and economic expert Nicki Hutley told the Herald Sun that the impact of flood risks in certain areas was a cause for thought.

“I’m amazed at how much value is being lost on people’s homes,” Ms Hutley said.

“And while prices in these areas continue to rise, they are certainly not rising as quickly. While people’s home prices are not going down, the risk will keep things from gaining a certain amount of value.”

She added that it was only a matter of time before more extreme weather conditions caused further flooding problems for Australian homes.

“And that risk pricing will increase as people become more aware,” Ms Hutley said.

The research using PropTrack was based on data on recent sales, renovations, geographic flooding data and broader market trends. The report includes value estimates of all homes in an area.