The top 10 Australian locations at highest flood and bushfire risk
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The top 10 Australian locations at highest flood and bushfire risk

A new report finds higher flood and bushfire property premiums are leaving more homeowners and investors struggling to insure their assets

By Bronwyn Allen
Tue, Jun 11, 2024 12:02pmGrey Clock 3 min

More extreme weather events are affecting property values and home insurance costs, with a new report highlighting the impact of bushfire, riverine flooding and coastal erosion risk on homes and the need for buyers to assess disaster risk in their purchasing processes.

The 2024 Perils Report from Domain Research has found there is a direct relationship between the value of a home and its susceptibility to natural disasters. It revealed that 5.6 million Australian homes are at risk of bushfire — almost half of the entire residential housing stock. More than 32,000 homes, or 0.3 percent of stock, have high bushfire risk ratings. The researchers estimate that a home’s value decreases by 2 percent with every increase in its bushfire rating.

The report also found that 953,000 homes, or 8.1 percent of housing stock, face flood risk. Almost 141,000 homes have a high risk, and for every percentage point increase in the risk of a 50-centimetre flood, a property’s value drops by 0.8 percent. About 160,000 homes are within 150 metres of the coastline, and about one in 10 are at risk of erosion. However, the report finds there is no significant price impact given buyers place a high priority on waterside locations and views.

“This report is almost like a snapshot in time, looking at what is that landscape currently today, but we know that these natural disasters are escalating because of climate change,” said Domain chief of research and economics, Dr Nicola Powell. “The impacts in the future could [be] greater, impacting more homes and communities.”

Domain Research said evaluating a property’s risk is increasingly important for buyers. Home purchasers can access information from local councils and state governments, and some information may be included in the contract of sale. Buyers can also pay for a risk report to be done.

A recent report by the National Housing Supply and Affordability Council described climate change as an ‘emerging trend’ affecting values and insurance costs. “The price differential between flood-affected and non-flood affected homes has been estimated to be up to 35 percent a year after a flooding event,” the report said. “Furthermore, the RBA estimates around 7.5 percent of properties are in areas that could experience price falls of at least 5 percent due to climate change by 2050.”

The report said more than one million households are struggling to afford home insurance today, and more homes are uninsured as a result. The Insurance Council of Australia (ICA) says premiums are rising due to the impact of more severe natural disasters and a significant increase in construction costs that have gone well above the rate of inflation, making repairs more expensive.

The ICA said four declared insurance events in 2022 alone resulted in 302,000 claims costing $7.28 billion in insured losses. Six billion was from a single event – the Northern NSW and South-East Queensland floods – which was the second costliest insured event in the world that year and the costliest insured event in Australia’s history.

ICA CEO Andrew Hall says governments at all levels need to invest in more protection measures to mitigate the impact of extreme weather, thereby helping to keep insurance premiums lower.

“Governments must also amend land use planning legislation to include a mandatory requirement for planning approvals to consider property and community resilience to extreme weather, and improve building codes so future homes are made more resilient,” Mr Hall said.

 

Top 10 areas with the highest chance of a 50cm flood per year

 

1          Ballina NSW 3.9 percent

2          Tweed Heads South NSW 3.7 percent

3          Grafton NSW 2.7 percent

4          Coonamble NSW 2.3 percent

5          Tweed Heads NSW 2.2 percent

6          York-Beverley WA 1.9 percent

7          Maclean-Yamba-Iluka NSW 1.9 percent

8          Lismore NSW 1.8 percent

9          Tingalpa QLD 1.7 percent

10        Far South West QLD 1.6 percent

 

Source: Domain Research

 

Top 10 areas with the highest bushfire risk (out of 10) per year

 

1          Upper Yarra Valley VIC 7.7

2          Ashendon-Lesley WA 5.5

3          Mount Dandenong-Olinda VIC 5.4

4          Ettrema-Sassafras-Budawang NSW 4.6

5          Mount Wellington TAS 4.3

6          Glen Forrest-Darlington WA 4.0

7          Bilpin-Colo-St Albans NSW 3.9

8          Calga-Kulnura NSW 3.9

9          Deua-Wadbilliga NSW 3.9

10        Belgrave-Selby VIC 3.8

 

Source: Domain Research



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Property values have experienced strong growth around the country, but there are two highly desirable areas where oversupply is putting downward pressure on sales

By Bronwyn Allen
Tue, Jun 18, 2024 2 min

While property values are rising strongly in most markets across Australia, it’s a vastly different story in Victoria and Tasmania, new data from CoreLogic shows. Over the 12 months to May 31, the median house price lifted just 1.8 percent in Melbourne and fell 0.6 percent in regional Victoria. The median dipped 0.1 percent in Hobart and ticked 0.4 percent higher in regional Tasmania. This is in stark contrast to Perth, where values are up 22 percent, and regional Western Australia, up 14.8 percent; as well as Brisbane, up 16.3 percent, and regional Queensland, up 11.8 percent.

CoreLogic Head of Research, Eliza Owen says an oversupply of homes for sale has weakened prices in Victoria and Tasmania, creating buyers’ markets.

On the supply side, there has been more of a build-up in new listings than usual across Victoria, even where home value performance has been relatively soft,” Ms Owen said. Victoria has also had more dwellings completed than any other state and territory in the past 10 years, keeping a lid on price growth. The additional choice in stock means vendors have to bring down their price expectations, and that brings values down.”

Melbourne dwelling values are now four percent below their record high and Hobart dwelling values are 11.5 percent below their record high. Both records were set more than two years ago in March 2022. The oversupply has also affected how long it takes to sell a property. The median days on market is currently 36 in Melbourne and 45 in Hobart compared to a combined capitals median of 27. It takes 55 days to sell in regional Victoria and 64 days in regional Tasmania compared to a combined regional median of 42 days.

Changes in population patterns have also contributed to higher numbers of homes for sale in recent years. Since COVID began in early 2020, thousands of families have left Melbourne because working from home meant they could buy a bigger property in more affordable areas. While many relocated to regional Victoria, a significant proportion left the state altogether, with South-East Queensland a favoured destination. Meantime, Tasmania’s surge in interstate migration during FY21 was short-lived. Data from the Australian Bureau of Statistics shows the island state has recorded a net loss of residents to other states and territories every quarter since June 2022.

Record overseas migration has more than offset interstate migration losses, thereby keeping Victoria’s and Tasmania’s populations growing. However, the impact of migrants on housing is largely seen in the rental market, so this segment of population gain has done little to support values. Growth in weekly rents has been far stronger than growth in home values over the past year, with rents up 9 percent in Melbourne and 4.8 percent in regional Victoria, and up 1 percent in Hobart and 2.7 percent in regional Tasmania.

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