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
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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The typically busy spring season for the housing market was a dud, and the summer isn’t looking much brighter.
Housing services companies like Zillow Group and Rocket RKT +3.78% were loud and clear last week on earnings calls: Rocket CEO Varun Krishna called the quarter through June “one of the toughest spring housing markets in years.”
Jeremy Hofmann, Zillow’s chief financial officer, said on a conference call that the company predicted earlier this year that the market for mortgages would be flat. “We actually now think it’s going to be down low-to-mid-single digits,” he said.
The rest of 2026 will remain challenging for mortgage origination volume, says KBW analyst Bose George. The question now is what happens in 2027. “If mortgage rates remain [around] 6.75%, I think that’s going to be challenging even for next year,” he says.
But what’s bad news for mortgage companies could be a positive for bargain hunters. Buyers can expect prices to grow more slowly—or mildly decline—with less competition as long as mortgage rates remain unpredictable.
Mortgage rates at the beginning of the year were solidly below year-ago levels, notes Zillow senior economist Kara Ng. But they surpassed last year’s levels recently, she adds, referencing Freddie Mac’s weekly survey of 30-year fixed mortgage rates. Last week’s reading, at 6.69%, was higher than year-ago levels for the first time in 2026.
“From the affordability point of view, it’s going to get more challenging in the second half of the year,” she says. “And when affordability gets more challenging, that impacts sales and home price appreciation.”
Mortgage application data tracked by the Mortgage Bankers Association has cooled since the beginning of the year. The trade group expects that the number of mortgage originations in the remaining two quarters will lag behind last year’s levels, after exceeding 2025 levels in the first half.
Rocket’s early-stage data—which the company told Barron’s it derives from its brokerage Redfin, demand for its mortgage products, and signs in its servicing portfolio that a homeowner is preparing to refinance or move—“leads us to expect the third quarter mortgage market to be smaller than the second,” Chief Financial Officer Brian Brown, said on the company’s call. He added that such an occurrence is “something the industry has not seen since 2022.”
Prices will be about flat nationally, Ng says. Zillow’s most recent forecast, which shows how values are expected to change in the year ending June 2027, show them dropping in roughly half of the 100 largest U.S. metros for which data is available.
Buyers aren’t rushing in at a time when mortgage costs are rising and unpredictable. But those with the right combination of patience and cash could stand to benefit. “If you are financially qualified to buy a starter home, you are facing less competition and you’re more likely to get a price cut,” Ng says.
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