How flooding has affected the property market

Real Estate

Team MONEYME|21 February 2023| 2-minute read

Between interest rates and inflation, the property market has taken a serious hit over the past year.

However, in some neighbourhoods, the 2022 floods have done even more damage, contributing to prices dropping by more than 20%.

The biggest drops in regional Australia

During the COVID-19 pandemic, the Northern Rivers could do no wrong.

Prices soared as previously city-bound slickers, revelling in the freedom enabled by remote working, made dramatic tree changes.

However, following the devastating floods of 2022, these suburbs have been hit hard. In fact, the Northern Rivers saw the biggest price drop in regional Australia last year, with median house prices falling by 23.9% in Byron Bay and 25.7% in Mullumbimby.

Surrounding towns didn’t fare much better. Suffolk Park, Lismore, Ocean Shores, and Lennox Head also experienced drops of more than 20%.

The worst-hit city areas

Although the flooding did the most damage in regional areas, cities didn’t escape harm.

From mid-2021 to mid-2022, prices dropped in Windsor, in Sydney’s northwest, by 6.3%, and in Narrabeen, on Sydney’s Northern Beaches, by a whopping 33%.

Choosing to sell at decade-old prices

In other cases, home owners overwhelmed by the damage caused by flooding have decided to sell at bargain basement prices—rather than endure rebuilding and the possibility that history may repeat itself.

This four-bedroom home in Lismore is on the market for $259,000—$6,000 less than it sold for in October, 2008. Meanwhile, this three-bedder, which sold for $405,000 in May, 2021, is now priced at $229,000.

Increasing insurance premiums

Another factor bringing down house prices is increasing insurance premiums. In high-risk areas, homeowners may be asked to pay more than $15,000 per year.

Further, as councils redraw flood maps, premiums in previously low-risk areas are on the rise. Home owners in Queensland, whose homes weren’t even affected by the 2022 floods, reported a three-fold increase from 2021 to 2022.

Key takeaways

• In some areas affected by the 2022 floods, house prices have dropped by more than 20%.
• The two biggest drops in regional Australia occurred in Byron Bay (23.9%) and Mullumbimby (25.7%).
• House prices in some flood-affected city suburbs, such as Windsor and Narrabeen in Sydney, have also declined.
• Some flood-damaged homes are on the market at decade-old prices.
• Other factors hitting prices are increasing insurance premiums and the redrawing of flood maps.