Houses and Property and floods

Why were houses built where it floods?

From the early 1800s many towns were established on floodplains next to river systems.  Our early settlers were not familiar with the extreme variability of flow in Victorian rivers and streams.  Many settlements, which later grew into substantial communities, were located in areas subject to flooding. Land was settled adjacent to rivers and streams and along coastlines principally for benefits such as water supply, transportation, waste disposal and productive soils.  Today we are now left with legacy flooding problems that require flood studies and floodplain management plans to understand the nature of flooding and to determine how to deal with the risks.  It is only since the late 1970s that this has been properly appreciated as a result of experience of past major floods, improved flood information capture and computer technology. This flood information has provided knowledge to better understand floods.

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What will flood mapping do to my property value?

Research in Australia* indicates that such policies do not have a noticeable effect on property values, particularly in high value markets such as Melbourne where other factors are more dominant.

If your property has been identified as having a flood risk, the real flood risks on your property have not changed, it's only that flood information is now more transparent through planning scheme flood overlays and planning certificates contained in Section 32 (Vendor's) statements when selling a property (required under the Sale of Land Act 1962).  A prospective purchaser of your property could have previously discovered this risk if they had made enquiries themselves.

  • Dr Stephen Yeo, “Are Residential Property Values Adversely Affected by Disclosure of Flood Risk?” Proceedings of the 44th Annual Floodplain Management Authorities Conference, Coffs Harbour May 2004.

EFFECTS OF DISCLOSURE OF FLOOD-LIABILITY ON RESIDENTIAL PROPERTY VALUES: AN UPDATE

On the question of the effect of being located in a floodplain there exists considerable heterogeneity in the empirical results, though flood-prone land is often discounted. The degree of discounting may be associated with the degree of risk, and the discount can often be traced back to a flood event.

In Brisbane, where major flooding had not been experienced since 1974, the 2011 flood caused an average -6.2% fall in property prices for flood-affected properties (Dobes et al., 2013). Using repeated sales, Doupé et al. (2014) found a decline of -18.9% for the first year after the flood and -7.1% for the first two years after the flood. Eves and Wilkinson (2014) examined trends in the median sales prices of houses in Brisbane suburbs grouped according to their socio-economic status. In the year following the flood, the greatest fall in median price was -15.9% for flooded high-value suburbs, compared to -8.1% for flooded low-value suburbs.

But sometimes positive attributes of a waterfront or coastal location outweigh any discount. On the question of the effect of an actual flood event on property values, the characteristic effect is discounting in impacted areas, exacerbated by multiple floods in a short time-span and even extending to areas not flooded. Property values typically recover in time.

Atreya et al. (2013) found that the flood risk discount caused by the 1994 flood in Dougherty County, Georgia, disappeared between four and nine years after the flood.

The impact of the Barlby, Bewdley and Mold (UK) floods on house prices lasted less than three years at all sites (Lamond & Proverbs, 2006; Lamond et al., 2010).

Although the Brisbane post-flood datasets are not long enough for a full assessment (at the time of this paper), there was evidence of a recovery in sectors of the market one year after the 2011 flood (Eves & Wilkinson, 2014). Doupé et al. 2014 found that the discounts taken for the two years after the flood were much less pronounced than for the first year.

We anticipated seeing more evidence of discounting of housing values as a result of changes in disclosure regimes including the availability of flood insurance and expanded delivery of flood information. But as yet, there remains scant evidence for a sustained decrease in the value (or in growth rate) of houses with a flood risk.

  • S Yeo, K Roche, J McAneney - 2015 Floodplain Management Association National Conference

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My property was never identified as ‘flood prone’ before.  What has changed?

Your land may always have been flood prone.  What has changed is our understanding of flooding through flood studies and past historical floods.  Your land has been identified as flood prone so you can prepare yourself to manage your flood risk and reduce your losses when a flood occurs.  It also means that if you want to redevelop or build on your land you will be able to build in a way that is appropriate to the flood risk.  This will ensure that your investment is better protected from future damage.  It also ensures that buildings do not make flooding worse for neighbours.

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Do I have to change my property if it is flood prone?

You can choose to leave your property as it currently is but there are simple things you can do to better protect it from floods. Refer to Prepare and Prevent page on this website.

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What if I want to carry out building works on my property?

When you make major modifications to your building you will have to make the property comply with any requirements for building or development which apply to flood prone land in your local government area.

The purpose of planning and building controls is to protect your investment from future flood damages which you probably won’t be able to insure against and to ensure that building and development does not make flooding worse on neighbouring land.

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What if I want to sell my property?

When you sell your property you are required under the Sale of Land Act 1962 to prepare a Section 32 statement (or known as a Vendor's statement) that includes any information affecting the property.  This includes council planning scheme information that will inform the purchaser if there are any zone and overlay controls applying to the property which may restrict the land-use and development of the land.

A Planning Certificate should be obtained from your council or online from LANDATA® which provides property titles and certificates.  This provides any amendments that have been placed on exhibition and well as current information within the council planning scheme.

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Will I be able to get house and contents insurance if my property is identified as flood prone?

The floods of 2010-11 across eastern Australia led to an Inquiry into flood insurance that saw sweeping changes including the new Australian regulations relating to flood insurance including a standard definition as follows:

The covering of normally dry land by water that has escaped or been released from the normal confines of: any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or any reservoir, canal, or dam.

Today the insurance industry now offer a range of flood insurance policies for households and small businesses.

More information on flood insurances can be found at Flood insurance on this website.

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Will I be able to get a home loan if my land is flood prone?

Most banks and lending institutions do not account for flood risks when assessing loan applications unless there is a very significant risk of flooding at your property.  Nevertheless, property owners who are concerned about their ability to obtain a loan should clarify the situation with their own lending authority.

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Page Last Updated: Wednesday 7 March, 2018