Property prices in Australia’s flood- and bushfire-prone regions typically experience a dip following a natural disaster but tend to recover within around two years, according to property experts.
As wildfires continue to impact areas like California, attention turns to regions like the Grampians National Park, recently devastated by fires. Factors such as demographics, government response, location desirability, and insurance coverage play a crucial role in determining how local real estate markets are affected.
Flood and Bushfire Effects on Property Markets
While Mallacoota in Victoria was severely impacted by bushfires in 2020, research by University of New South Wales student Siddhant Saha found that house prices surged by 70% over three years following the disaster. Similarly, after the 2011 Brisbane floods, some suburbs affected by the flooding saw median house prices rise significantly above pre-flood levels.
In Sydney, areas impacted by the 2019-2020 Black Summer bushfires saw property prices fall by 6-24%, though this decline was short-lived, with most areas recovering after 12-24 months.
Government Response and Market Recovery
Ray White chief economist Nerida Conisbee noted that buyers often don’t factor in long-term climate risks when purchasing homes. She added that government responses to disasters—such as better preparedness or rebuilding efforts—play a significant role in how the property market is affected. A proactive government approach, such as reducing the likelihood of future disasters or improving infrastructure, can enhance market resilience.
Despite the increased insurance premiums and risks associated with living in bushfire- and flood-prone areas, Conisbee observed that demand for properties in such regions remains strong. However, she suggested there may come a tipping point where the costs of living in these areas become prohibitive.
Price Growth Despite Risks
Data from Climate Valuation indicates that even in areas where more than 80% of properties are at high risk of being uninsurable due to flooding, most experienced above-average price growth in the past five years. This suggests that even with the threat of natural disasters, Australians continue to invest in these regions.
Local Perspectives: Grampians Fires
In December 2024, fires burned over 76,000 hectares across 21 days in the Grampians region. Despite the devastation, local real estate agents like Harcourts Horsham principal Mark Clyne believe that property prices will not be significantly affected. Residents of these regions are already aware of the fire risks, and many people move on after a disaster.
Clyne compared the situation to shark attacks, where initial fears might deter people but eventually life returns to normal. Similarly, after the shock of the fires, property demand is likely to bounce back over time, with some individuals opting to sell for insurance payouts.
Conclusion
In conclusion, while natural disasters such as floods and bushfires temporarily impact property prices, the long-term effect is often a recovery or even growth in property values. With the right government responses and a culture of resilience in affected communities, these areas tend to bounce back after the dust settles, demonstrating that demand for real estate in these regions remains strong despite the risks.
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