The long‐term impact of flooding on residential property values

Abstract

Current planning schemes in Australia identify areas that are potentially liable to flooding. This identification of flood‐liable land is based on flood height levels over time. Throughout New South Wales (NSW) this measure of flood affectivity is determined by three classifications. These classifications also influence the development of residential property within these flood areas. Prospective purchasers are advised of this flood zoning, when a full title search is carried out. However, as these properties are often located on the flood plain, but not within sight of the river, flooding can appear visually remote to the uninformed buyer. This study analyses residential house sales in flood‐prone areas and compares price movements of these houses with similar houses in immediate adjoining areas that are not affected by flooding. The analysis covers the period 1984 to 2000, which includes the last major floods in Sydney during 1990. This study period determines what impact a major flood has on residential housing prices and whether this effect is ongoing or decreases, the longer the area is free from flood affectivity.