The NSW government plans to encourage people to move away from floodland by offering stamp duty concessions and other subsidies.
The government is working on a proposal for residents of flood-ravaged areas such as Lismore to not pay stamp duty if they buy in an area away from floodplains.
The plan will be considered by the cabinet’s expenditure review committee at its next meeting.
But not everyone agrees that a monetary incentive is the best option.
The problem is homeowners are increasingly attracted to the low property prices in these areas due to the fact these properties sit on flood-prone land.
Shane Stone, the coordinator general of the National Recovery and Resilience Agency, is calling for an end to floodplain development.
A call that has only become more urgent since the recent widespread flooding across a significant portion of the east coast.
He told the SMH that “the taxpayer and the ratepayer cannot continue to pick up the bill for these huge, catastrophic damage events” and that inundated homes should not be rebuilt.
“You’ve got people who want to live among the gum trees – what do you think is going to happen? Their house falls in the river and they say it’s the government’s fault,” Stone said.
The minister for Western Sydney Stuart Ayres also told the smh said it was not realistic to relocate people from floodplains.
He points out that residents are acutely aware of the risk they take by choosing to live in a flood-prone area.
Ayres on Tuesday told a recent budget estimate hearing it was “a farcical proposition” to buy out homes in major flood-affected areas like the Hawkesbury-Nepean valley in his electorate.
He said it was better to mitigate flooding in established communities through weather mapping, flood modelling, improved evacuation routes, and raising the Warragamba Dam wall.
The east coast floods and our property prices
The end of February was a sobering reminder of the impact of extreme weather events and climate change seen across Australia’s east coast.
It is difficult to assess quite how the recent floods will affect property values, rents, and the availability of dwellings but a look at the historical data of the 2011 floods can help predict the knock-on effect to sky-high property prices.
According to Corelogic, following the Brisbane floods in 2011, the city’s dwelling values sustained a decline from January 2011 to January 2012 (which bottomed out at -6.1%) and didn’t recover until March 2014.
Overall, the data reveals that it took around 3-5 years for Brisbane’s property market to recover from the 2011 floods.
But one of the biggest differences between the property market in 2011 and 2022 is the length of time between these devastating extreme weather events.
In 2011, major flooding had not affected the region since 1974, and flooding of this nature was considered a ‘once in a 100-year event.’
For current homeowners, it has been just over 11 years.
This short time frame between significant flooding events could mean we see a shift in buyer attitude towards housing in low lying areas, higher demand for properties in low-flood risk areas and higher insurance premiums, and a spike in renovation costs (at a time when material shortages and labour costs are already sending prices through the roof).