But buyers and those in the property industry said flood risk was just one of many factors to weigh up, with some saying a flood-zoned property could still be a safe purchase with the correct due diligence.<\/p>\n
The data combined average monthly sale prices since 2020 with Cotality\u2019s flood score, which assigns each property in the country with a risk from zero (no risk) to five (high risk) based on property history, council data and other information.<\/p>\n
\u201cWe probably expected to see the properties at the highest risk of flooding having the lowest growth rate in the years following [the 2023 severe weather events],\u201d Dargusch said.<\/p>\n
Instead, the data showed the opposite.<\/p>\n
Despite houses with high flood scores selling at a steady discount, their values had been increasing faster than properties with no risk at all since the severe weather events of 2023.<\/p>\n
\u201cI remember looking at it, going, I can\u2019t make any sense of it,\u201d Dargusch said.<\/p>\n
\u201cIt\u2019s counterintuitive \u2013 we\u2019re seeing in actual fact that the properties with the highest risk of flood had the highest rate of growth.\u201d<\/p>\n
That was true even in Auckland, where thousands of properties were damaged during the 2023 Anniversary Day floods, and in Hawke\u2019s Bay, at the epicentre of Cyclone Gabrielle.<\/p>\n
The team compared houses in flood zones in both regions with unaffected properties in a 500m buffer.<\/p>\n
In Auckland, flood-zoned houses attracted a $70,000 to $100,000 discount, but had increased in value by 18% since 2020, compared to 13% for other properties.<\/p>\n
\u201cWe had to double-check it and then triple-check it to make sure that the data was right,\u201d Dargusch said.<\/p>\n
In a way, what was happening was a rational market response, he said \u2013 people were seeing a window of opportunity and taking it.<\/p>\n
\u201cHousing affordability being as difficult as it is, they\u2019re likely pricing [the risk] and saying, that\u2019s okay, I accept that risk. I choose to have a home \u2026 and live with that risk versus an alternative approach.\u201d<\/p>\n
Price growth would have to top out at some point, as it was unlikely that average house prices for flood-risk properties would exceed those not at risk.<\/p>\n
\u201cAll things equal you wouldn\u2019t typically see those lines cross … Is there a plateau ahead where they\u2019ve reached their maximum growth rate and then the growth rate flattens, prices flatten, and that\u2019s where it stays?\u201d<\/p>\n
That had already happened in places like Lismore in New South Wales, which had suffered repeated and severe flooding, Dargusch said.<\/p>\n
\u201cThe rate of growth may or may not be higher for a period of time, but the prices have been almost permanently reduced.\u201d<\/p>\n
The results had concerned him \u201cquite greatly\u201d.<\/p>\n
\u201cI think about the families who are so excited to move into those houses, raise their kids, have a patch of land of their own,\u201d he said.<\/p>\n
\u201cYou wonder how families live with that [risk] over time \u2013 do I get away with it? Will I have the luck? Will Mother Nature have a different future in store for me?\u201d<\/p>\n
The Government had already indicated the \u201csafety net\u201d of property buy-outs following severe weather events \u2013 as happened in Auckland and Hawke\u2019s Bay \u2013 would not continue indefinitely, he said.<\/p>\n
Without that, some very high-risk properties would eventually become \u201cnon-transactable\u201d.<\/p>\n
That would not be down to a lack of willing buyers. \u201cIt\u2019s about the property being deemed uninsurable.\u201d<\/p>\n
Flood maps not enough on their own<\/p>\n
Auckland woman Amy McDaid bought her Avondale house, which was located in a flood-prone area, with eyes wide open.<\/p>\n
\u201cI would always check the [council] flood maps, but the more I looked, the more I became aware that the flood maps weren\u2019t good enough in themselves to give me an idea,\u201d she said.<\/p>\n
She still took the maps seriously, but actually visiting properties she was interested in let her get a better understanding of the risk.<\/p>\n
\u201cIf it was down a long driveway and if it was at the bottom of a gully, what did the surrounding areas look like \u2013 did they look damp? Did they look like they were prone to water? Was there mould on adjacent homes?\u201d<\/p>\n
Other properties might show a flood hazard, but it was clear any water would run away from the house itself, McDaid said.<\/p>\n
Before putting in an offer on the house she eventually bought, she checked with insurers that they were happy to provide policies.<\/p>\n