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<\/p>\nFlood-risk homes being snapped up by house-hunters<\/p>\n
Morning Report<\/p>\n
Instead of avoiding homes at risk of flood, house-hunters are snapping them up at a discount, new data shows.<\/p>\n
Buyers’ taste for a bargain means growth in property values for houses in flood zones is currently outpacing nearby, unaffected areas.<\/p>\n
Analysts at Cotality, who supplied the data exclusively to RNZ, were so surprised by what it showed that they had to double-check it.<\/p>\n
Cotality head of data Craig Dargusch said he was “greatly” concerned that people at the lower end of the market appeared to be trading off risk against affordability.<\/p>\n
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
Cotality’s Craig Dargusch on climate risk and house prices<\/p>\n
Morning Report<\/p>\n
The data combined average monthly sale prices since 2020 with Cotality’s 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
“We 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],” 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
“I remember looking at it, going, I can’t make any sense of it,” Dargusch said.<\/p>\n
“It’s counterintuitive – we’re seeing in actual fact that the properties with the highest risk of flood had the highest rate of growth.”<\/p>\n
That was true even in Auckland, where thousands of properties were damaged during the 2023 Anniversary Day floods, and in Hawke’s Bay, at the epicentre of Cyclone Gabrielle.<\/p>\n
The team compared houses in flood zones in both regions with unaffected properties in a 500-metre buffer.<\/p>\n
In Auckland, flood-zoned houses attracted a $70,000 to $100,000 discount, but had increased in value by 18 percent since 2020, compared to 13 percent for other properties.<\/p>\n
“We had to double-check it and then triple-check it to make sure that the data was right,” Dargusch said.<\/p>\n
In a way, what was happening was a rational market response, he said – people were seeing a window of opportunity and taking it.<\/p>\n
“Housing affordability being as difficult as it is, they’re likely pricing [the risk] and saying, that’s ok, I accept that risk. I choose to have a home \u2026 and live with that risk versus an alternative approach.”<\/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
“All things equal you wouldn’t typically see those lines cross.\u2026 Is there a plateau ahead where they’ve reached their maximum growth rate and then the growth rate flattens, prices flatten, and that’s where it stays?”<\/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
“The rate of growth may or may not be higher for a period of time, but the prices have been almost permanently reduced.”<\/p>\n
The results had concerned him “quite greatly”.<\/p>\n
“I think about the families who are so excited to move into those houses, raise their kids, have a patch of land of their own,” he said.<\/p>\n
“You wonder how families live with that [risk] over time – do I get away with it? Will I have the luck? Will Mother Nature have a different future in store for me?”<\/p>\n
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Cotality head of data Craig Dargusch<\/p>\n
Supplied \/ Cotality<\/p>\n
The government had already indicated<\/a> the “safety net” of property buy-outs following severe weather events – as happened in Auckland and Hawke’s Bay – would not continue indefinitely, he said.<\/p>\n Without that, some very high-risk properties would eventually become “non-transactable”.<\/p>\n That would not be down to a lack of willing buyers. “It’s about the property being deemed uninsurable.”<\/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 “I would always check the [council] flood maps, but the more I looked, the more I became aware that the flood maps weren’t good enough in themselves to give me an idea,” 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 “If it was down a long driveway and if it was at the bottom of a gully, what did the surrounding areas look like – did they look damp? Did they look like they were prone to water? Was there mould on adjacent homes?”<\/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 Amy McDaid and her dog, Isla, at home in Avondale, Auckland.<\/p>\n Supplied \/ Amy McDaid<\/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![\"Amy](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/07\/4JM4NZV_amy_mcdaid_jpg.jpeg\")
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