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Property prices in flood-hit regions have slumped

With the anniversary of the Biblical deluges in northern NSW and south-eastern Queensland, a lot of attention has understandably been focused on the ongoing challenges facing those flood-hit communities.

Data group CoreLogic, though, has put out an assessment of what’s happened to the regions’ property prices over the past year.

Bearing in mind that capital city prices are down about 9% from their peaks (according to ANZ), it seems these regions have fared a lot worse.

Here’s CoreLogic’s assessment of the regions in northern NSW:

And the view for the suburbs around Brisbane (not quite so bad):

Kaytlin Ezzy, a CoreLogic economist, said:

While the current tightening cycle has amplified the downturn in values, the declines seen across flood-impacted suburbs are significantly steeper compared to the broader region and are among the largest suburb declines nationally.

Outside of one flood-impacted suburb in Brisbane, all other suburbs recording similar value declines were more expensive [than] Sydney suburbs, which are generally more sensitive to changes in interest rates.

Given household wealth and consumption are often linked, the slump in property prices might have a lingering effect on economic activity in the areas, it would seem.

On the other hand, would falling values attract more people to live there?

Ezzy leans towards a long-term drag, not least because of the scale of the flood events possibly precluding a rebound in property prices seen after floods in earlier years.

Given the severity of this event, and the short timeframe between major flood events, it’s likely the current value declines across the Northern Rivers and impacted house suburbs in Brisbane could be more enduring.

Notably, “homeowners, lenders and insurers are becoming more cautious of the risks associated with climate change and are adjusting their risk premiums accordingly”, Ezzy says.

Indeed, those higher risk premiums are likely to extend to other regions exposed to climate extremes in a warming world. Given Australia’s notoriously volatile climate, particularly for rainfall, that could just about take in the whole country.