Flood risk already raining on Australian home prices
The value of a standard three-bed house at risk of flooding is approximately $75,500 less than a similar property without a flood hazard.
New analysis of house prices and flood risks confirms that up to 70 per cent of vulnerable homes are being priced at a discount.
report A report from real estate data firm PropTrack and the environmental nonprofit Climate Council challenges existing research that suggests flood-hit real estate markets recover quickly after a disaster.
By separating vulnerable homes from those not at risk of flooding in a “market first” dataset, the researchers were able to find that at-risk properties recovered from a lower base.
Additionally, homes beyond the reach of floodwaters often increased in value faster than properties at risk.
As a result, the gap between at-risk homes and resilient ones has widened over time, explained PropTrack senior economist and report co-author Eleanor Creagh.
“This is a long-term growth penalty that increases year on year and can amount to a significant amount,” he told AAP.
A standard three-bedroom, two-bathroom home in a flood-prone area can be expected to sell for $75,500 less than a similar home not exposed to potential floodwaters.
Nationally, the value of the housing stock is $42.2 billion less than if there was no flood risk.
The east coast and the tropics have always been prone to flooding, but climate change is fueling increasingly heavy downpours; The warmer atmosphere can hold more moisture and energy to fuel storms.
Floods are now Australia’s most damaging weather event.
In 2025 alone, floods hit northern Queensland in February and the mid-north and Hunter regions of NSW in May; Former Tropical Cyclone Alfred also caused major damage in March.
Queensland and NSW are home to the bulk of at-risk properties and the lion’s share of valuation discounts.
The biggest price reductions are often seen in areas where disaster has recently occurred.
High-value or prestigious markets are generally more resilient to flood-induced discounts, but they are not immune; Penalties are observed at places such as Queensland’s Mermaid Beach.
But in some places coastal views trumped other considerations and flood-vulnerable homes were more expensive, including Noosa on the Sunshine Coast.
While Ms Creagh said the research was evidence the market had already priced in flood risk, there were still areas that were not given enough weight in buyer valuations.
“$42.2 million is around 0.4 percent in terms of the value of the entire housing stock,” he said.
“Although it seems like a big sticker number – and it’s certainly in the suburbs that are hit the hardest – if you consider the entire value of the housing stock, it’s not that big.”
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
