Homes carrying high flood risk have been appreciating faster than properties with no flood exposure since the severe weather events of 2023, according to data from analytics firm Cotality.
In Auckland, properties within flood zones sell for $70,000 to $100,000 less than comparable homes outside flood areas, yet those discounted properties have appreciated 18% since 2020 compared with 13% for non-flood properties.
Cotality head of data Craig Dargusch said the firm had to verify the unexpected pattern multiple times. "We had to double-check it and then triple-check it to make sure that the data was right," he said. He expressed significant concern that buyers at the lower end of the market were prioritising affordability over safety.
Cotality rates each property nationwide on a scale from zero to five based on property records, council information and other sources. The trend of faster growth in flood-risk areas held even in Auckland and Hawke's Bay, regions hit hard by flooding in 2023.
Dargusch said the pattern reflected rational market behaviour, with buyers seizing a perceived window of opportunity and accepting risk to achieve affordability. He noted that average prices for flood-risk homes were unlikely to overtake those of safer properties, and warned that government signals about ending property buy-outs could leave some high-risk homes eventually unable to be sold if insurers deem them too risky.
Auckland homebuyer Amy McDaid purchased a property in a flood-prone Avondale area after detailed investigation, including checking with insurers before making an offer. "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?" she said.
Mortgage adviser Sarah Bloxham said first-home buyers were increasingly cautious about natural hazards. "If it's got a hint of any sort of flood overlay, they're just not even offering," she said. She recommended calling an insurer first before spending on valuations or reports.
Conveyancing practitioner Hilary Jenkins said flood-zone designation required careful interpretation. "Just because you're in a flood risk area doesn't mean the house is going to flood," she said. She noted that some sellers were leaving flood-affected areas and accepting lower prices as properties took longer to sell.
Climate Change Minister Simon Watts announced funding last year for a National Flood Map to give the public consistent flood-risk information. The first version is due early next year.