Buyers walking away from deals over flood risk

CoreLogic senior property economist Kelvin Davidson says recent discussions with real estate agents show the flood risk of a property is becoming a major concern.

“Anecdotal evidence is some people are looking at a property, assessing its flooding risk and not going ahead with a purchase. This will probably become common.”

He says house prices may lift a little in the wake of the floods as they did after the Christchurch earthquakes. “It’s economics 101 – supply and demand. It depends on how the banks, insurance companies and the Government handle the situation where some places have flooded repeatedly over a number of years when there is heavy rain.

He says another issue that may rear its head is the cost of insurance. “If premiums rise on particular properties that are at risk of flooding, it may deter people from buying them because of the expense.”