I'm currently doing some DD on a few QLD suburbs and wanted to get other peoples thoughts on what the values of flood affected houses in one suburb will do to those other houses in the suburb that are outside the flood area on flood maps? My concern is these property's may hold back growth for the entire suburb
Buying in flood zones
- Thread starter Cargs
- Start date
I think at the moment people will deliberately purchase outside a flood zone because floods are fresh in memories right now and this will make them more favourable.
However, as part of your DD, do not just rely on council flood maps! We did this and bought outside a flood zone only to find the insurance companies 'paid millions for their own flood maps' 'which are far more reliable than councils' and needless to say there was a fairly massive premium included in the quote.
Call an insurance co. And get a quote and you will then find out if they have added this to council flood maps before purchase so you know exactly what you are up for!
Talking to insurance companies about the real flood zone is a wonderful idea! Why bother with a flood zone (or bushfire zone) property when there are better ones around? Who needs the headache of dealing with flood repairs? Before buying I like to think of when I need to sell it, ie my exit strategy. Any properties with no dealbreakers will sell quickly with multiple offers and for a premium, those with dealbreakers tend to be rejected by most buyers and take a long time to sell.
Yen
Yen
Once I drill down my research to individual properties my DD will include an insurance quote, it interesting to note the insurers have better flood maps than the council, thanks for pointing that out. I've never intended to buy a house directly in a flood zone but am curious to see how people think the value of a high and dry home will be affected in a suburb where flood prone property's exist?
Probably not as much as one might think. I've looked at properties in flood prone suburbs, and the values of supposedly comparable properties from the flood prone end to the non-flood prone end can vary by tens of thousands.
Because the flood prone properties in Brisbane happen to be in the most desirable, blue chip areas (exception being Rocklea). So buying a flood affected property should allow one to get in at entry level price, or lower. Problem is I don't think it really works that way..
A seller like this isn't making much of a discount.. http://www.realestate.com.au/property-house-qld-graceville-116833935
Just because there are maps that doesn't mean that you can rely on them. They are really only estimates.
How often do you see on the TV record floods.
What then happens is the flood maps get revised to include more areas.
More details here: http://www.anewhouse.com.au/2012/05/water-views-or-flood-risk/
How often do you see on the TV record floods.
What then happens is the flood maps get revised to include more areas.
More details here: http://www.anewhouse.com.au/2012/05/water-views-or-flood-risk/
No, I do not think it is because they have better maps, personally I think it is more to do with recouping costs from the flood by getting the entire area to pay for a portion of the area that is prone, with the increased premiums and using their 'bigger, better maps' to justify it!
I've got 3 properties that are in an apparent flood zone. However they have never flooded, not in 2013, 2011, 1974, etc.... They are 1 in 100 year flood zones purely due to being within about 30m of a creek/stream that runs through the suburb. The stream never overflows. But they make a minimum flood zone around a stream regardless of whether or not it floods...
There isn't much impact on price. I saw one house in a the same zone sell for $450k instead of $480k which it would have gotten in a higher area. But that was because it was a subdividable block and you have to put a new house on posts off the ground so it obviously didn't appeal to as many people. My solution is to develop the land myself and put a qlder on it already off of the ground, so then there isn't an issue and you'd be getting normal price for the sale.
However if a house was in a very frequent flood zone and it wasn't easy to raise the place above the flood height, I would probably give it a miss unless it was ridiculously cheap.
There isn't much impact on price. I saw one house in a the same zone sell for $450k instead of $480k which it would have gotten in a higher area. But that was because it was a subdividable block and you have to put a new house on posts off the ground so it obviously didn't appeal to as many people. My solution is to develop the land myself and put a qlder on it already off of the ground, so then there isn't an issue and you'd be getting normal price for the sale.
However if a house was in a very frequent flood zone and it wasn't easy to raise the place above the flood height, I would probably give it a miss unless it was ridiculously cheap.
The flood risk in the blue chip areas haven't really stopped buyers in those areas. Especially now that the damaged houses have been repaired/reno'd a while ago. Suburbs are pretty much back to normal.
I wise old REA who was around during the 1974 floods said it was all forgotten within 10yrs. He expects this to happen again.
The issue I'm seeing in Brisbane and Ipswich is a $200k-$350k property can have a $2000+ building insurance premium, (not including landlord and contents!) if it has a flood marker on the lot.
I find this much more an issue than the risk from flood. I would have another few properties if this didn't have this pop up in a DD process. Insurance is also the reason keeping Nth Qld investment properties from selling.
Cheers.
I wise old REA who was around during the 1974 floods said it was all forgotten within 10yrs. He expects this to happen again.
The issue I'm seeing in Brisbane and Ipswich is a $200k-$350k property can have a $2000+ building insurance premium, (not including landlord and contents!) if it has a flood marker on the lot.
I find this much more an issue than the risk from flood. I would have another few properties if this didn't have this pop up in a DD process. Insurance is also the reason keeping Nth Qld investment properties from selling.
Cheers.
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