city-bypass-sign-flooded-lismore-flooding-nsw-feature
Lismore (above) was one of the worst hit areas in the recent flooding events on the eastern searboad. Image: Canva.
  • Coastal markets doubled the rate of inland regional area growth
  • Water frontage averaged a 79% price than inland equivalents
  • Potential bargains may be offset by stunted capital growth

The recent extreme weather events across the eastern seaboard don’t seem to be stemming the desire to live waterside, according to BuyersBuyers‘ co-founder Pete Wargent.

The recent floods hit places like Lismore and Gympie particularly hard, and Brisbane experienced major flooding again, just over a decade after the 2011 floods.

“Sometimes owner-occupiers are prepared to buy in flood risk zones if they find a property which fits all of their other criteria, and if they love the location,” said Mr Wargent.

The x-factor

“Often, properties with water views can appear to march to their own drum, performing
well even when the wider market is lacklustre,” said Buyers Buyers CEO Doron Peleg.

“A water view which can’t be built out is a genuine point of scarcity and desirability which tends to be reflected in long-term outperformance in Australia.”

Mr Peleg also noted BuyersBuyers considered whether sea-change or tree-change markets were stronger in 2021, through market research.

The market research found that coastal markets recorded double the rate of growth of inland regional markets.

“That’s not to say that treechange locations performed poorly – far from it, in many cases. Some inland markets have also benefited directly from regional moves away from the capital cities.”

“Mittagong and Orange in New South Wales are two examples of markets where rentals have been very tight away from Sydney, and the surge in demand has pushed properties prices higher, while asking rents have exploded.”

The first waterfront premium

Earlier this year, Knight Frank released its latest Australian Waterfront Premium report.

The report found the number of prestige homes located on the absolute waterfront increased significantly, mostly thanks to the introduction of Crown Residences at One Barangaroo in Sydney

The report found 32.9% of the 374 super-prime residential sales were located on the absolute waterfront, across Australia; the figure is close to the ten year average of 34%.

Knight Frank’s research found that prime waterfront properties were priced 79% higher, on average than the inland equivalent in 2021.

This figure is up 14.4% from 2020 which recorded a 69% premium on average.

Another waterfront premium

Australians are still looking for water views despite recent flooding events, according to Mr Wargent.

However, there is an additional cost to consider, and it’s not just due to property pride of place.

“For most investors, the opportunity to snare a potential bargain is usually offset by the risk of stunted capital growth (as future buyers may see potential flooding risk), and because the annual insurance premium when buying in a flood zone may be excessively high.”

Pete Wargent, Co-founder BuyersBuyers

“For an interstate investor, in particular, there is less sleep at night factor if you own a property which you fear may be flooded at some point in the future,” added Mr Wargent.

Mr Wargent also reminded potential investors in flood-prone areas should complete thorough research:

“History can be a useful guide when it comes to risks such as flooding. Furthermore, local knowledge and common sense are also important.”

“Buying sight unseen can be risky if it doesn’t allow you to get a feel for the contours and the lie of the local land.”

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Disclaimer: This article contains general information and should at no time be considered investment advice to the reader. The reader should always verify their situation with the relevant professional/s before taking any further steps. 

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