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Lismore land values halved following 2022 floods

Australia’s property market has shown incredible resilience during a time of Covid-19, 13 interest rate rises and increasing costs of living, however regions impacted by significant climate events, such as Lismore, have struggled to rebound according to the latest analysis by leading property data and analytics company, PointData.

Beyond the devastating impact to homes and buildings, the longer-term impact for climate-event affected regions can be far more significant, with land values having the potential to decline to a level that reduces saleability and increases the risk of arrears/foreclosure. Furthermore, financial institutions and insurers are increasingly applying insurance ‘no go’ zones and severe loan-to-value ratio restrictions.

PointData’s new climate risk modelling, driven by its AI and machine learning engine, separates the impact on buildings at the time of the event, and looks at the broader impact on property values which are devalued over a longer period. Applying this model to the Lismore floods has shown the significant negative impact on property values.

PointData founder George Giannakodakis, said: “The combination of climate events and a market slide can be devasting on householders, and also puts the financial sector at significant risk. An example of this played out in the 2022 Lismore Floods, where low lying properties were hit by both the flood event in early 2022, and later by the impact of rising interest rates, leading to properties on average losing as much as 60% in flood affected areas, and a further 13% as a result of interest rate increases.

“The NSW Government released the Lismore Flood Recovery Planning Package to support the region, which resulted in a small recovery, however as at the end of 2023, North and South Lismore property values were still down around 30% on average. The flow on impact is that entire postcodes or suburbs are often then classified as ‘no go’ zones by banks and insurers, as the risk of further flooding, or climate related events remains.”

Financial institutions, governments and insurers all have different ways to price and categorise physical risk to property associated with climate change. Unfortunately for homeowners, blanket ‘no go’ loan and insurance postcodes, or area wide applications of risk, can be very conservative and therefore not nuanced enough to reflect the level of climate impact at an address level, or individual property. PointData’s granular technology is now able to distinguish locations within these suburbs that are more resilient to flood risk and should not be lumped with high-risk areas.

PointData has developed two solutions that will be made available to both consumers and financial institutions:

  1. A property level assessment of building risk across all residential properties, including mitigation approaches via building codes embedded in planning overlays for new builds and future development. PointData can accurately measure the building footprint (and envelope if required) in an area impacted by a climate event by combining global digital elevation data via several satellite feeds, LIDAR and government data.
  2. A climate adjusted loan-to-value ratio for banks to precisely inform the financial sector of future risks at a property level.

“As an industry, we need to find solutions that spread the risk of climate-related events to mitigate the potential for ‘climate ghettoes’. Innovation and technology should be at the centre of the solution to enable protections for homeowners, while mitigating the risk for banks and insurers,” said Mr Giannakodakis.

Lismore’s fall in land values as a result of flooding and interest rates.

A breakdown of the maximum impact on property values across several suburbs in the Lismore region at a neighbourhood level applying PointData’s new technology

Unlike suburbs to the west (Lismore and South Lismore) that were flood inundated, unaffected suburbs to the east such as Goonellabah only experienced a model decline in property values due to interest rate rises.