Australian Homeowners Face $42 Billion Financial Burden: What It Means for You

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Homeowners in flood zones are paying “a disaster penalty”, with a new report from the Climate Council finding their houses have lost a combined $42.2 billion in value.

The report from Climate Council and PropTrack, a property data insights firm, found that despite house prices rising across the board, a typical three-bedroom, two-bathroom home in a flood zone is worth $75,000 less than a similar home outside of one.

Climate Council CEO Amanda McKenzie said the report showed that climate change is already having a “significant” impact on house prices in flood zones.

“It’s really important for people to understand that these risks are here with us now, and it’s already having a material impact on Australians, and that that impact is exacerbating inequality,” she said.

Is your area vulnerable to property devaluation due to flooding? Recent research sheds light on how flooding impacts home values in various regions, and the findings are quite revealing.

In Queensland, the flood-prone suburbs of Chelmer and Graceville, located near the Brisbane River, have experienced a significant decline in property values. The report highlights that homes in these areas have seen a 10.6% decrease, translating to an average loss of approximately $303,000 in value.

Of an estimated 11.7 million homes in Australia, just over two million, or one in six, are at risk of flooding, according to the Climate Council.

Queensland and NSW were the states most affected, while Tasmania and the ACT were the least impacted.

The greatest value drop was in Brisbane, which has been hit by 10 flood events since 2010.

Similarly, in western Sydney, properties in the neighboring suburbs of Pitt Town and McGraths Hill, situated in the low-lying Hawkesbury catchment, have not been spared. Homes in these areas have depreciated by 8.7%, equating to a reduction of about $363,500 compared to properties not at risk from flooding.

These statistics underscore a broader trend where increasing property prices have somewhat obscured the financial hit faced by homes affected by flooding. As one expert poignantly noted, the rise in house prices has masked the adverse impact on these flood-affected properties.

The lure of cheaper homes

Amid a national housing crisis, McKenzie warned that there is no silver lining to climate change pushing house prices down.

“We’ve been asked a lot that, if these houses are worthless, isn’t that a good thing?” she said.

However, McKenzie said the problem “compounds inequality”.

A man in a blue shirt and brown pants looks at a floor in a house.

Former prime minister Scott Morrison inspects a flood-damaged property in Sydney’s McGraths Hill in 2022, where property values have since dropped by nearly 9 per cent. Source: AAP / Dean Lewins

“In some of these regions where we’ve identified the flood risk being really high, they’ve been inundated multiple times within a five-year period,” she said.

“If you’re in a flood risk zone, you find it’s harder to insure your house, or you can’t insure your house. And so when a catastrophic flood comes, you have far less resilience to that flood event. You potentially can’t rebuild your property.”

Many of the regions are already lower socioeconomic zones, and McKenzie said people should not be lured by the promise of cheaper homes.

“People can become trapped,” she said.

Richer areas not immune

Homes at the waterfront suburb of Mermaid Beach, once one of the most expensive places to buy on the Gold Coast, are valued 7.8 per cent lower due to flood risk.

This was despite only 16 per cent of properties being located in the flood zone. However, events such as ex-Tropical Cyclone Alfred, which hit the Gold Coast between February and March this year, contributed to the changing perception of Mermaid Beach.

A damaged sign that reads "putt putt" with a street light fallen through it.

A damaged Putt Putt golf course at Mermaid Beach following ex-Tropical Cyclone Alfred in early 2025. Source: AAP / Dave Hunt

However, the report did find the drop in value was smaller in some of the more prestigious areas. Noosaville and Noosa Heads were two places where coastal vistas and an enviable beach lifestyle outweighed the risk of flooding.

McKenzie said this is likely because “people don’t fully appreciate the risks yet”.

“No matter what demographic the property is in, if your home is flood-affected, it has increased less than others.”

Who should pay the penalty?

Climate Council CEO Amanda McKenzie said this report showed “the material cost that people are wearing right now.”

McKenzie called for changes to planning laws to stop future builds in flood prone areas.

“The government will need to buy back houses because it won’t be feasible to live in those locations anymore. Those costs should be absorbed by the whole community because people didn’t know that that was going to be the risk that they were exposed to.”

McKenzie urged people considering buying in a flood zone to consider the future risks.

“This isn’t about a moral argument for a better future. I think it’s important to communicate to the public and to politicians that this is an economic, material cost being experienced today.”