Source: Radio New Zealand
Flooding and other severe weather events can impact buyer behaviour. RNZ
House buyers often haven’t had long memories of how floods have affected different areas – but there’s a warning that could change if big storms become a more frequent occurrence.
Parts of Wellington and Wairarapa were inundated this week, soon after Cyclone Vaianu swept through parts of the country and only months after areas of Northland were badly hit by slips and floods.
Cotality head of research Nick Goodall said he was undertaking research looking at the effects of Cyclone Gabrielle and the Auckland Anniversary weekend floods on the housing market.
But he said earlier research, focusing on Dunedin, showed there was a 15 percent discount on property prices in flood affected and surrounding areas, but that was gone after about 18 months.
“Our colleagues in Australia did a similar analysis with similar results.”
He said Cotality wanted to look into it again to see whether the mindset had changed if storms were perceived as more frequent events.
Cotality head of research Nick Goodall. Supplied / Cotality
“The question always is will people’s attitudes change over time? And the more frequently they’re happening, then the more it will change people’s behaviour.”
Goodall said banks often had more information than buyers did.
“I think it’s probably about having the right information available for people to make those educated decisions … yes, there’s some flood models out there, but there’s inconsistency, it’s not always freely available to public.
“The more that information gets into the public’s hands, the more likely that people are going to base their decision on that, saying I’m not going to buy it or I’m not going to buy it at a certain price.”
Auckland mortgage adviser Bruce Patten said he had seen the impact being short-lived, too.
“It’s amazing how short some people’s memories are …. In saying that with insurance premiums going through the roof in some areas, a lot of people get put off if they ask for an insurance quote.”
Another mortgage adviser, Campbell Hastie, said how houses were likely to be affected by future weather events was already an increasing worry for buyers he met.
Campbell Hastie. Supplied / Hastie Mortgages
“I think people used to assume that every property could be insured unless it was a total odd ball but they’re learning that that’s not always the case,” he said.
“Lenders are more focused on it too and while it’s always been a condition of lending, it’s been given a bit more prominence in loan offers which is another reason customers take more notice these days. Flood-related information is fairly easy to find and there’s more detailed info in LIM reports too … it’s more likely to be on your radar so yes, people are looking for it and it does factor into their decision making.”
Auckland real estate salesperson Diego Traglia said flooding and other severe weather events would have a noticeable but nuanced impact on buyer behaviour.
“In the immediate aftermath of storms, we typically see a shift in sentiment. Buyers become more cautious, particularly around properties near waterways, low-lying areas, or those with any known flood history. Due diligence increases, with more focus on LIM reports, insurance, and past flooding. For many, that risk is enough to rule properties out.
“That said, the impact on demand is usually selective. Well-located homes still attract strong interest, but properties with clear flood exposure can see reduced competition, longer time on market, and pressure on price.”
He said areas like Kumeu had added complexity.
Auckland real estate salesperson Diego Traglia. Supplied / Team Diego
“Some council flood maps are known to be inaccurate, and updates are coming. For now, some properties appear to be in flood zones on paper but aren’t actually affected, which can confuse buyers and impact demand based on outdated information.
“A key factor is understanding why a property flooded, and what’s been done to fix it. Not all flooding is equal. Where the cause has been addressed, whether through drainage upgrades or infrastructure improvements, buyer confidence can return relatively quickly.
“Over time, the market tends to rebalance. Demand doesn’t disappear, but it becomes more price-sensitive and risk-aware, with buyers taking a more informed and measured approach.”
Some owners already in flood zones were worried about the future impact.
In one case the Insurance and Financial Services Ombudsman (IFSO) scheme dealt with recently, a family complained after their house was badly damaged in flooding and had to be rebuilt.
The insurer agreed to cover the rebuild but there was a dispute about whether the floor level should be higher.
The insurer said it only needed to raise the floor level to the minimum required to obtain building consent and that there was no clear evidence from the council that a higher level was mandatory.
The family wanted it higher to reduce the risk of future flooding.
They said that if the floor level was not raised enough, the council could place a notice on the property title indicating that the land was subject to natural hazard risk, which could affect future insurance or their ability to get a mortgage.
The Insurance and Financial Ombudsman scheme looked at the terms of the house insurance policy, whether a higher floor level was required to obtain building consent, and expert reports and council information provided by both parties.
The policy stated that the insurer was only required to pay for costs that were reasonably required to rebuild the home and meet legal or council requirements.
Because there was no firm council decision showing the higher floor level was mandatory, the IFSO scheme found the insurer was not required to pay for the additional cost.
Insurance and Financial Services Ombudsman Karen Stevens. Supplied / IFSO
“Many people want to future proof their homes against flooding, especially as severe weather events become more frequent,” said Insurance and Financial Services Ombudsman Karen Stevens.
“However, our role is to look at whether an insurer has correctly applied the terms of the policy. Insurers aren’t required to fund upgrades or improvements that go beyond what is required under the policy.”
She said uncertainty about climate adaptation and who should pay for it was becoming an increasingly common issue for homeowners, insurers and councils.
“This issue is not going away, especially with the number of storms we’re seeing now. There are urgent decisions to be made about how adaptation will be managed and funded.”
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