Property price can fluctuate with impact of Bushfire in any given area.
After initial devastation of the fires, impacts are ongoing. Not only does bushfire reduces a price, insurance companies and banks can shy away from lending money or providing cover to those areas at a reasonable price. They can decline providing lending or insurance cover or they will premium load it. So, you might only be able to borrow up to a certain loan-to-value-ratio, or you might pay a higher interest rate.
So far over 11 million hectares of land, including more than 3,000 homes across NSW, Victoria, Queensland, South Australia and the ACT have been destroyed by raging Bushfire in Australia since September 2019. NSW land values apparently had dropped by up to 33 per cent after bushfires in certain areas.
According to REA’s chief economist, Nerida Conisbee, there are a number of identifiable trends that tend to occur after a major bushfire event:
- Data shows median house prices tend to decrease in suburbs and regions immediately following a significant bushfire.
- Property ‘views’ (that is, by potential buyers searching property listing sites) in affected areas tend to decrease initially but increase again after time.
- There is often an increase in listings of properties after a major bushfire, possibly as people look to leave the area, contributing to the decrease in sales prices.
- It is a possibility that local employment will be negatively impacted. If people lose their jobs, they may struggle to service their debts and banks can expect elevated mortgage arrears, potentially for quite some time until customers get back on their feet.
However, there are certain views that owners can hold on to their properties and less property comes up in the market for sale creating competition for the buyers and thus increasing price in certain suburbs.
So, while those not directly affected by the fires should feel eternally grateful, we can nevertheless expect to see broader flow-on effects for the foreseeable future. In saying that it is very important that any potential buyers do check if their future property falls in a Bushfire area or not irrespective of whether property has been impacted from the engulfing flames in the past.
We here at Sydney conveyancing can guide and advise you if property is impacted by Bushfire after reviewing your Contract for sale of Land. Please contact us anytime on 6989 4656 for further details.
