Flood-prone properties in Logan and throughout Queensland will be harder to sell as banks tighten their lending procedures and buyers become more discerning, local experts say.
Logan real estate agent Avi Khan and mortgage broker Dan Brown gave the warning as the Council prepares to release new flood mapping.
The maps are expected to expand the number of Logan properties listed as being at risk of flooding.
Khan, who is principal of Ray White’s Daisy Hill and Marsden branches, said of the new maps due out next month: “There’s going to be so much carnage in the marketplace for people”.
He added: “There’s always complaints about flood maps … so there’s going to be a lot of locals upset by a lot of the new flood maps coming out.
“It is concerning, but we understand it’s something that Council has to undertake. It’s within their responsibility to do that.”
Meanwhile, Loan Market mortgage broker Dan Brown said he had a case recently where the bank declined a loan for the purchase of a property because it ruled that the property was “future flood affected”.
That was despite the hopeful buyer having a government-guaranteed five per cent deposit.
He said: “It wasn’t actually affected in February with the new floods, but it was a possible one in 100 (year) circumstance on part of the property.
“The sale fell through and the buyers ended up having to buy another property.”
Brown explained that it would be very difficult to secure a loan if the banks gave a flood-prone property their highest risk rating of five, unless the buyer had a deposit of at least 30 per cent.
He added: “If someone is looking to go to sale soon or has an existing property (that is declared flood prone) it will possibly affect that property’s value and that owner’s future.
“There will be fewer buyers for a property declared flood prone.
“I have a lot of buyers for properties and one of the first things they do, considering recent events, is to check the flood maps because it’s an easy thing to do online.
“If they do check online and notice there’s some flood mapping around the property, they will steer away from it. They don’t want to hear an agent’s spiel of the possibility that it is (flood prone) or not – they will just go somewhere else.”
The broker said mortgage insurers also carefully analyse flood risk.
He explained: “Lender’s mortgage insurance are a little bit more stringent on guidelines. If they see something on a valuation that calls into question the resale or saleability of that property, they may be more adverse to secure that property.”
In a *PS Logan story last week, Logan's mayor Darren Power admitted: “A lot of people with existing properties will get upset because we’ve deemed their land flood prone and it’s going to reduce their value.”
But he added: “It’s not the Council's fault, it’s climate change and it’s happening”.
Estate agent Avi Khan agreed, saying: “Climate change is a big factor in what’s going on in the world and in our areas as well.”
But he added: “There’s a lot of people who’ve bought properties just prior to the recent flood (in February).
“There’s a lot of people who’ve been looking at selling as well and making plans for their retirement or making plans to move interstate so it will affect a lot of the valuations being given out by banks and real estate (agents) and the like”.
“There’s going to be a lot of unhappy people.
“I dare say there will be some properties in the flood maps that weren’t flooded, but Council thinks they will likely be flooded. I think those people will be the ones that will be really upset. They will be the ones that will be completely gutted.”
But Khan said Council is doing its job in revising the flood maps.
He said: “I think they’re in a no-win situation where they have to placate the owners, landowners and residents, but at the same time they have a duty of care to make sure that those areas which were flood affected are identified as flood affected.”
And he said the Council would be affected too, because if some property valuations fall their rates will be lower.
Meanwhile, the agent said obtaining insurance cover for flood affected properties would also become more difficult.
He said: “Insurance premiums will go up as well, some properties may not be insurable because they are in the flood prone areas. There’s a lot of different things that will happen with this.”
While the prices of properties on the Brisbane and Logan rivers have not fallen since the February floods, Khan said this was because “the market had gone up like crazy”.
He said: “The market has been up by 33 per cent and what happens normally is that property prices go down after a flood.
"But this time because the market was so strong and there was so much demand for properties the flood events didn’t actually affect the property prices as much as they would normally.”