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The Flood Factor: How to Avoid Buying Flood-Prone Properties

A rare one in 200-year storm caused widespread damage and flooding last summer. A year on, investors are very wary of flood threat. Andrew Nicol explains how property investors can navigate some risk.

30 April 2024

A property in a known floodplain is not an immediate cause for panic. Hear me out. Flood zones are prevalent throughout Auckland, Christchurch and other major areas.

If you buy (or own) a property in a floodplain, you have a 1 per cent chance of flooding in a given year. For buy-and-hold investors, this risk increases to 14 per cent during 15 years of ownership. So, it’s not so much about not buying a property in a flood zone. It’s about knowing what risks you need to pay more attention to.

Property age

Newer builds (not necessarily new builds) are often going to fare better in a flood. Up-to-date council rules state properties must be raised above the ground if the area is prone to flooding.

The Christchurch City District Plan specifies properties need to be high enough off the ground to withstand: a one in 200-year rainfall event; and a 1m sea level rise. In suburbs like Bromley, Christchurch, that number is 1.5m higher off the ground, for newer properties.

Existing properties, pre-dating these codes, are built lower to the ground. This can mean that two properties sitting side-by-side in a flood zone will have varying flood risks. Depending on the age of each property.

New builds

Floods happen because stormwater systems get overwhelmed. If you build a whole heap of properties together, you often have a whole heap more rooves to collect water, and less grass to absorb it. New developments will often have a water tank installed underneath or near the unit.

It works like a big bucket that collects all the rainwater running off the roof, driveways, and walkways. The tank then collects the water and drip feeds it into the storm water system at a rate it can cope with. If your land is sloped, then water can run off your land and it won’t pool. But if your land is flat, or is at the bottom of a hill, then the water might stay on your land.

So, the stormwater system only gets fed water at a rate it can cope with.

Car parks

If your newer property is in a flood-risk area, you still have to worry about your car.

If your car is parked on the street, and the street floods, your car may be a write-off.

But you may not be off the car-parking hook entirely if your property comes with a garage. While newer properties will be raised above ground level, often the garage won’t. This is because a developer often isn’t going to lay the extra concrete just to raise your car off the ground.

You can ask for it, of course. But it will be at an extra cost, and this may put some people off. Especially considering the price of a garage can add significant cost to a new property.

Land flooding

The focus is usually on how to keep water out of the house. So, we forget to think about how badly the land will get flooded. Sometimes the flood risk is the susceptibility of the water to go onto the land.

You can get a building inspector to look at your property’s plans before you go unconditional. They will be able to tell if the water is going to pool on your land, or run-off somewhere else.

This can be an issue if you can drive through the flood water to get to your property ... or get out. Sure, it’s a small risk, but it’s something that you want to think about when you’re making a purchasing decision.

The reality is, many homeowners and investors already own property in a flood zone. But for potential buyers, there is some control you can exercise around flood risk when buying properties. Especially, when they know what properties are more susceptible than others.

Some properties are more at risk, than others. This is true, even for neighbouring properties. Investors who deal in new builds might be able to worry a bit less.

This is something you want to think about when you’re making a purchasing decision.

Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.


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