NSW land values dropped by up to 33 per cent after bushfires

NSW land values dropped by up to 33 per cent after bushfires
NSW land values dropped by up to 33 per cent after bushfires
Land values in NSW dropped by up to 33 per cent after the 2019/2020 bushfires destroyed properties across the state, according to the 'Review of the impact of bushfires on land values' report released on April 9, 2020.
 
CSIRO report that there was more than 10 million hectares of land burnt in Australian during the 2019/2020 bushfire season. This is greater than the combined area burned in the Black Saturday 2009 and Ash Wednesday 1983 bushfires. The CSIRO lists weather and vegetation as playing the major contributing factors to the 2019/2020 bushfires.

Record low rainfall (2019 was the driest year since records began in 1900) and record high temperatures lead to dry vegetation and an increased frequency of fire weather days.

During the 2019/2020 bushfire season to date, NSW Justice has issued a natural disaster declaration for 51 LGAs across NSW.

The Rural Fire Service (RFS) recorded the most fire incidents in NSW in the 2019/2020 fire season over the last 20 years.

NSW land values dropped by up to 33 per cent after bushfires

The number of bushfire incidents recorded in each fire season  Source: NSW Review of the impact of bushfires on land values, 9 April 2020. 

 

NSW land values dropped by up to 33 per cent after bushfires

Areas of NSW that were subject to bushfires in the 2019/2020 bushfires. Source: NSW Review of the impact of bushfires on land values, 9 April 2020. 

By March 3, 2020 the RFS recorded that the majority of destruction from the bushfires had occurred to residential properties with some commercial, industrial and public areas also being impacted. The total number of properties destroyed and damaged are as follows: 

Degree of damage Residential  Out Building Commercial  Industrial  Public Area
Destroyed 2,355 5,207 172 25 49
Damaged 962 1,911 71 26 66
Source: NSW Review of the impact of bushfires on land values, 9 April 2020.

In addition to the significant level of damage caused by the bushfires to property structures it has been suggested that the extent of the fires may also cause some sterilisation of the landscape. This is due to the greater intensity of these bushfires and the dryness of the landscape which had been in drought. However, the level of regeneration achievable will not be known until after the end of the bushfire season. 

In response to the bushfires, the NSW government declared that it will cover the full cost of council rates for the third and fourth quarters of the 2019-2020 financial year and in conjunction with the Commonwealth government will pay the clean up costs for properties that were destroyed (Service NSW, 2020).

In early February 2020, NSW experienced significant rainfall which helped put out most fires in the state and weakened drought conditions across most of eastern NSW.

The NSW Valuer General determines land values for approximately 2.6 million properties across the state each year. Almost half of these, 1.1 million, are in located in the 51 LGA’s where a natural disaster declaration was issued.

NSW RFS impact assessment data indicates approximately 38,000 thousand of these were in the fire impact area. This represents approximately 1.5 per cent of the total number of valuations in the state.

NSW Valuer-General David Parker studied the impact of past bushfires on property sales across the US and NSW to give land owners and councils an indication of where prices could fall this year after the unprecedented events of the past summer.
 
NSW land values dropped by up to 33 per cent after bushfires
 
Impact on land values were contingent on where properties were located, how much land was destroyed by bushfires and the level of demand for land. 
 
Dr Parker explains, “If there was a strong market for land before the bushfire and the bushfire only affected a small proportion of properties in the area, there was almost no effect [on the land value]". 
 
Looking at the 2013 Blue Mountains bushfires, land values dropped between two and six per cent due to damage to relatively few properties but sustained high levels of demand in the region, ergo property prices after the event created many vacant blocks for sale. 
 
However, on the flip side, there was an 11 to 33 per cent drop in land values after the 2017 Sir Ivan bushfires in the Warrumbungle local government area. 
 
Dr Parker explained, "areas where demand is low and a high proportion of properties of land was destroyed, you saw the biggest impact on values. 
 
"When you think about it, they're the people who need the most help. Their lives have been destroyed."
 
Tags: 
NSW Bushfires

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