Fears sea-level policy may slash $1bn off property values

1 June, 2013 Uncategorized0

Fears sea-level policy may slash $1bn off property values


May 31, 2013, 10:45 p.m.

  • HIGH AND DRY: Marks Point resident Peter Johnston’s  house and contents insurance has risen 280 per cent in one year.  Picture: Marina NeilHIGH AND DRY: Marks Point resident Peter Johnston’s house and contents insurance has risen 280 per cent in one year. Picture: Marina Neil

RESIDENTS fear Lake Macquarie City Council’s controversial actions on the risks of sea level rise will wipe more than $1 billion off the value of properties.

But some believe the loss could be worse, with homes  worthless because they cannot be sold.

Some say their properties already won’t sell and insurance premiums are skyrocketing – problems they blame on the council’s sea level rise measures.

But the council says  changes in property values are a result of the global financial crisis, housing supply and interest rates, not council predictions of sea or lake level rise.

In a statement the council also said  sea and lake level predictions in 2050 or 2100 played no role in the calculation of insurance premiums.

However, Marks Point resident Barbara Davis, who is leading an action group on the matter, said the council was ‘‘destroying people’s lives’’.

The council had placed notations relating to flood and sea level rise on section149 property certificates of about 10,000 properties, and residents say the move has devalued many properties.

Mrs Davis said the action group called for the council to revoke the notations, but council officials said they were legally obliged to keep them.

The council said the state government required councils to ‘‘consider information on historical and projected future sea level rise, which is widely accepted by competent scientific opinion’’.

Marks Point resident Karen Mahoney said the sale of her home had fallen through because banks were only willing to lend up to 50per cent of the value of the property.

Ms Mahoney said banks had attributed this to the property’s section149 notation.

She had been willing to ‘‘wear the loss’’ of $200,000 to $300,000 from a high of $895,000, before the buyer pulled out.

Charlestown-based Russell Property Partners’ owner John Russell said the notations were ‘‘causing people difficulty in selling and making sales fall over’’.

‘‘Insurance and finance companies are avoiding loans on properties with these notations,’’ Mr Russell said.

‘‘You can shop for banks all you like, but mortgage insurance companies are making those decisions.’’

Mr Russell said the council ‘‘needs to put on the table what it’s going to do to protect these homes’’.

The council said it was developing a plan, which included options to ‘‘defend against or modify the flood risk’’, such as levees and private retaining walls.

Marks Point resident Peter Johnston, among others, estimated sea level rise notations would cause Lake Macquarie property values to drop by at least $1billion.

They based the estimate on projected devaluations of the 10,000 properties with notations.

Belmont real estate agent Sue Price said $1billion might be an overestimation, but properties at Marks Point had been devalued.

‘‘It’s hard to say where this will end,’’ Mrs Price said.

Pensioner Elaine Wolfe, of Pelican, feared she would not be able to sell her house to move to an aged care home when needed.

‘‘Will the council come and look after me?’’ Mrs Wolfe said.

Marks Point resident Phil Jones provided documents to show that NRMA Insurance had increased his home and contents’ insurance policy from $3375 last year to $7562 this year – a 124per cent increase.

A letter NRMA sent to Mr Jones said: ‘‘We take into account data … which may include local council flood mapping’’.

Lake Macquarie council altered its flood plan last year to include sea-level rise risk.

A council report said insurance premium increases had ‘‘mistakenly been attributed to local government flood risk management policies, flood mapping, and policies on sea level rise’’.

The Insurance Council of Australia said sea-level rise was ‘‘not covered and not considered’’ in premiums, blaming increases on factors including building big homes in highly hazard-prone areas.

Marks Point resident Rob Antill said the council’s approach to sea level rise had  cost him $1million because a development he had planned had become unviable.

Lake Macquarie councillor Ken Paxinos said he was ‘‘ashamed’’ of the council’s sea level rise actions.

Sustainability manager Alice Howe told councillors on Wednesday  the council had ‘‘a duty of care to consider sea level rise in planning and development decisions’’.

Fighting to stay afloat

MARKS Point resident Peter Johnston said he believes  Lake Macquarie City Council’s sea level rise policy would leave many people with properties worth nothing.

‘‘A house isn’t worth anything if you can’t sell it,’’ Mr Johnston, 62, said.

Some houses could not be sold in Marks Point because of council actions on sea level rise, he said.

He recently received a letter from NRMA Insurance saying his house and contents insurance had risen from $1017 to $3872 – a 280per cent increase in one year.

He had worked hard for his three-bedroom weatherboard house, he said.

‘‘We might live on the water, but I’m a carpenter by trade and I worked in the coalmines,’’ he said.

‘‘This is our nest egg.’’

He said the council was not listening to residents’ concerns. It  was spending money on sea level rise actions when ‘‘it should be fixing potholes’’, Mr Johnston said.

‘‘Sea level rise might or might not occur,’’ he said.

Leave a Comment

You must be logged in to post a comment.

This site uses Akismet to reduce spam. Learn how your comment data is processed.