Widespread flooding in first half of 2022 sees latest land valuations expected to fall in worst hit areas of the Northern Rivers region

Due to Northern Rivers flooding in February-March and June 2022, property owners in flood affected locations in Lismore City local government area such as North, South and central Lismore experienced decreases in demand for their lots. As did property owners in flood affected Ocean Shores and Golden Beach in Byron Shire. 

"Lismore saw a 23.9% decrease [in commercial land demand] after the 2022 floods significantly impacted the area, with the entire CBD being inundated....Lismore [industrial land] decreased slightly (5.2%) as a two-tier market emerged with premiums being paid for flood free industrial land.....Strong demand continued in Lismore (23.7%) for productive farmlands to the northwest which were not as severely affected by the 2022 floods."

Valuer General of New South Wales, Valuation NSW, Media Release, 19 January 2023:

New land values published for the North Coast region

The NSW Valuer General has published land values for the North Coast region. The land values reflect the value of land only, as at 1 July 2022.

Land value is the value of the land only. It does not include the value of a home or other structure. Property sales are the most important factor valuers consider when determining land values. [my yellow highlighting]

The new land values will be used by Revenue NSW to calculate land tax for the 2023 land tax year. Registered land tax clients will receive their land tax assessment from Revenue NSW from January 2023. More information on land tax can be found at revenue.nsw.gov.au.

Councils receive new land values for rating at least every three years. Land values are one factor used by councils to calculate rates. All councils have been issued with the 1 July 2022 land values.

Landholders will receive a Notice of Valuation showing their land value before it is used by council for rating. Notices will be issued from January 2023. This gives landholders time to consider their land value.

The latest land values for all properties in NSW are available on the Valuer General NSW website, along with information on trends, medians and typical land values for each local government area.

Please visit www.valuergeneral.nsw.gov.au for more information on land values and the NSW valuation system.

North Coast Region local government areas

Ballina, Bellingen, Byron, Clarence Valley, Coffs Harbour, Kempsey, Kyogle, Lismore, MidCoast, Nambucca, Port Macquarie-Hastings, Richmond Valley and Tweed.

General overview

The total land value for the North Coast NSW region increased by 35.9% between 1 July 2021 and 1 July 2022 from $116 billion to $158 billion.

Residential land values increased 36.8% overall. Demand for rural villages, hinterland and beachside locations continue as sea and tree changers relocate to work remotely. This trend was particularly evident in Coffs Harbour (46.7%), Port Macquarie (38%) and Clarence Valley (46.5%). Lismore (31.5%) saw increased demand in flood free areas including Goonellabah, Lismore Heights and Richmond Hill while flood affected locations such as North, South and central Lismore experienced decreases. Byron (18.2%) varied as decreases in flood affected Ocean Shores and Golden Beach offset increases at Brunswick Heads, Suffolk Park and elevated Pacific Vista Drive, Byron Bay.

Commercial land values increased 24.1% overall. Relative affordability contributed to Bellingen (56.7%) and Clarence Valley (40%) experiencing the strongest increases. In Ballina (14.9%), the flood impacted CBD experienced moderate to slight increases while Lennox Head and Wollongbar increased strongly due to tight supply. Byron (25.2%) increases highlight continued strength in the Byron tourism sector and investor demand. Lismore saw a 23.9% decrease after the 2022 floods significantly impacted the area, with the entire CBD being inundated.

Industrial land values increased by 29.6% overall. Clarence Valley (122.5%) saw heightened demand for a limited supply of affordable fringe industrial land around Grafton and Yamba. Similar supply issues led very strong increases in Kempsey (56.4%), especially South Kempsey precinct, and drove values in affordable fringe locations of Woolgoolga and Macksville which contributed to very strong increases in Coffs Harbour (41.5%) and Nambucca (37.7%). Lismore decreased slightly (5.2%) as a two-tier market emerged with premiums being paid for flood free industrial land.

Rural land values increased 37.4%. Strong commodity prices drove demand for quality agricultural land with reliable water and resulted in increases regionwide, with Port Macquarie-Hastings (54.5%) leading the trend. Relative affordability drove demand in several local government areas including Nambucca (51.4%) and Kempsey (40.3%). Across Byron (26.1%), values remained steady in flood impacted localities including Main Arm and Mullumbimby while purchasers underpinned strong demand for rural homes and hobby farms in areas like Myocum and Bangalow. Strong demand continued in Lismore (23.7%) for productive farmlands to the northwest which were not as severely affected by the 2022 floods.

~~~Ends~~~ 

How will February-March 2022 flooding in Northern NSW affect land values?

 

It would appear that the Northern Rivers region bounced back from any flow-on effect on land values due to the 2019-20 mega bushfires and, the pandemic appears to have actually increased demand for housing in the region. Now residential and commercial property owners are waiting on the first official post February-March 2022 floods land value report.

BACKGROUND

Pre-July 2019 to March 2020 Bushfire Season

NSW Valuer-General’s Report for NSW Land Values at 1 July 2019

North Coast NSW region local government areas

Ballina, Bellingen, Byron, Clarence Valley, Coffs Harbour, Kempsey, Kyogle, Lismore, Mid-Coast, Nambucca, Port Macquarie- Hastings, Richmond Valley, Tweed

General overview

The total land value for the North Coast NSW region increased 1% between 1 July 2018 and 1 July 2019 from $85.8 billion to $86.7 billion.

The value of residential land value in the region generally remained steady or increased slightly with an overall increase of 0.6%. However, moderate increases were experienced in Richmond Valley (6%) and Lismore (5%). Overall, values in Byron decreased slightly by 2.6% except for residential land in central Byron Bay which increased by 6.5% and residential land in the villages of Billinudgel, Federal and Main Arm which increased by 5%.

Commercial land values across the region generally remained steady or increased slightly with an overall increase of 0.9%. An exception to this was Kyogle where values increased moderately by 6.8%, with increases mainly confined to the northern part of the Kyogle town centre.

Industrial land values in the region generally remained steady with an overall increase of 1.6%. Values increased slightly in Port Macquarie-Hastings (4.4%) and Richmond Valley (4%), and moderately in Kyogle (6.2%) and Ballina (5.9%).

Rural land values in the region generally increased slightly with an overall increase of 2.5%. Rural land in Lismore, however, experienced a moderate increase of 8.1% due to a strong demand for hobby farm and rural lifestyle properties.

Post-July 2019 to March 2020 Bushfire Season

North Coast Voices, 14 February 2021:

As of 28 January 2020 the climate change-induced 2019-20 bushfires in New South Wales had burnt 5.3 million hectares (6.7% of the State), including over 52 per cent of the land area in the Clarence Valley and close to 49% of the land area in the Richmond Valley.

Now we find out how this affected land values in those two local government areas.

Decreases were evident in some areas impacted by bushfire events, with the largest land value decreases in Rappville and Whiporie in Richmond Valley (-21%) and unspecified moderate to strong decreases in localities south of Grafton, Coutts Crossing and the Clarence River.

In the middle of the COVID-19 Global Pandemic

NSW Valuer-General’s Report for NSW Land Values at 1 July 2021

North Coast NSW region local government areas

Ballina, Bellingen, Byron, Clarence Valley, Coffs Harbour, Kempsey, Kyogle, Lismore, Mid-Coast, Nambucca, Port Macquarie- Hastings, Richmond Valley and Tweed.

General overview

The total land value for the North Coast NSW region increased by 28.7% between 1 July 2020 and 1 July 2021 from $89.3 billion to $115.5 billion.

Residential land values increased by 27.9% overall. The strongest growth was in Byron (51.9%), followed by Ballina (39.3%), Richmond Valley (38.4%), Clarence Valley (31.9%) and Kyogle (27.4%). Strong increases were also seen in Port Macquarie (17.9%), Kempsey (17.0%) and Lismore (17.7%).

Sea and tree changers relocating to work remotely drove demand along the North Coast seaboard.

Overall, commercial land values increased by 28.7%. Byron (50.3%) experienced the strongest increases due to strong demand in a tightly held market. Other large increases were seen in Tweed (23.6%), Ballina (28.8%), Richmond Valley (37.5%) and Port Macquarie (27.3%), Kyogle (11.4%) and Kempsey (10.7%), while Lismore (9.0%) increased moderately with supply meeting demand.

Industrial land values for the region increased by 22.6%. Very strong increases in Byron (37.1%) followed heightened demand for relatively affordable industrial space in Bangalow and Mullumbimby. An increase in building activity saw demand outstrip supply in Port Macquarie Hastings (36.5%). Nambucca (31.9%) saw strong demand for limited stock while a balanced supply of industrial land resulted in moderate-strong value increases in Clarence Valley (7.3%), Lismore (11.1%), and Richmond Valley (11.7%).

Rural land values across the region increased by 30.5%. Byron increased 70.5% as the residential market moved into hobby farms and lifestyle properties, while nearby Ballina experienced a very strong 32.2% increase. Strong increases were also seen in Coffs Harbour (11.9%), Nambucca (28.8%) and Clarence Valley (22.9%), with increased demand from both lifestyle changers and rural producers. Good rainfall, buoyant commodity prices, low interest rates and a favourable seasonal outlook has seen on-going demand for quality cropping and grazing land from local and interstate buyers and western graziers.

Generally the Valuer-General’s land value reports are published within six months either side of the 1 July date at which any value change is calculated.

Given that property sales are the most important factor valuers consider when determining land values and since the NSW February-March 2022 widespread destructive flooding along the Australian east coast has left whole villages, towns & even cities with a significant percentage of their housing stock in an unsaleable condition, I suspect that this year’s land value report may be delayed.

COVID-19 Pandemic in Australia: land values, housing markets and potential for population movement

In the last two years when talking about the SARS-CoV-2 virus and COVID-19 the focus has been on the number of people falling ill or dying, jobs lost, schools closed, difficulty in accessing vaccines or diagnostic services, the shortage of goods & services and economic impacts felt at a micro or macro level.

In commenting on change this pandemic has wrought, access to housing and household wealth sometimes rate a mention. Here is a quick sketch of two of the building blocks underpinning that aspects of our lives at state and national level.  

 The NSW Valuer-General determines land values across the state.

Over 40,000 property sales were analysed to determine land values as of 1 July 2020.

Overall land values increased across New South Wales by 3.6% from $1.70 trillion to $1.80 trillion in the 12 months leading up to 1 July.

However, not all sectors saw a growth in land values.

Although residential land values across the state saw an overall increase of 4.0% (coming back from a fall in 2019),  with industrial land seeing an overall value increase of 5.5% along with a total 4.8% rise in the combined value of rural land - it was another story for commercial land.

Commercial land values experienced an overall decrease of 6.6% which according to VG News: July 2021  was "largely due to the impact of the COVID-19 pandemic". Having received greater disruption than the residential land sector. 

House prices in most capital cities had been expected to experience a cyclical upswing in 2020 but the onset of the pandemic saw house prices contracting in all capital cities except Canberra in the June Quarter 2020. However the Reserve Bank's cash rate reductions, lower interest rates and government policy responses saw the market bounce back, according to KPMG Economic's paper The Impact of COVID-19 on Australia's Residential Property Market in 2021.

The expected Australian population reduction of over 1 million people by the end of this decade compared to pre-pandemic population forecasts is beginning to be felt across the economy and, along with an anticipated return to equilibrium and higher mortgage rates is predicted to temper the housing market for the next 2-3 years. 

Despite these factors affecting the housing market in 2022 and 2023, KPMG’s analysis predicts that house prices are expected to be between 4-12% higher and unit values are expected to be between 0-13% higher than would have been the case in the absence of COVID-19.

For renters in capital cities there appears to have been an overall but seemingly temporary fall in rent payable - between March and November 2020, capital city unit rents dropped by 5.4 per cent, while house rents increased by 1.1 per cent. 

This pattern is relatively consistent across all capitals though the difference is most significant in Melbourne and Sydney where unit rents fell 7.6 per cent and 6.6 per cent respectively while house rents have seen a much smaller reduction of around 1 per cent. 

These March to November falls in rents did not seem to occur in regional areas in NT, Qld, NSW Vic, Tas, SA or WA in analysis supplied in AHURI Final Report No. 354: Pathways to regional housing recovery from COVID-19, April 2021.

By 20 January 2022 realestate.com.au was beating a commercial drum stating that the housing market had been booming since November 2021 - due in part to an alleged rise in investor confidence, the "influx of expats", limited housing stock and low interests rates, along with a demand for more space and a regional exodus from cities.  

Wooli NSW

Yamba NSW

Iluka NSW

Evans Head NSW

Here are four of the housing market profiles found in the 2021 Suburb Report Card interactive which can be found here. Click on images to enlarge.

POPULATION BACKGROUND

An Australian Bureau of Statistics (ABS) media release of September 2021 and linked data stated that there were 293,500 births and 162,500 deaths from 31 March 2020 to 31 March 2021.

The resulting natural increase was down 4 per cent from the previous year and continued the trend of a gradual decline over the past 5 years, driven mainly by decreasing births.

However, due to international border closures a natural increase of 131,000 people was the predominate population growth during that March to March period.

Again according to the ABS Regional internal migration estimates, provisional October 2021: 

In the March 2021 quarter there was a net loss of 11,800 people from Australia's greater capital cities through internal migration. This was the largest net loss on record since the series started in 2001, surpassing the previous record net loss set in the September 2020 quarter (-11,200).

The net loss was the result of 54,400 arrivals.... and 66,300 departures (up slightly from 66,000) to non-capital city areas.

* 

Climate change impacts begin to affect regional land values in NSW Northern Rivers region

 

As of 28 January 2020 the climate change-induced 2019-20 bushfires in New South Wales had burnt 5.3 million hectares (6.7% of the State), including over 52 per cent of the land area in the Clarence Valley and close to 49% of the land area in the Richmond Valley.

Now we find out how this affected land values in those two local government areas.

Decreases were evident in some areas impacted by bushfire events, with the largest land value decreases in Rappville and Whiporie in Richmond Valley (-21%) and unspecified moderate to strong decreases in localities south of Grafton, Coutts Crossing and the Clarence River.

  

Daily Telegraph, 10 February 2021:

THE 2019 bushfires have had a lasting impact on the Clarence Valley, with the NSW Valuer General revealing areas hit hard by the disaster have seen a decrease in land values.

The total land value for the North Coast NSW region increased by 2.5 per cent between July 1, 2019 and July 1, 2020 from $87.1 billion to $89.3 billion.

“However, moderate to strong decreases in rural land values occurred in other localities including south of Grafton, Coutts Crossing and the Clarence River because of the 2019 bushfires,” NSW Valuer General Dr David Parker said.

“Decreases in land value were evident in some areas impacted by the 2019 bushfires such as Rappville and Whiporie.” According to the NSW Valuer General’s report, rural land values in the region remained steady at 1.5 per cent and Kempsey (6 per cent) experienced moderate increases due to continuing demand for good-quality agricultural land with reliable water combined with strong commodity and stock prices.

Dr Parker said property sales were the most important factor valuers considered when determining land values.

“Last year was a difficult year for determining land values in the aftermath of last summer’s horrific bushfires, followed by the impacts of the COVID-19 crisis,” he said.

“My office has undertaken separate studies of the impact of both bushfires and COVID-19 on the property market. Our valuers have applied the findings of these studies to affected areas and property types where there are insufficient sales available to determine the land values.” Valuer General NSW has established a dedicated assistance line for landholders impacted by the 2019-20 bushfires, or who believe their land value has been impacted by COVID-19. Affected landholders are encouraged to call 1800 458 884….