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Lou Rendina, the founder of Kensington’s Rendina Real Estate, said the new flood maps could reduce the value of a home by as much as 10 to 15 per cent, even though no homes were inundated in the October 2022 floods when the Maribyrnong River breached its banks.
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Rendina called on the government to consider further mitigation works before there was significant damage, and to address the Flemington Racecourse’s controversial 1.6-kilometre flood wall, which was built in 2007 immediately upstream of Kensington Banks.
“You have residents who have spent big money in Kensington Banks, from as little as $600,000 to as much as $1.8 million,” he said.
Tony Kelly, Victorian managing director of property valuation firm Herron Todd White, said the flood maps would cause a significant hike in insurance premiums and in some cases, insurers would refuse to cover a property, which in turn can prevent purchasing. One Kensington resident told The Age his flood insurance had risen from $180 to $5000 a year.
Kelly said house prices dropped by 10 to 20 per cent in areas affected by the 2022 floods, such as Maribyrnong, the suburb worst hit. He expected similar falls in Kensington Banks.
“Even though water hasn’t come through [those houses], it’s a change, and the lenders and insurers will be the people to pick it up first,” Kelly said.
Australian Property Institute chief executive Amelia Hodge says she feels sorry for Kensington Banks residents.Credit: GlennHunt Photography
“When it’s new and is a surprise, people are at a greater risk of seeing a short-term fall … It might settle down over time but, at the moment, if I was a home owner, I wouldn’t be overly happy.”
Melbourne Water has bowed to mounting pressure and committed to examining the impacts of the Flemington Racecourse flood wall on properties near the Maribyrnong River in a one-in-100-year flood, which the new flood maps are modelled on. As part of Melbourne Water’s flood inquiry, the wall’s effects were only analysed for the one-in-50-year flood scenario.
The Planning Institute of Australia’s Victoria vice president, Jane Keddie, called on the government to consider measures for managing flood risk, including preventing new homes being built in high-risk areas, adapting housing and infrastructure in lower-risk areas, and considering buyback schemes when risk levels became unacceptable.
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Melbourne Water has not publicly revealed projected flood depths for Kensington. Home owners are instead being asked to call the authority to receive individual information.
A Melbourne Water spokesman advised residents to discuss their circumstances with their insurers and said the authority was not considering property buybacks.
“There is not the same level of risk in the Maribyrnong River catchment as other catchments in Australia where governments have used buybacks,” he said.
Melbourne Water’s flood review panel found last year that buyback schemes for flood-prone properties might be needed in some areas.
“We are updating all our modelling across Melbourne to ensure planning decisions are as well-informed as possible to take account of climate change, we will continue to support community awareness and preparedness and investigate potential mitigations,” the authority’s spokesman said on Monday.
A spokeswoman for Water Minister Harriet Shing said Melbourne Water was investigating flood mitigation options and meeting with the Insurance Council of Australia to understand the impact on premiums.
Australian Bureau of Statistics data shows that insurance premiums nationally surged by 16.4 per cent in the year to March 2024 – the highest annual rise since 2001. The bureau identifies natural disasters as a key driver behind the increase.
Politicians are scrutinising the insurance industry after the Albanese government last year launched a parliamentary inquiry into insurers’ responses to the 2022 floods.
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