Is mandatory seller disclosure of flood risk necessary? A Brisbane, Australia, case study
| Date | 22 May 2023 |
| Pages | 83-105 |
| DOI | https://doi.org/10.1108/JPPEL-08-2022-0029 |
| Published date | 22 May 2023 |
| Subject Matter | Property management & built environment,Building & construction,Building & construction law,Real estate & property,Property law |
| Author | Catherine Brown,Sharon Christensen,Andrea Blake,Karlina Indraswari,Clevo Wilson,Kevin Desouza |
Is mandatory seller disclosure of
flood risk necessary? A Brisbane,
Australia, case study
Catherine Brown and Sharon Christensen
School of Law, Queensland University of Technology, Brisbane, Australia
Andrea Blake
School of Economics and Finance, Queensland University of Technology,
Brisbane, Australia
Karlina Indraswari
School of Earth and Environmental Sciences, The University of Queensland,
Brisbane, Australia
Clevo Wilson
School of Economics and Finance, Queensland University of Technology,
Brisbane, Australia, and
Kevin Desouza
School of Management, Queensland University of Technology,
Brisbane, Australia
Abstract
Purpose –Information on the impact of flooding is fundamental to mitigating flood risk in residential
property. Thispaper aims to provide insight into the seller disclosureof flood risk and buyer behaviour in the
absence ofmandated seller disclosure.
Design/methodology/approach –This paper adopts a case study approach to critically evaluate the
matrix of flood information available for buyers purchasing residential property in Brisbane, Queensland.
This paper usesbig data analytic techniques to extract and analyse internetdata from online seller agents and
buyer platforms to gain an understanding of buyer awareness and consideration of flood risk in the
residentialproperty market.
Findings –Analysis of property marketing data demonstratesthat seller agents voluntarily disclose flood
impact only in periods where a floodingevent is anticipated and is limited to asserting a property is free of
flood risk. Analysis of buyer commentarydemonstrates that buyers are either unaware of flood information
or are discounting the risk of flood in favour of other property and locational attributes when selecting
residentialproperty.
Practical implications –This research suggests that improved and accessible government-provided
flood mapping tools are not enhancingbuyers’understanding and awareness of flood risk. Accordingly, it is
The authors wish to acknowledge the contribution of Dr Rouhshi Low in reviewing and editing earlier
versions of this paper, and the financial assistance provided by the Consumer Policy and Regulation
Research Group, QUT Law School, Queensland University of Technology.
Funding: was provided by the QUT Law School Centre for Commercial and Property Law. This Centre
no longer exists due to changes in the School’s research funding model. So technically is the former
Centre for Commercial and Property Law.
Seller
disclosure of
flood risk
83
Received28 August 2022
Revised6 February 2023
Accepted27 April 2023
Journalof Property, Planning and
EnvironmentalLaw
Vol.15 No. 2, 2023
pp. 83-105
© Emerald Publishing Limited
2514-9407
DOI 10.1108/JPPEL-08-2022-0029
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/2514-9407.htm
recommendedthat mandatory disclosure be introducedin Queensland so that buyers are more able to manage
risk and investmentdecisions before the purchase of residential property.
Originality/value –This paper contributes to existing literature on raising community awareness and
understanding of natural disaster risks and makes a further contribution in identifying mandatory
disclosure as a mechanism to highlight the risk of flooding and inform residential propertypurchasers.
Keywords Consumer behaviour, Natural hazard, Disaster management, Flood risk,
Community resilience
Paper type Research paper
1. Introduction
Home ownership carries with it significant financial and other risks ranging from the
financial impact of structural defects, adverse regulatory changes and exposure to natural
hazards such as floods and wildfires. Data emerging from Australia and elsewhere
demonstrates that the worldwide financial impact of natural hazard events is not only
significant but increasing, though estimates of the financial impact vary. For example,
Rudden (2022) states that the estimated worldwide economic loss of natural hazards was
US$342bn in 2021, while Our World in Data (2022)indicates these economic costs amounted
to approximately US$258bn. The cost of natural hazards experienced by individual
countries is also significant. For example, in the USA, natural hazard costs have been
estimated at US$165bn for 2022 (Rott, 2023), while the costs related to flood events in
Germany were also found to be high (Hudsonand Thieken, 2022, p. 1296). In Australia, the
cost of natural hazard events is rapidly increasing. Deloitte Access Economics (2021,p.3)
estimated the current annual cost (tangible and intangible) of natural hazards to the
Australian economy as being A$38bn. This is substantially higherthan the 2017 estimated
cost of A$18.2bn per year, that estimate being based on the total economic cost to the
Australian economy over a 10year period (Deloitte Access Economics, 2017, p. 19). Even if
emissions are significantly lowered in future, the average annual cost of natural hazardsin
Australia is estimated to be as high as A$73bn by 2060 (Deloitte Access Economics, 2021,
p. 3). A significant proportion of the costs associated with natural hazard events relate to
losses suffered by individualAustralians through loss of employment, total or partial loss of
housing, increased cost of insuranceor a lack of availability of insurance, as well as the cost
of recovery via government support (Australian Competition and Consumer Commission,
2020). What is more difficult to quantify, but just as detrimental, is the impact on health,
well-being and safety, especially when the hazard impacts people’s livelihoods and homes
(2009 Victorian BushfiresRoyal Commission, 2010).
As is the case in many other jurisdictions, such as the USA and other organization for
economic cooperationand development (OECD) countries (OECD, 2016), the impact of floods
and cyclones in the Australian state of Queensland has been highly significant. For the
period 2007–2016, 60% of theaverage annual economic cost of natural hazards in Australia
were attributable to Queensland (Deloitte Access Economics, 2017, p. 23). Of those costs,
65% were attributable to floodevents (Deloitte Access Economics, 2017, p. 24). For example,
the total insured financial impact of tropical Cyclone Yasi in 2011, and the consequential
flooding in Queensland, wasestimated to be A$5.1bn, equivalent to over 60% of the costs of
natural hazards for that year (DeloitteAccess Economics, 2017, p. 19). Given the significant
impact of disasters on property owners, the focus of government disaster management
plans tends to be on the shared role of individuals and government bodies in preparing for
the impact of natural hazard risks. It is, therefore, unsurprising that recommendations for
greater community awarenessof natural hazard risks are common outcomes of post disaster
JPPEL
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