VIDEO: Thousands of homes “uninsurable” after updated flood zone modelling
RHIANA WHITSON, REPORTER: On a cold winter’s night in inner-city Melbourne, residents gather at a community hall looking for answers.
VOX POP: Our home is our safe place. It's our physical safety, and also financial safety. And now, both of those are at risk.
RHIANA WHITSON: Last month people from Kensington Banks, an estate about five kilometres from the CBD, were told by the local water authority they now live in a flood zone.
VOX POP 2: We're now concerned about the value of our property.
VOX POP 3: How is it acceptable that we've got flood mapping that we've all bought as part of us owning houses, getting mortgages, getting insurance, that's 20 years out of date. How has there not been updated flood mapping periodically? Climate change isn't a science that is new.
HARRIET SHING, VICTORIAN WATER MINISTER: We're seeing governments all around the world grappling with the challenges of what the dual pressures of population growth and climate volatility mean for built up populations.
REPORTER: Victoria is facing an escalating flood crisis and even in the centre of Melbourne where hundreds of residents were evacuated after the Maribyrnong River flooded city streets.
REPORTER: Victoria’s flood emergency has hit hard with hundreds of homes underwater and more under threat...
RHIANA WHITSON: In October 2022, almost 600 properties flooded when the Maribyrnong River burst its banks.
Kensington homes escaped damage in the one in 50-year flood event.
What are we looking at here, Nerina.
NERINA DI LORENZO, MELBOURNE WATER MANAGING DIRECTOR: So this is the 2022 flood event that occurred and the yellow in this map tells you where flood waters went to.
RHIANA WHITSON: Melbourne Water is updating its flood modelling for the first time in two decades following criticism by a flood review panel the authority was using out of date modelling.
Nine hundred properties in the Kensington Banks estate are among those newly designated as flood prone in the Maribyrnong River catchment.
Would you buy a place in one of these areas?
NERINA DI LORENZO: I would be looking at like any, any place that I'll be looking at, I'll be doing a range of things. I'd be checking my property certificates. I'd be looking at section 32s, and I'd be looking at what is the risk and how might I manage that.
RHIANA WHITSON: Do you to accept though that people didn't have the right information to refer to because you've only just released the 2024 modelling?
NERINA DI LORENZO: We released it as soon as we had it and so, and we released it well before it went into planning schemes.
RHIANA WHITSON: The Kensington Banks estate was developed in the late '90s on a former cattle yards, after approval from the state government and Melbourne City Council.
Chief executive of Climate Valuation, Karl Mallon, has been analysing the impacts of climate change for two decades.
KARL MALLON, CLIMATE VALUATION: As flood models around the country are updated, that's going to come in more and more.
So places that may not have been in a flood zone, are going to become in flood zones, or places that were in flood zones, but it wasn't considered very high risk, are going to become high risk.
So I think what we're seeing in, for example, places like Kensington, we're just going to see that over and over and over again.
RHIANA WHITSON: Exclusive data provided to 7.30, by Climate Valuation analysed the risk of riverine flooding for 15,000 suburbs identifying 13 black zones where it says home buybacks and community relocation will have to be considered.
Fifteen places are red zones where, with investment and adaptation, these areas could still be viable.
KARL MALLON: A red zone classification means that more than 50 per cent of the properties are at risk of becoming uninsurable.
So a community like Lismore would be in that, in that categorization.
The black zone is even worse. That means that more than 80 per cent of the properties in that area are what we would classify as high risk of becoming uninsurable due to flooding.
RHIANA WHITSON: Here in Kensington Banks real estate agents say property values could fall by 20 per cent because of the new modelling. Insurance premiums will likely rise, and experts say banks are increasingly wary of writing new loans for homes in flood prone areas.
KARL MALLON: What we are seeing is banks around the world start to say, we're not going to issue mortgages on properties where either you can't get insurance now or we, as the bank, don't believe that you're going to be able to get affordable insurance for the life of the mortgage.
So they're not just looking at today, they're looking at 30 years forward and they are including climate change into those calculations.
So our view is, is that we're going to see places where it's going to be very hard to get a mortgage.
RHIANA WHITSON: Roger Hadgraft is a water engineer and resident of Kensington Banks. He bought his home in 2012.
ROGER HADGRAFT, KENSINGTON BANKS RESIDENT: It's crazy because we believed that, that this, this area was immune from the 100-year flood
RHIANA WHITSON: The average flood depth for the suburb would be half a metre but could be as high as 2 metres. The inundation wouldn’t be as severe at Roger’s property.
Can you show me where the water would get to?
ROGER HADGRAFT: So it's about it's about a foot deep. So it's probably about there.
So, you know, enough to ruin furniture and, and, of course, the bottom of walls and, and so on - unless we had enough warning.
RHIANA WHITSON: The flood modelling for the rest of Melbourne Water’s catchment areas is being updated by 2026.
While mitigation measures are being explored, there is no clear solution for Kensington Banks.
NERINA DI LORENZO: Well, not a single infrastructure solution at this point. Now that we've got this new data, we're able to work on, for a whole catchment view, what are the possible mitigations and are they feasible? So we're kicking that work off now, and we're working on that.
RHIANA WHITSON: The Victorian Government is under pressure to commit to property buybacks in flood prone areas as has occurred in New South Wales and Queensland.
HARRIET SHING: I would like to see the work that Melbourne Water’s commissioned, work on expert understanding of mitigation options looks like. They are currently out to tender at the moment for that work.
RHIANA WHITSON: So you're not ruling out buybacks?
HARRIET SHING: Once we have a sense of the best advice on how to mitigate risk across our catchments, not just in one particular part of the Maribyrnong and Melbourne water catchment but around the state, we'll be in a position to be able to understand what the options are.
RHIANA WHITSON: Climate Valuations’s Karl Mallon says governments across Australia will have to face the consequences of past planning decisions.
KARL MALLON: There is, in my view, very strong responsibility, which is if you've allowed continued development in a flood zone, or new development in a flood zone, there has to be some responsibility towards those people who may not have realised they are buying new houses in flood zones.
VOX POP 2: I want to know what accountability there is to the government to support people like myself who are imminently going to sell and may be impacted by that. So I don't know what the answer is but I do think there should be some level of accountability.
Nine hundred property owners in one inner-city Melbourne suburb have just been told they live in a flood zone -- news that is expected to have big implications for property prices and insurance premiums.
According to a new report from Climate Valuation, by 2030, over three million homes across Australia will have exposure to some level of riverine flood. Rhiana Whitson reports with Lucy Kent.