The New South Wales valuer-general has cut the price of pieces of land on a beachfront near Byron Bay by 50%, due to the dangers of coastal erosion.
But property expert and SQM Research founder Louis Christopher says the issue is not so much that properties have been stripped of their value, but how the market and local council will react to this new development in other areas.
The decision is the latest in a series of controversial decisions involving property owners on the Byron Bay coast, which has seen widespread protests against the Bryan Bay council.
“It’s something that is a threat to certain coastal parts of Byron Bay, and in Northern Sydney as well. The issue is not so much that water is going to overcome and destroy these homes, but what the market is going to do to react to it.”
The issue is that beachfront properties are at risk to rising sea levels, caused by gradual global warming. A number of storm surges have begun to erode the coast, putting these properties at risk.
A number of properties have actually been put up for sale, but very few buyers are attracted, and Christopher says this decision will only make that situation worse.
“This issue is going to get worse because now, everybody knows about it and it will spread to other areas. But it boils down to how councils are going to react, because it can make the situation a heck of a lot worse for homeowners or it can improve the situation through responsible planning.”
Other markets, particularly in Queensland and Sydney, have the same erosion problem and Christopher says these decisions could spread.
There have been a number of battles between these costal property owners and the Byron Bay council. Late last year residents won the right to defend their properties against coastal erosion instead of being forced to abandon their homes, which is the proposal being pushed by the council if erosion becomes too dangerous.
Some analysts say properties could have even been affected by the council’s decision to pursue that abandonment policy. “Some of the properties in Byron Bay have been affected by how the council has responded,” Christopher says.
The new valuation will allow the council to determine what rates should be paid. But Christopher warns the Byron Bay market could be affected by any rash council decisions, such as pursuing the abandonment policy, and believes any decision must be carefully thought out.
“This is an issue in itself – how the council responds to this ongoing threat. In very draconian ways the council can destroy value, and we need to watch how that is ongoing.”
The actual decision to strip the land’s value was forecast by the valuer-general’s office some time ago. This morning, a spokesperson told SmartCompany the decision to slash the land values was actually made several months ago, and ratepayers were told at the time.
“This is all part of a general process of revaluating properties, and this was actually forecast six months ago to ratepayers. They have known about this decision for six months.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
