The catastrophic bushfires in New South Wales and Queensland will have damaging effects for house prices, property analysts and economists have warned.
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The fires, which have claimed 16 Queensland homes and 303 NSW homes and continue to rage in the country’s north, will also suppress home values in affected regions for up to 12 months, property economist Anna Porter said.
In a recent note, she pointed to suburbs near The Royal National Park and Turramurra that will “likely see a decline in interest”.
“The market will shy away from bushfire-prone property for 6-12 months after a major fire incident,” Porter said.
“Price discounting can be the only way to move the property if you have to sell in these areas.
“Holding on to the property for 12 months or more after a major fire event can help ease the pricing pain as the market is quick to forget and prices will readjust again.”
Realestate.com.au chief economist Nerida Conisbee agreed, suggesting homeowners in affected regions consider waiting longer to sell due to buyer concerns.
Prospective buyers will likely be squeamish about buying in areas recently affected by the devastating blazes, and may also be reticent to purchase in any bushfire-prone areas due to current fears.
Obtaining home insurance will be another concern for future buyers.
“Getting insurance in areas that have been recently impacted by fire damage is very expensive, so for a lot of people that would probably be a consideration as well,” Conisbee said.
“In the short term there would be a really big hit on values. It is obviously a very stressful time for a lot of people for a lot of reasons and property prices is probably one of them.
“The other thing is where there's been severe drought for a long time, they've already had a hit in values and employment. This will be another hit that will affect the region, so there will be some very challenged areas economically, and as a result of the drought and the bushfires.”
But in the longer term, the questions buyers and sellers need to consider will change.
Local government plans to increase back-burning or build more fire-breaks should be considered in plans to buy and sell, as should the capacity to boost the home’s resilience to fires.
She pointed to the government response to the flooding of the Brisbane river in 2011 which affected around 8,000 properties.
“There was a lot done to ensure that if that happens it again that it won't have the same catastrophic impact on properties,” she said. Buyers should keep an eye out for similar measures from local and state governments, she added.
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