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QV's David Nagel says before buying coastal property, look at the actual risks. Insurance companies are, and without insurance your holiday property might not be bankable

QV's David Nagel says before buying coastal property, look at the actual risks. Insurance companies are, and without insurance your holiday property might not be bankable
Not a value enhancer

Content supplied by QV.

Scientists predict that our sea level will rise by at least 10cm and likely even more over the next 20 years or so, which will increase the frequency and severity of coastal flooding in this country and could possibly even lead to more than 10,000 homes becoming uninsurable by 2050. 

Despite that ominous warning – which was most recently reiterated by Belinda Storey for the Deep South National Science Challenge last month – coastal property remains amongst the “hottest of hot commodities”, according to Quotable Value (QV) general manager David Nagel, who expected it to remain that way for the foreseeable future.

“We Kiwis love the ocean. We want to be in it, on it, and near it – especially this time of year. But it seems that we have failed to heed the warnings for far too long now and I still don’t think that the message is getting through to most people yet. The sea level will rise and the odds of more extreme weather events is set to rise alongside it.”

In Wellington, for instance, a 12cm rise in sea level could make a 1-in-100 year flood up to five times more likely to occur. “As a local property owner, that particular statistic does concern me quite a bit,” Mr Nagel admitted, “and yet we Kiwis continue to snap up coastal property at a rapid rate.”

He’s not the only one who is alarmed by the slow-moving threat of sea-level rise, and yet of the more than 20 QV property consultants and valuers surveyed for this story nationwide, nearly all of them named coastal areas in their region as the places most likely to go up in value this year.

On the Coromandel, QV property consultant Jarrod Hedley said the threat of sea-level rise had not dampened demand for coastal property. “Residential house values have continued to grow very strongly over the last six months – particularly on the eastern side of the Coromandel.

“Though we’ve seen the most growth at the lower end of the market in coastal areas, there remains strong demand for higher value beach-front property.”

Similarly, property consultant Derek Turnwald said demand for coastal property remained strong in the Bay of Plenty. “Auctions and open homes continue to be well attended with homes generally selling well above seller expectations.

“I do expect things may cool slightly when the LVRs take effect once more, but demand will likely remain high on the coast this year. People want to live near the water.”

Mr Nagel warned Kiwis to be more aware of the risks before they purchase coastal properties. “Do your due diligence. Don’t just adopt that classic Kiwi ‘she’ll be right’ mentality – actually look very carefully at the risks, one of the biggest being the ability for coastal homeowners to get access to full insurance cover in the future,” he said.

Insurance companies have already warned that coastal properties may become uninsurable as climate change kicks in. The difficulty then becomes not just the risk of damage or loss to property, but without insurance, it’s unlikely a mainstream bank will lend funds to purchase coastal properties.

“That could significantly reduce the pool of buyers capable of purchasing coastal property, and therefore cause prices to drop drastically. If we take heed of the warnings from the insurance council and the major insurers, it’s just a matter of time before the landscape changes, literally!”

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What if I told you the greater risk was not buying on the coast?

???? The coast and any low lying areas are now high risk. The problem is people are not really that smart when the sun is shining and waves are gently lapping at a golden sandy shore they are not thinking 10 years ahead at sea level rise and the increases in storms and the 1 in 100 year floods that have turned into 1 in 5 year floods. There will be a point at which many properties will be uninsurable and therefore their values will crash. Personally I became very wary of any property less than 3 or 4 meters above sea level.

That represents your reality. You don't have to buy on the coast. Nothing in this life comes with any guarantees, including the claims you have chosen to adopt. The smart money still buys on the coast, that isn't going to change. If it does turn out to be a problem, its reasonable to assume they'll have the capacity to deal with it.

Oh yeah. Because throwing a little money at a property is going to sort things out if you have waves breaking on the back lawn. What an absolute fool

The ridiculous idea that money can find a way because youre rich goes a long way in a rigged system with manipulated markets, but comes crashing to a halt when faced with actual realities like nature.

The only reality we can be sure of is what's happening today. Anything else is speculation. If you want to know the situation on the coast try talking to people who have lived there for years. You may find it quite different to what has been portrayed in the mass media. Given that, I still wouldn't recommend coastal living to climate handwringers. They don't seem to know how to enjoy themselves.

Today sea levels are rising, the science is clear. No speculation involved unless your part of the foil hat brigade. It will take decades but its happening. Have a happy new year.

Not everywhere. Land rise following the Kaikoura earthquakes, from Oaro to Marfells beach, ranged from 1.5 to 5 metres. So safe from SLR for a few millennia. Likewise, parts of Pegasus Bay tectonic rise was from 0.1 to 0.4 meters after the Christchurch series. And the 1848-1855 series in Wellington raised parts of the land by up to 1.5 meters.

Like weather, SLR is a complex dance. SLR's dance is as between tectonics, the sea, local erosion/accretion dynamics, and local land uses (e.g. groundwater extraction).

In short, YMMV, so glib nation-wide generalisations can simply be ignored in favour of local knowledge and local actual measurement.

There is this generalisation in this article and comments that all coastal properties are at risk.
That is not necessarily so.
The coastal environment is both very dynamic and highly variable.
Yes there are well documented instances of coastal erosion with loss of infrastructure including roading and housing.
However, this is not necessarily the case for all coastal properties. For example; the Manawatu coast has been growing at over a metre a year; a beached wreck over 100 years ago at Santoft is now over 100 metres in land behind sand dunes, and the wreck at Waiterere which was surrounded by sea at high tide when I was a kid - last I saw it - is now likely to covered by dunes in the near future.
This coastal accretion has been happening during ongoing period of climate change and sea level rises.
Variation can also be quite local. Here in the Hawke’s Bay, as the HBRC coastal assessment report indicates that estimated future sea level rises are already adversely affecting areas such as Haumoana and Westshore but not other parts of the coast including areas in between. When discussing HB for instance, one also needs to factor in that the region was uplifted by a metre in 1931; but even that is thought to have possibly negatively impacted the beach dynamics at Haumoana.
What needs to be pointed out is that rather than an uniform generalisation, one needs to consult local government coastal risk assessment reports.

All good points. You can also consider what happened in kaikoura. Reclaimed land can happen a lot of ways, some unpredictable


People take risks every day, It's not anyone else's job to tell people what to do, I for one would be happy to buy on a beach with no insurance except fire and take the risk of sea levels going up or down.

If banks won't lend to houses by the sea then I get a cheaper house.

There is also the option that local communities might come togeather to finance flood defences and so kick the can down the road.

East coast of the North Island? Pray for earthquakes to bring uplift.

Much of the developed area of our major cities have been located in geologically active and/or Tsunami prone areas. If we where really concerned would we not have moved our government out of Wellington and strategically important businesses away from waterfront locations?

Al and Obama don't seem too worried:-/

Not that tired old meme rearing its idiotic head again? Perhaps Barak is prepared to risk some of his substantial fortune on the fact he may not live to see the IPCC projected maximum SLR of 1.1m by the end of this century? As for Al, seeing as his house is situated on East Mountain Drive, Montecito, there could be a clue hidden in the address, that it is in fact no where near sea level, or a beach. It does apparently have nice sea views, from a distance.

Zero reason to worry. We are talking property and the govt has your back.
Any losses will be socialised and owners paid out at top,o the market prices.
That’s how f ing tragic things are now.

Better hope so because if you think affected people are going to band together and build a seawall your dreaming. Its already happening in parts of NZ and suddenly they think the government will come to the rescue.

..its called being facetious. We have govt pouring billions into the property ponzi to keep it up.

The government needs to give clarity now to how much they will compensate landowners for future sea level rise.

I suggest they say everyone has had fair warning for decades now, and so there will be zero compensation paid when councils ultimately abandon maintaining affected areas. Also landowners will need to foot the cost of clearing their land ready for the sea to take it back. ie you can't just walk away and let rubbish go into the ocean.

Not sure which scientists are saying 100mm rise in 20 years, this is almost double the rate NIWA have on their website.

Local/ regional government are becoming increasingly unlikely to give consents to seawalls and other hard structures as they tend to just produce more erosion on the ends of the walls. Councils and their ratepayers will also not be prioritising funding seawalls, which are expensive to build and maintain, for private property owners. Governments will be prioritising protecting public assets (our roads, railways etc) from sea level rise. This is going to cost heaps.

The problem of the private houses is simple, it's not a central or local government problem. End of story.
What is a really problem is sorting out what local and central services those affected are entitled too and for how long. The investment in roading, water etc is huge and the burden of maintaining it when the sea wants it would be huge but it's something that really needs sorting as a first priority. Banks and insurance companies can sort their own $#@&.

Yes. And it's not just the beachfront properties in many areas - it's whole communities. Take Eastbourne (Lower Hutt) for example. One coastal road in and out - already walled - and over-toped regularly during winter.

And looky, looky - our regulators are still reclaiming land and building new infrastructure at the ratepayers expense along the coastal marine area there!

Anyone buying on low lying beach front and paying that premium is a bit mad. Retreating dunes are easily visible the length of NZ. The Cromandel, note Whangamata, and Waihi beach, are good examples. Plenty of online reports in Council website including maps showing estimated 50 and 100 year revised high tide line. Beachfront sections/houses in a lot of cases is tagged as being GONE. Your insurance company is already noting this. No mortgage.

Sea rise, while minor, is a thing. The real issue right now is the increased ocean storm activity driving storm surge combined with high/king tides. Unstoppable.

Is it not coastal erosion rather than sea levels rising, building a bach as close to the sea as you could 60 odd years ago. The sea will always erode the shoreline whether its higher or lower.