Despite previously “suffering inundation”, Warrnambool Council’s flood-prone homes fetch $1.3m

Warrnambool City Council has offloaded three flood-prone Koroit Street homes for $1.3 million, channelling the money back to council while shifting redevelopment and insurance risks to the private market.

What happened? The properties on 34, 36 and 38 Koroit Street, - previously flagged as “flood-prone” and having “suffered inundation” - were bought in December by a local buyer who intends to rent them out in the short term with redevelopment as the longer-term goal, subject to “normal council approval processes”.

The houses were purchased by Warrnambool City Council between 1990 and 1991 due to “the ongoing flood risk posed to their then owners”, with realestate.com’s property history revealing number 34 sold for $94,960 in October 1990, while 38 sold in April 1991 for $92,200. There is no property data for number 36.

Hey, big spender: Council voted unanimously in October to sell the three houses as one site, with the meeting agenda noting an intention to attract “larger development or landholding buyers”. 

The agenda also stated that such buyers would likely be less concerned by flood and insurance issues because they would be purchasing the land for redevelopment.

Flood risks remain: During that meeting, council CEO Andrew Mason said the properties had undergone significant drainage works to mitigate flood risk, but acknowledged risk remained. 

While flash flooding since the works were completed “has not affected the properties”, the council noted the absence of any “significant storm events” left uncertainty about how effective the drainage upgrades truly are.

Insurance complications persist: Previous flood-related claims have made coverage difficult, with council’s insurers “not willing to accept claims related to the same flooding events that caused damage to the properties” in the past.

Council’s risk team advised that while new owners should be able to insure the properties, any existing flood damage would likely be uninsurable. 

Raising floor levels and accommodating any remaining flood risk through redevelopment was identified as the most likely solution.

Ethical issue: Councillor Richard Ziegler told The Brolga in October that he faced an “ethical issue” in voting to sell the properties, stressing that prospective buyers needed to be fully aware of the risks. 

“Council is offloading because they're problematic … and a buyer will have the same problems in future,” he said.

“The three properties have been presenting problems for many, many years because of the flood risks and the flood problems pretty much every year when there’s heavy rain.”

Nearby Japan Street flooded in January 2024, one of several areas across Warrnambool impacted by flooding in recent years.