Is mandatory seller disclosure of flood risk necessary? A Brisbane, Australia, case study

Abstract

Purpose Information on the impact of flooding is fundamental to mitigating flood risk in residential property. This paper aims to provide insight into the seller disclosure of flood risk and buyer behaviour in the absence of mandated seller disclosure. Design/methodology/approach This paper adopts a case study approach to critically evaluate the matrix of flood information available for buyers purchasing residential property in Brisbane, Queensland. This paper uses big data analytic techniques to extract and analyse internet data from online seller agents and buyer platforms to gain an understanding of buyer awareness and consideration of flood risk in the residential property market. Findings Analysis of property marketing data demonstrates that seller agents voluntarily disclose flood impact only in periods where a flooding event is anticipated and is limited to asserting a property is free of flood risk. Analysis of buyer commentary demonstrates that buyers are either unaware of flood information or are discounting the risk of flood in favour of other property and locational attributes when selecting residential property. Practical implications This research suggests that improved and accessible government-provided flood mapping tools are not enhancing buyers’ understanding and awareness of flood risk. Accordingly, it is recommended that mandatory disclosure be introduced in Queensland so that buyers are more able to manage risk and investment decisions before the purchase of residential property. Originality/value This paper contributes to existing literature on raising community awareness and understanding of natural disaster risks and makes a further contribution in identifying mandatory disclosure as a mechanism to highlight the risk of flooding and inform residential property purchasers.