In general, the idea that oral traditions give us accurate information on events from the distant past is dubious; in oral traditions, stories are more likely to be passed down if they're entertaining and memorable, and over the centuries, they need to appeal to a variety of different people going through different situations. This means that stories soon become twisted out of shape, as stories are reconfigured to impart different morals for different situations etc.

However, a 2016 paper by Patrick Nunn and Nicholas Reid argues that indigenous Australian stories of coastal lands being inundated by water might be an exception to the rule, because a) indigenous Australian cultures were relatively isolated until recently, b) the cultures place a great deal of importance on tradition, and c) the cultures have a strong sense of attachment to a place (and indeed indigenous Australian peoples lived on the Australian continent largely isolated for tens of thousands of years).

Many different indigenous Australian cultures have stories of land being inundated, and because of the end of the last ice age, there's clear geographical evidence of various areas of Australia becoming inundated with water. Nunn and Reid found 21 different stories of inundations from different places around Australia. Comparing the descriptions of inundation in the oral traditions to what likely happened in the geographical record, they argue that in many cases, the oral traditions are ~7000 years old. The authors argue that one inundation in particular (the inundation of Port Phillip Bay, around modern-day Melbourne) happened much more recently than ~7000 years ago (they date it at between 1000-2800 years ago), and they argue that the oral traditions in the Port Phillip Bay are comparatively less embellished.

I am somewhat dubious about their argument that indigenous Australian cultures have been relatively isolated until recently - they likely were isolated from non-Australian influences, sure, but there's quite a variety of indigenous Australian cultures, and in 40-50,000 years of history, there's quite a lot of scope for different indigenous cultures to move into different regions and take cultural influence from other indigenous cultures etc. Nonetheless, that the stories are supported by the geographic record suggests that the ideas that Nunn and Reid are pushing are at least plausible.