Over the last twelve months Australians are beginning to take note of the serious effects of climate change on property values.
Consider the following:
The 2022 International Panel for Climate Change (IPCC) report predicts that the effect of flood, fire and coastal erosion will cause an estimate ninety one billion dollars a year in property damage here in Australia by 2050.
The Reserve Bank of Australia released a white paper which reports 3.5% of all Australian properties currently at ‘high risk’ from climate change, rising to 8% by the end of the century.
Australia’s five biggest banks are now modelling the potential effects significant climate related price falls under the guidance of APRA’s Climate Variability Assessment. These models will inform whether (or not) climate affected properties can be used as mortgage collateral.
A Climate Council of Australia report has found that by 2030, 13% of all Australian property will face prohibitively expensive insurance premiums, or will be effectively uninsurable.
The effects of climate change are already affecting many Sydney suburbs.
Whether you already own, or are looking to purchase here are six things you can do to minimise your risks:
Download and read the flood study for your suburb. Remember that most of these studies were completed years ago, before our new appreciation of the exponential increase in flood risk.
Assess the level of fire risk. You may be close to parkland, a large urban park, or simply be close to large overhead powerlines or a substation. Extreme weather events increase the likelihood of fire.
Assess the implications of erosion. For the many homes close to a body of water, loss of an accessible beach or riverfront would see a significant decrease in value.
Consider how weatherproof the property is. Extreme weather increases likelihood of leaks, damp, mould and rot. Poorly insulated homes are also expensive to heat and cool.
Consider accessibility/upgradeability to renewable energy solutions such as solar and EV vehicle charging and consider the principles of PassiveHouse design
Consider a professional climate risk assessment report from a company like https:/climatevaluation.com/. Before long they will be mandatory
When it comes to climate risk, acting ahead of the curve will pay off.
Sydney will be a very different place ten years from now.
References:
https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter11.pdf
https://www.rba.gov.au/publications/bulletin/2021/sep/climate-change-risks-to-australian-banks.html
