Property prices defy climate risk warnings in new data
Property prices in high-risk climate zones continue to rise despite warnings that extreme weather could wipe $600bn from Australia's housing market by 2050.
Lifestyle rather than climate impacts are continuing to play a more significant role in homebuyers’ purchase decisions despite dire warnings that more than $600bn could be wiped from the property market by 2050 due to extreme weather events.
New analysis by the real estate firm Ray White, in response to the federal government’s report, found that more than half of the suburbs listed as “high-risk” by the Climate Council for flooding, bushfires, extreme storms and coastal impacts had experienced price growth over the past 12 months.
It comes as property experts anticipate a “renovation revolution” driven by homeowners looking to better equip their homes for increasingly extreme weather after the federal government’s National Climate Risk Assessment warned the value of Australia’s property sector could drop $611bn by 2025 and up to $711bn by 2090.
Of the 85 suburbs identified in the Climate Council’s At Our Front Door report to have more than four in five properties at risk of climate impacts, 58 per cent of the locations with enough data to analyse price growth had recorded an average rise of 5.8 per cent over the past year.
The increase was largely in line with national price rises and represented areas with luxury homes valued at more than $2m, to locales where prices for some properties came in under $100,000.
Ray White chief economist Nerida Conisbee said climate vulnerability was yet to have a noticeable impact on prices, but that could change.
“More frequent extreme weather events will directly undermine liveability and safety,” she said. “Stricter building codes and planning rules may increase costs in high-risk areas, while banks could tighten lending criteria for vulnerable properties. Together, these forces have the potential to create downward pressure on prices in locations that are today still commanding premiums.”
REA Group chief economist Eleanor Creagh argued climate impacts were already shaping the housing market, with the risks of rising sea levels and extreme weather “increasingly being capitalised into property values across the country”.
Property market climate strategist Cecille Weldon believes Australia is on the brink of a “renovation revolution”, with homeowners likely to prefer elements that make a home comfortable all year round, such as ceiling installations and external shading.
“Our lens on property is set to change and should already be doing so,” Ms Weldon said. “One is comfort, and the other is resilience.”
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