The Effect of Climate Change on the Australian Property Market

Climate change is a diverse issue, with many perceptions on what the future will hold for us. According to the most recent Climate of the Nation Report, 80% of Australians believe we are already experiencing the impact of climate change. Moreover, both the perceptions or realities of climate change have the ability to influence the Australian property market in a significant way. The following article will address the ways in which climate change can impact life in Australia and how this can potentially shape the property market today and for many years to come.

How is Climate Change Impacting Life in Australia?

According to the WWF, these are just some of the ways climate change has had an impact:

  • Hotter days
  • Rising sea levels
  • Reduced rainfall leading to water shortages
  • Severe extreme weather such as droughts, bushfires, storms, floods, coastal erosion increasing damage to homes

How is this Impacting the Australian Property Market?

Price of Rural Property Market Decreasing

Due to increased temperatures and a lack of rainfall, the pricing of rural properties will continue to decline in the Australian property market. Particularly, recording its lowest ever rainfall in 2019 and putting many towns at risk, was the Murray Darling Basin spanning across three states and one territory.

australian property market

Vulnerable Waterfront Properties

Climate change has the potential to threaten coastal regions through a major loss of infrastructure and property. The most at risk areas include:

  1. Cairns and the Great Barrier Reef due to severe weather
  2. Ballina due to being a vulnerable location for residential property damage
  3. Gold Coast due to flooding and rising sea levels

Although coastal regions have proven to be a popular market – If enough investors are convinced that the seas will continue to rise, this could be a detrimental outcome for the future demand for waterfront properties.

australian property market

Property Insurance Pricing Surge

Surges in insurance pricing might just be the most immediate threat of climate change on the Australian property market. Notably, Insurance policies are based on the amount of risk to a particular property. Hence, why homeowners currently in areas at risk of flooding, bush fires and severe storms already pay such high premium costs. An example of this is the recent, devastating Australian bushfires. Not to mention, climate change increases the severity and frequency of severe weather events, causing insurance prices to potentially sky rocket in the future. Evidently, it has been reported that one in 19 Australian property owners could face the ‘potentially unaffordable’ home insurance pricing due to the impact of climate change. And, this could all occur as soon as 2030.

australian property market

Where to Look to in the Future of the Australian Property Market?

If you are planning to build, there are many considerations you can make on your own carbon footrpint. More companies are becoming focused on building eco-friendly houses among the growing concern of climate change. Particularly due to a rising concern in homeowners and homebuyers for eco-friendly features in homes. If you are a builder or property developer, here are just some of the many considerations you could make:

  • Maximise the properties northerly exposure
  • Using high thermal mass insualation such as brick or sandstone
  • Water saving measures

Overall, it is evident that the potential impacts of climate change will significantly influence the Australian property market. Regions which offer insulation from sever weather events could see increase demand, putting pressure on pricing and pushing out low income earners. It is apparent that this matter will require responses from planners, policy makers and the overall property industry.

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