Weather events, climate change become top concern for home buyers, owners

Extreme weather events and environmental concerns are becoming a substantial consideration for many potential homebuyers and property investors.

According to the latest study by Australian Housing and Urban Research Institute (AHURI), the threat of natural disasters such as floods and bushfires is now a key factor for more than a third of Australians in deciding what regional or rural city to move to.

AHURI’s study found four natural hazards that are perceived to be the biggest threats:

1. 72% of people say extreme heat and bushfire
2. 66% floods and flash floods
3. 62% drought and water shortage
4. 54% pandemic impacts

Risks arising from climate change

A separate study by CoreLogic found that increasing storm surges and coastal erosion could potentially impact $25bn worth of residential coastal properties.

CoreLogic head of consulting and risk management Dr Pierre Wiart said the recent weather events in Queensland and New South Wales shed light on the importance of knowing the risk of a location, particularly climate-related coastal risks.

“This is leading to direct physical and financial consequences. Coastal risk has far-reaching implications for the country’s property market and its supporting financial sector, including property valuations, home loan viability and insurance premiums,” he said.

Dr Wiart said urgent attention is needed given the alarming impact of climate change on Australia’s coastal erosion and rising sea levels.

“Understanding the coastal risk associated with those properties is important to every owner, potential buyer, and ultimately our property and financial sectors that are supporting the expansion of new coastal properties in number and in value,” he said.

These natural trends are also affecting credit risks, long-term loans, and insurance.

“Property owners face ballooning insurance premiums and restricted insurance coverage, together diminishing their insurance affordability and protection of their significant assets,” he said.

Dr Wiart said the data will not only help businesses and property groups employ a sophisticated approach to quantifying the risks of climate change and enhancing risk management, but also help homebuyers and homeowners make the best property decision for a long-term wealth preservation.

Most at-risk suburbs

The CoreLogic report identified 10 suburbs which have a ‘very high’ and ‘high’ coastal risk score.

Those categorised as ‘very high’ risk may be impacted by coastal retreat within the next 30 years and may also be at very high risk of significant storm surge impact.

The study found that Queensland has the highest share of properties at ‘very high’ risk for the number of both individual houses and units, given the Sunshine and Gold Coast’s densely populated coastlines.

New South Wales, Tasmania, and South Australia also have many individual houses classified at a ‘very high’ coastal risk.

Here are the suburbs with the highest number of most-at risk detached houses and apartments and the corresponding value at risk.

CoreLogic research director Tim Lawless said it is crucial to understand these risks, especially given the fact that there has been an acceleration in the coastal living trend over the past two years.

“There has been a broad demographic shift where more Australians are prepared to consider housing options outside of the capital cities,” he said.

“Working from home has been a catalyst of this trend with more people basing themselves in regional locations during the pandemic.”

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Photo by @cityofgoldcoast on Unsplash