Could Climate Change Impact House Prices In Australia?
Australians are living in fear of the impact of climate change on our homes. The insurance industry is taking note, but some experts say that the risk to house prices isn’t as high as it might seem.
With Australia preparing for more extreme weather events, insurance costs are rising—and homeowners may find that their coverage does not protect against the effects of climate change
As Australia girds itself against the threat of extreme weather events, insurance costs are going through the roof and homeowners can’t count on their homes being covered.
Insurance premiums are rising as insurers struggle to cover claims from catastrophic events like the Queensland floods and 2011’s record-breaking summer heatwave. Some companies have even pulled out of areas that they deem risky, leaving homeowners struggling to find an insurer who will cover them. And it seems there may be more pain ahead: according to our mortgage broker specialists in Perth, nearly 80% of Australians think climate change is already affecting their lives in some way or another—and that includes higher home insurance premiums!
With climate change becoming an increasingly serious threat worldwide, there’s something else you should keep in mind: home values tend to decrease when natural disasters strike nearby—a phenomenon known as “disaster devaluation”. This means when disaster strikes close by; your property loses value because people no longer want to buy or rent properties where bad things happened in the past.
Climate-related events like floods and bushfires have a direct bearing on house prices
House prices have always been affected by the cost of insurance, but this is especially true when it comes to climate change. The rising cost of insurance means that you need more money to cover your house in case of a disaster. As a result, your house will be worth less than before when it’s time to sell. However, there are also some people who benefit from increased costs: those who are buying homes at reduced rates because they’re surrounded by water or bushfire-prone areas can buy them cheaper than their fair market value and still get full coverage on them (assuming they take out an appropriate policy).
Some areas will be more vulnerable than others
It’s important to remember that climate change is a global issue, but it will affect different areas differently. For example, coastal areas are more vulnerable to sea level rise and inland areas are more vulnerable to drought and flooding.
Thus, if you live in an area that is susceptible to both sea level rise and drought (like Perth) or drought (like Brisbane), then you could be at risk for having your house depreciate in value soon if the government does not take action.
There are strategies to minimise risk and capitalise on opportunities in this shifting landscape
If you want to invest in an area less likely to be impacted by climate change, it’s best to look at inland regions that are well-connected and serviced by roads or rail lines. These locations will still experience high demand due to their proximity to major cities such as Sydney or Melbourne; however, they won’t face as many risks associated with rising sea levels or drought conditions common on our coastlines.
If you think this might be a concern for your property, it’s important to check with your local council about the planning and zoning for areas subject to flooding
If you think this could be a concern for your property, it’s important to check with your local council about the planning and zoning for areas subject to flooding. You should also speak with your insurer about flood risk.
If you’re buying a property that might be affected by sea level rise, it’s worth checking with a builder or architect.
A surveyor will be able to tell you if there are any issues with land elevation or drainage around the proposed site. Finally, an engineer can advise on whether any building codes need to be met before construction begins.
Some insurers have already begun modelling the impact of climate change on their policies
As the climate continues to change, some insurers have already begun modelling the impact of climate change on their policies.
Insurers could raise premiums for homes in areas that are vulnerable to extreme weather events. This would increase costs for residents, which could have an effect on house prices.
For example, In Melbourne’s CBD where there are high-rise apartments, storm surge flooding has led to some owners suffering damage to their properties. Insurers may pass this cost onto homeowners by increasing premiums or asking them to take out flood cover on top of their existing policy.
So if you’re buying or building a house in an area that’s susceptible to flooding or other weather events, you will want to make sure it’s designed accordingly
If you’re buying or building a house, it’s important to understand the risks of flooding and bushfires. If you live in an area that’s particularly susceptible to these hazards, you’ll want to make sure that your house is designed accordingly.
If there are plans for future developments in your suburb, you may also want to ask about how these could impact on your property’s value. For example, if there are plans for roadworks around your home and they will be completed within the next five years then it could affect the value of your home due to the inconvenience factor (and possible property devaluation).
While nobody has a crystal ball, there is evidence that house prices could be affected by climate change and extreme weather events
While it is difficult to predict what will happen, it’s useful to understand the factors which might affect house prices in the future. There are many things that could impact house prices: local economic conditions, supply, and demand for property in an area; government policies relating to housing affordability; changes in household income levels; even something as simple as how popular a suburb happens to be among young families looking for somewhere to live!
Some of these factors are related to climate change and extreme weather events (such as flooding or bushfires), while others may have nothing at all do with climate change (such as changes in interest rates).