Coastal erosion and increasing storm surges could impact $25 billion worth of residential coastal property in Australia, according to a new report by CoreLogic.
The report utilised CoreLogic’s proprietary Coastal Risk Score, which measures the impact of climate change over time. The score evaluated combined coastal risks based on compounding storm surge (rapid erosion) and change in coastline (slow erosion), with the latter also considering the ongoing rise in sea level.
Dr Pierre Wiart, CoreLogic’s head of consulting and risk management and the author of the report, said the damage caused by recent weather events in Queensland and New South Wales were a reminder of the devastating effects weather could have on Australian property. Wiart said the Coastal Risk Score would inform homeowners, future buyers, insurers and lenders of potential future climate-related property risks.
“In the next three decades, coastal risk will crystallise, with the tangible effects of climate change already being felt in most parts of Australia,” Wiart said. “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.”
According to the United Nations Intergovernmental Panel on Climate Change report, published last year, Australia’s sea levels are rising at a higher rate than the global average. Wiart said the impact of climate change on Australia’s coastal erosion required immediate attention.
“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 value,” he said. “Consequently, credit risk and long-term loans are directly impacted by these natural trends. Equally, for any financial institution, it is important to evaluate the potential downturn in property values or the concentration of a portfolio at risk.”
CoreLogic’s Coastal Risk Score places properties into one of five categories: no risk, low risk, medium risk, high risk and very high risk. Dwellings categorised as “very high risk” may be impacted by coastal retreat within the next 30 years, and may also be at risk of significant impact from storm surge.
More than 900,000 Australian dwellings fall into one of the four “at risk” categories, with 12,694 houses and 9,441 units classified as being at high or very high risk of coastal exposure.
Queensland has the highest concentration of properties at very high risk for the number of both houses and units, thanks to the densely populated coastlines of the Sunshine Coast and Gold Coast. However, New South Wales, Tasmania and South Australia also have large numbers of dwellings classified as being at very high risk, CoreLogic reported.
Article source: www.mpamag.com