URGENT UPDATE: A groundbreaking report reveals that Australia’s property market is on the brink of a financial catastrophe due to climate change. The report warns that extreme weather events such as flooding, bushfires, and droughts will severely impact property values, projecting losses of up to $610 billion by 2050 if global temperatures rise by 3C.
New assessments confirm that rising risks associated with climate change are not yet fully reflected in property prices. Ehsan Noroozinejad, a senior researcher at Western Sydney University’s Urban Transformations Research Centre, states that while some climate risks are factored into market values, many future threats remain largely unaccounted for. “Future risks, like sea-level rise, are only partially or not at all capitalized into prices,” he explains.
The report indicates that under a worst-case scenario, property values could be slashed by as much as $570 billion by the end of this decade. This alarming projection highlights the urgent need for buyers and investors to reassess the stability of properties in vulnerable areas. The findings come as home buyers continue to pay premium prices for desirable locations, ignoring the looming threat of environmental disasters.
In Lismore, a town devastated by the 2022 floods, property prices dipped but have begun to recover, with current values still 6.7% below record highs. According to Cotality, sales activity has returned to long-run averages, showing that many buyers are willing to overlook climate risks for the sake of lifestyle benefits. The report notes that even as insurance costs rise, the allure of waterfront properties keeps demand high.
Liam Dillon, senior economist with the Committee for Economic Development of Australia, predicts that climate risks will increasingly influence home prices, particularly as sea-level rises expose more properties to flooding. “There’s two forces acting there—one is the intensity of disasters, and the other is the number of properties exposed,” he states.
Insurance costs are becoming a significant burden for homeowners in high-risk areas, with the report estimating that 751,000 homes are already in high-risk zones. By 2090, that number could exceed 1.2 million. Rising premiums may erode property values by as much as 10% in some regions, particularly affecting lower-income neighborhoods first.
Despite the risks, affluent buyers continue to flock to regions like Adelaide Hills, drawn by natural beauty and proximity to urban centers. Wealthier households are often better equipped to rebuild after disasters, further driving demand in these climate-exposed areas.
The report also highlights a worrying gap in public understanding of climate risks. Less than 1% of homeowners believe they are at high risk of flooding, even as 4.4% of homes face a significant chance of inundation. Dillon notes that a lack of accessible information on climate risks contributes to this misunderstanding, calling for governments to strengthen mandatory disclosures at the point of sale.
As climate change continues to escalate, the time to act is now. Experts advocate for implementing a resilience rating system to help buyers make informed decisions and prevent overpaying for climate-vulnerable homes.
With these findings, the urgency for buyers and policymakers to adapt is clear. The clock is ticking, and immediate action is required to safeguard Australia’s property market against the impending impacts of climate change.
