Half a trillion dollars could be wiped off the value of Australia’s property market by 2030 as a result of climate change, according to a grim new government report.
And it won’t just be households in high-risk areas bearing the brunt, with some of the nation’s most affluent beach and harbourside suburbs identified as “primary hotspots” at risk of sea level rise, storm surges and extreme weather events.
The National Climate Risk Assessment (NCRA), released this week, modelled the risks and impacts under three scenarios: 1.5ºC, 2ºC, and 3ºC of warming above pre-industrial levels, realestate.com.au reported.
Current estimates put the world on track for a temperature rise of 2.9ºC this century, according to the UN.
The report warns that extreme weather events such as heatwaves, cyclones, bushfires and severe floods will become more frequent, directly impacting homes, businesses and infrastructure. Other flow-on effects include reduced productivity from heatwaves, escalating insurance premiums, and an increase in uninsurable homes in high-risk areas.
Climate Change and Energy Minister Chris Bowen (pictured left) said no community would be immune.
“One thing that is very clear from this climate assessment is that our whole country has a lot at stake,” Bowen said.
Under a worst-case scenario, the impact of extreme weather events is expected to hit property values by $571 billion by 2030, $611 billion by 2050 and $770 billion by 2100.
The report also warned that climate impacts will be “cascading, compounding, concurrent,” with fatalities from heat-related illness projected to surge – by up to 444% in Sydney and 423% in Darwin under a 3ºC scenario. Rising oceans and flooding could threaten the homes and livelihoods of more than one million Australians by 2050, doubling by 2090.
“We are living climate change now. It’s no longer a forecast, a projection or prediction – it is a live reality, and it’s too late to avoid any impacts,” Bowen said.
“These impacts, as well as disruptions in supply chains and increased prices for essential goods, will contribute to the cost of living, placing further strains on household budgets,” the report said.
While households in the Northern Territory, northern Queensland and northern WA are most exposed to extreme heatwaves, floods, storms and bushfires, inner-city residents are also at risk.
Major urban centres and coastal suburbs were flagged as hotspots. In Sydney, suburbs such as Double Bay, Millers Point, Darling Point, Darlinghurst, Haymarket and bayside Kogarah are increasingly exposed to sea level rise.
“Expanding coastal urban suburbs and waterfront developments will increase future impacts from sea level rise, storm surges and extreme weather events,” the report said.
In Melbourne, suburbs east, west and north of the CBD were also identified as hotspots. Sea level rise along the Victorian coastline is projected to reach around 13cm by 2030 and up to 42cm by 2070.
Nationally, sea levels are expected to rise up to 50cm by 2050 and more than 80cm by 2090, with significant impacts across the eastern seaboard.
Australia’s residential housing market is valued at $11.6 trillion, according to the ABS.
Of the nation’s 11.4 million dwellings, the NCRA estimates 8.2% – around 751,000 homes – are already located in high-risk areas, while a further 794,000 are classed as very high risk. By 2090, the number of homes in very high-risk areas is expected to rise to 1.2 million.
Outer urban areas of major cities were identified as “watchpoints” due to factors such as demographics, hazard exposure and slower recovery times after events.
With 73% of Australians living in major cities – most along the east coast – the risks are widespread. By 2050, the number of people living in high- and very high-risk coastal communities nationally is expected to rise to 1.5 million, and more than 3 million by 2090.
“The relatively high values of assets at risk increase the impacts if risks are realised,” the report said, noting that past planning decisions which overlooked sea level rise will compound vulnerabilities.
-PropTrack data shows Australians are already worried about climate-related costs. A January survey found 87% of respondents were concerned about rising energy bills, followed by biodiversity loss (81%), water shortages (79%), home safety risks (75%) and lifestyle changes (68%).
“2024 was the hottest year on record, with greenhouse gas emissions reaching an all-time high, underscoring the urgent need for climate action,” PropTrack senior economist Eleanor Creagh (pictured right) said.
“The findings reveal that while climate concerns are a priority, financial motivations drive most energy decisions.”
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
