Increasing storm surges and coastal erosion have the potential to affect $25 billion worth of coastal homes across Australia, according to CoreLogic.
CoreLogic’s new coastal risk score ranks properties across five categories from no risk to very high risk, where homes may be impacted by coastal retreat within the next 30 years and may be at very high risk of significant storm surge impact.
More than 900,000 homes were identified as falling into one of the four ‘at risk’ categories, with 12,694 houses and 9,441 units categorised as being at high or very high risk of coastal exposure.
The value of those properties was $5.3 billion and $19.6 billion, respectively.
CoreLogic’s Head of Consulting and Risk Management Dr Pierre Wiart said the damage caused by recent weather events in southeast Queensland and New South Wales were a tragic but timely reminder of the untold devastation extreme weather events could have.
“In the next three decades, coastal risk will crystallise, with the tangible effects of climate change already being felt in most parts of Australia,” Dr 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.”
Dr Wiart said credit risk and long-term loans were 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,” Dr Wiart said.
“Increasing coastal risk is also adding pressure on insurance.
“Property owners face ballooning insurance premiums and restricted insurance coverage, together diminishing their insurance affordability and protection of their significant assets.”
CoreLogic Research Director Tim Lawless said while Australia’s property wealth was principally distributed on the eastern and south-eastern seaboard, a significant proportion was located in the country’s premium coastal, river and harbour front suburbs.
“Spectacular views, lifestyle appeal and limited supply has long attracted a premium for Australia’s best coastal properties,” Lawless said.
“In the past two years however there has been a broad demographic shift where more Australians are prepared to consider housing options outside of the capital cities.
“Working from home has been a catalyst of this trend with more people basing themselves in regional locations during the pandemic.”
CoreLogic’s coastal risk score evaluated combined coastal risks based on compounding storm surge (rapid erosion) and change in coastline (slow erosion), in addition shoreline movements and advanced location analytics.