Climate risk consultancy describes impact of global warming on insurance and real estate values
September 12, 2022
Climate risk consultancy Climate Valuation says property values can “expect to be hit” due to global warming, with “direct” implications also on premium affordability.
Around 1 in 8 Australian households could be at moderate or high risk of climate-related hazards by 2030, according to the consultancy.
The consultancy says the number of moderate to high risk properties is expected to increase from 1.6 million currently to 2.6 million in 2050.
He estimates that the total value of property value correction is expected to exceed $700 billion by 2100, based on current housing stock and valuations.
And in some extreme cases, coastal areas could experience total loss of value by 2100 due to sea level rise and storm surges.
“Climate change is having a direct impact on the affordability of home insurance with technical insurance premiums modeled to increase by an average of 70% in high-risk areas and even more in the most affected areas,” says the consulting firm.
“Changes in insurance costs will have a ripple effect on the home loan market and the availability of mortgages in high-risk areas, further worsening the decline in home values.
“Insurance affordability is critical to supporting communities and national economic recovery from natural disasters.”
The consultancy says it has developed an online tool for Australian homeowners in response to the climate threat.
The portal provides individual reports customized for specific properties, including a free site audit report and a full climate impact report for $99.