Real Estate

$25 billion in Australian residential property exposed to high coastal risk

Increasing storm surges and coastal erosion has the potential to impact $25 billion worth of Australian residential coastal property, leading data and analytics company CoreLogic estimates. today in CoreLogic’s inaugural Coastal Risk Scores for Financial Risk Assessment whitepaper, utilise a new proprietary Coastal Risk Score, which measures the potential impact of climate change over time.

The risk score methodology evaluates combined coastal risks based on compounding storm surge (rapid erosion) and change in coastline (slow erosion), with the latter also implicitly considering on-going rising sea level trends. It draws on three decades of shoreline movements and advanced location analytics, to calculate and assign a coastal risk rating for 98% of Australian residential property.

Dr Pierre Wiart, CoreLogic’s Head of Consulting and Risk Management, and report author, said the damage caused by recent weather events in south east Queensland and NSW were a tragic but timely reminder of the untold devastation extreme weather events could have on Australian people and property.

Dr Wiart said the Coastal Risk Score would inform homeowners, future services sectors such as insurers and lenders, of potential future climaterelated coastal 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,” Dr Wiart said.

“This is leading to direct physical and Coastal risk has farreaching implications for the country’s property market and its supporting including property valuations, home loan viability and insurance premiums.”

The United Nations Intergovernmental Panel on Climate Change (IPCC) report, published in August 2021, called out Australia’s rising sea levels, which are increasing at a rate higher than the global average.

Dr Wiart said the impact of climate change on Australia’s coastal erosion and rising sea levels was alarming and

“Understanding the coastal risk associated with those properties is important to every owner, potential buyer and ultimately our sectors that are supporting the expansion of new coastal properties in number and in value,” he said. risk and long-term loans are directly impacted by these natural trends. is important to evaluate the potential downturn in property values or the concentration of a portfolio at risk.

“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 Dr Wiart.

Coastal Risk Score Explained

CoreLogic’s proprietary Coastal Risk Score places properties into categories, from No Risk, Low Risk, Medium Risk, High Risk through to 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 very high risk of impact.

More than 900,000 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 residential value of these properties is $5.3 billion and $19.6 billion respectively.

Australian suburbs most at risk

CoreLogic’s analysis shows Queensland has the highest concentration of properties at ‘Very High’ risk for the number of both individual houses and units, owing to the Sunshine and Gold Coast’s densely populated coastlines.

However, New South Wales, Tasmania and South Australia also have a large number of individual houses ‘Very High’ coastal risk.

Of the top 10 suburbs around Australia with the most value at risk, Paradise Point on Queensland’s Gold Coast has the highest volume of detached houses most vulnerable. of their high value, estimated at $1.47 billion within 6.4km2, no other suburb has such a high concentration of residential wealth subject to high coastal risk. About 20% of the suburb’s housing stock is 40% of the suburb’s total residential value.

Cronulla, Manly (Greater Sydney, NSW) and Port Melbourne (VIC) also rank highly due to the high residential apartment value and density of apartment dwellings within close proximity to the coastline.

The common traits of the top 10 suburbs are their close proximity to the coast, low elevation, fastest coastal retreat values.

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