Climate Change Impacts: How Much is your Property Worth Now?
A study by scientists from CSIRO and University of Queensland reveals homeowners could suffer cuts of thousands of dollars from the value of low-lying homes in southeast Queensland due to rising sea levels and intense storms. With proactive adaptation measures, such as raising homes and modifying drainage, homeowners and communities collectively could save billions of dollars. Read more
Queensland property values at risk as sea levels rise due to climate change, CSIRO and University of Queensland say
By Peter Hall in The Courier-Mail (18 June 2013):
RISING sea levels and intense storms will cut thousands of dollars from the value of low-lying homes in southeast Queensland, including Brisbane, according to an Australia-first climate change study.
The Federal Government-funded analysis by scientists from the CSIRO and University of Queensland reveals homeowners and communities collectively could save billions of dollars by acting now to fortify properties and infrastructure.
It factors in sea-level rises of up to 20cm by 2030 and 50cm by 2070.
The study shows some buildings just above the 1-in-100-year flood level are expected to be affected in coming decades, resulting in a minimum 4 per cent price drop.
It advocates “proactive adaptation measures’’, such as raising homes, modifying drainage and banning new development in at-risk areas.
In extreme cases, a retreat to higher ground may be the best option.
Experts concede convincing people to follow the recommendations will be a great challenge.
The study, Housing Shadow Prices in an Inundation-prone Suburb, looks at 4000 sales in an unnamed inner-Brisbane suburb.
The location is described as close to the river but not riverfront and within 5km of the CBD. It contains properties worth up to $5 million.
The research modelled buyers’ willingness to pay for land and homes in the flood-prone area and showed “significant property-price discounting of 5.5 per cent per metre below the defined flood level’’.
Experts say the snapshot could be applied to 61,500 southeast Queensland properties soon expected to be under threat from a 2.5m storm tide.
Project leader Dr Ryan McAllister told The Courier-Mail the main message was it made economic sense to adapt sooner rather than later.
Dr McAllister said previous international studies found property prices in flood areas dropped by 10 per cent to 20 per cent in the short term.
Prices usually bounced back as memories faded but his team’s detailed hedonic modelling had defined additional longer-term price impacts.
“For a house that is already in the flood zone, then 50cm of sea level rise will result in an additional 2.75 per cent of price discounting. How much discounting occurred before sea level rise (SLR) depends on its place in the flood zone,’’ Dr McAllister said.
“For a house that is just above the 1-in-100-year flood level, then 50cm of SLR will result in 4.05 per cent discounting,’’ he said.
Dr McAllister said that while the impacts of climate change would not be catastrophic, there were going to be “some winners and losers’’.
“The study recognises the challenge of convincing residents within exposed areas to participate in adaptation, which would require buy-in from the community,’’ he said.
“Given that in Australia people’s wealth is largely tied up in the family home, we present a strong case to consider the effect of current and future climate risks on net wealth.’’
HOUSE PRICES AND FLOOD RISK
What the study says:
- For flood-prone urban areas, the prospect of increasing population densities and more frequent extreme weather associated with climate change is alarming
- Proactive adaptation can reduce potential flood risks but convincing residents in exposed areas to participate is challenging
- The results of this study (4000 sales in a flood-prone inner-city Brisbane suburb) show significant property price discounting of 5.5 per cent per metre below the defined flood level
- The suburb is close to the river but not at the riverfront, avoiding problems of disentangling river views from the adverse effects of flooding. Future sea-level rises are expected to proportionately affect local flood risks.
INFORMATION: Housing Shadow Prices in an Inundation-prone Suburb (CSIRO, University of Queensland)
BY THE NUMBERS
- 20cm is the projection of sea level rise by 2030 and 50cm by 2070
- 227,000 people in southeast Queensland are at risk of inundation from a 1-in-100-year storm tide
- 273,000 will be exposed by 2070
- 35,200 residential buildings in the southeast are at risk from a 2.5m storm tide
- 61,500 properties will be affected by 2030, given current growth levels
- 3.8 million Queenslanders – 85 per cent of the state’s population – live near the coastline.