The climbing cost of climate change for the Australian property market

Climate change is already affecting home values due to the impact of more severe weather events and rising home insurance premiums, and the cost of building is likely to rise as regulatory changes designed to enhance climate resilience alter building codes and zoning laws, according to a new report.

The National Housing Supply and Affordability Council describes climate change as an emerging trend that is raising the cost and complexity of supplying more housing. In its newly released State of the Housing System report, the council discusses how climate change is reducing the value of some homes when major weather events cause flooding or other natural disasters.

“The price differential between flood-affected and non-flood affected homes has been estimated to be up to 35 percent a year after a flooding event,” the report says. “Furthermore, the RBA estimates around 7.5 percent of properties are in areas that could experience price falls of at least 5 percent due to climate change by 2050.”

More than one million households are struggling to afford home insurance, and rates of non-insurance are increasing due to the cost. For example, the Australian Competition and Consumer Commission estimated that 40 percent of homes in Northern Western Australia were uninsured in 2020.

“Climate change is causing home insurance premiums to rise across Australia, adding to already elevated housing costs. Homeowners in areas considered at–risk of natural disasters are expected to see insurance premiums rise further or have difficulty obtaining insurance due to heightened risks.”

More frequent and severe weather events such as cyclones and bushfires, as well as coastal erosion and flooding from rising sea levels, present risks to housing safety. More than 3,000 homes were lost in the 2019-20 bushfire season, causing $2.3 billion in insurance losses. The report says the predicted direct cost of natural disasters to the economy and housing will be $35.2 billion per year by 2050.

Climate change and net-zero targets could raise the cost of building new homes, the report says. “Regulatory changes to enhance climate resilience will alter building codes and zoning regulations.

Developers facing higher compliance costs may have difficulties meeting updated standards, potentially delaying or reducing housing availability.”

However, the report says the increased cost of building a home with climate-resistant materials and eco-friendly features is more than offset by lower energy costs over a property’s lifetime. The current minimum energy efficiency requirements within the National Construction Code are estimated to deliver a household–level benefit-to-cost ratio of 1.37, according to the report.

Long-term Sydney residents always had handful of not-so-glamourous nicknames for the building on the corner of Cleveland and Baptist Streets straddling Redfern and Surry Hills, but after a modern rebirth that’s all changed.

Once known as “Murder Mall” or “Methadone Mall”, the 1960s-built Surry Hills Shopping Centre was a magnet for colourful characters and questionable behaviour. Today, however, a $500 million facelift of the site — alongside a slow and steady gentrification of the two neighbouring suburbs — the prime corner property has been transformed into a luxury apartment complex Surry Hills Village by developer Toga Group.

The crowning feature of the 122-apartment project is the three-bedroom penthouse, fully completed and just released to market with a $7.5 million price guide.

Measuring 211sqm of internal space, with a 136sqm terrace complete with landscaping, the penthouse is the brand new brainchild of Surry Hills local Adam Haddow, director of architecture at award-winning firm SJB.

Victoria Judge, senior associate and co-interior design lead at SJB says Surry Hills Village sets a new residential benchmark for the southern end of Surry Hills.

“The residential offering is well-appointed, confident, luxe and bohemian. Smart enough to know what makes good living, and cool enough to hold its own amongst design-centric Surry Hills.”

Allan Vidor, managing director of Toga Group, adds that the penthouse is the quintessential jewel in the crown of Surry Hills Village.

“Bringing together a distinct design that draws on the beauty and vibrancy of Sydney; grand spaces and the finest finishes across a significant footprint, located only a stone’s throw away from the exciting cultural hub of Crown St and Surry Hills.”

Created to maximise views of the city skyline and parkland, the top floor apartment has a practical layout including a wide private lobby leading to the main living room, a sleek kitchen featuring Pietra Verde marble and a concealed butler’s pantry Sub-Zero Wolf appliances, full-height Aspen elm joinery panels hiding storage throughout, flamed Saville stone flooring, a powder room, and two car spaces with a personal EV.

All three bedrooms have large wardrobes and ensuites with bathrooms fittings such as freestanding baths, artisan penny tiles, emerald marble surfaces and brushed-nickel accents.

Additional features of the entertainer’s home include leather-bound joinery doors opening to a full wet bar with Sub-Zero wine fridge and Sub-Zero Wolf barbecue.

The Surry Hills Village precinct will open in stages until autumn next year and once complete, Wunderlich Lane will be home to a collection of 25 restaurants and bars plus wellness and boutique retail. The EVE Hotel Sydney will open later in 2024, offering guests an immersive experience in the precinct’s art, culture, and culinary offerings.

The Surry Hills Village penthouse on Baptist is now finished and ready to move into with marketing through Toga Group and inquiries to 1800 554 556.

The climbing cost of climate change for the Australian property market

The insurance premium gap between flood affected and non-flood affected homes is significant

A Sydney site with a questionable past is reborn as a luxe residential environment ideal for indulging in dining out