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
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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.
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$30 Million Nashville-Area Estate Quietly Looks for a Buyer.
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A 120-acre property 35 miles outside of Nashville, Tennessee, is selling off market for $30 million, making it the second-most-expensive home for sale in the state.
Located in Franklin, about 20 minutes from downtown, Cortina Farms is both a private residence and an event venue, which charges up to $56,000 to rent for the day, according to Compass, which is marketing the pocket listing. Erin Krueger holds the listing.
The only residence on the open market with a higher price in Tennessee is another Franklin property, which spans 749 acres and is asking $37.5 million.
Cortina Farms takes design inspiration from the Italian countryside, with stonework heavily featured around the verdant grounds.
The main house, with a stone exterior and a shingled roof, has approximately 2,500 square feet of living space, with three bedrooms and two bathrooms. Outside, there’s a covered back porch, an outdoor grill, a pool and a hot tub. There are also two guest apartments off the main house, each with a bedroom and a full bathroom.
In addition to its event business opportunities, the property is also designed for an equestrian, with two barns featuring a total of 12 stalls. Near the stables are four large fenced pastures that equal about 10 acres.
Other amenities include a wellness center, a party barn with a catering kitchen, an amphitheater, two lakes stocked with bass and catfish, and a helipad. Scenic trails for walking, running or ATV riding meander throughout the property past creeks, mature trees and waterfalls, according to information provided by Compass.
The property last traded hands in 2021 for $9 million, records on PropertyShark show. The owners weren’t available for comment.
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