Rising premiums from climate change-related extreme weather events could potentially have an impact on property prices in high-risk areas, according to research from the Reserve Bank of Australia (RBA).
In a recent study, RBA economists said the risks of climate change suggest that a “small share of housing in regions most exposed to extreme weather could experience price falls.”
And according to the study, 3.5% of dwellings in Australia are currently in these high-risk areas – but that number is projected to increase to 8% over the next 80 years.
The regions with the largest rise in properties that are likely to be high risk includes some populous regions in south-eastern Queensland and northern New South Wales.
Additionally, the report said that the climate risks in these regions “could further increase if the affected communities find that access to, or affordability of, insurance becomes a challenge.”
“These increases in premium costs would be incurred every year, and therefore could result in sizeable declines in property values,” the report said.
The study also warned that increasing “physical and transitional risks” from climate change will impact the Australian financial system “if they are not properly managed.”
“These risks could have a systemic impact on the financial system because they are global and occur across a range of financial sectors,” the report said.
