As climate change worsens, Australia is expected to face more frequent and severe natural disasters, with coastal areas one of the most vulnerable places in the country, prompting a climate expert to warn of what lies ahead for coastal properties.
Climate Valuation chief executive Karl Mallon said regulators have started ordering major banks to assess business risks from climate change, such as loans to properties vulnerable to floods – which means there is only a little time left until these properties become uninsurable and “unmortgageable.”
“At the moment, it's just ‘assess it’, but in the near future, they're going to be asked, ‘What are you doing about this?’” Mallon said, as reported by The Sydney Morning Herald. “And that's going to make them very hesitant to keep providing mortgages in high-risk areas.
“What we're saying to homebuyers is they need to think about whether they will continue to be able to get insurance or be able to sell their house in a few years if they’re in a high-risk zone because we think that's going to get very hard, very quickly.”
Mallon also said he expects coastal property values to dip within the next 18 months.
Mallon's warning reflects Insurance Council of Australia (ICA) CEO Andrew Hall's comment on the representative body's December report that showed houses in Australia are not resilient to tropical cyclone hazards.
Hall said no region in Australia is currently uninsurable, but some might become difficult to insure in the future if the severity of extreme weather events increases as predicted.
In another report released in November, the ICA warned that communities, properties, and infrastructure in coastal areas of Australia become increasingly vulnerable as climate change-related natural disasters increase in frequency and intensity.