Climate Change and Sydney Property Prices Market Update Jan 2022
Over the past week here in Sydney metro areas we saw just over 900 properties sell via private treaty and another 60 properties at auction- Across Sydney, there are only around 7700 properties listings- so very subdued numbers and short supply as the market still hasn’t fully returned to speed.
The rental market for January so far is very tight, in metro Sydney we are running at a sub 1% vacancy rate with property managers and leasing agents reporting rents for both houses and apartments are on the rise.
“Climate Change to Affect Property Prices”..
At the end of last year, the Reserve Bank of Australia released a paper on the Climate Change Risk to Australian banks.
The paper expresses significant concern over the certain increase in extreme weather events, erosion, storms fire, and flood associated with climate change. It is expected to affect the safety, livability, and insurability of hundreds of thousands of Aussie homes. This will lead to declining property values which is bad for the banks holding the mortgages and bad for us as homeowners and property investors.
Now you may think because you live in a big city this doesn’t affect you, but the report identifies 254 climate-sensitive suburbs at risk, and a substantial number of those are in Sydney stretching from Mosman to Palm Beach, Lane Cove to Hornsby, and on the Cronulla peninsula.
Without going into too much detail, if Australia’s most powerful financial institution is concerned about the effect of climate change on property, we need to be acting on this now too. A great way to do so is to make exposure to more extreme weather, a consideration affecting where you buy, and what type of property you buy. Flood maps and fire BAL ratings should take priority, as well as exposure to coastal erosion. Solid brick homes would make more sense over weatherboard or veneer. Aspect, orientation, cross ventilation, insulation, access to solar /renewable energy and cost to heat/cool the property should also be a concern, as should whether your home or investment remains viable if your insurance premiums double or triple due to being in a high-risk area.
This is just some food for thought this week, I have included the links to the RBA paper and other resources on climate change if you’d like to find out more.
I hope you’ve found this info useful and look forward to bringing you another property update next week.
1. Reserve Bank of Australia: “Climate Change Risks to Australian Banks” – https://www.rba.gov.au/publications/bulletin/2021/sep/climate-change-risks-to-australian-banks.html
2. Climate Council: “Compoud Costs: How Climate Change Is Damaging Australia’s Economy” – https://www.climatecouncil.org.au/wp-content/uploads/2019/05/costs-of-climate-change-report-v3.pdf
3. Bloomberg: “Property Value at Risk in Australian Climate Hot Spots, RBA Says” – https://www.bloomberg.com/news/articles/2021-09-16/bank-risks-emerge-in-australia-s-climate-hot-spots-rba-paper