Climate change threat to Australian housing estimated at $31b a year

“Without targeted action, most existing homes will be exposed to increasing climate risks over the coming decades,” the report warned.

“Population growth and housing stock change are key drivers of future exposure. Continuing to build housing in high-risk areas will increase risk and asset losses.”

The commission estimates that by the end of the century, annual damage to homes from climate change will be $31 billion, or 1 percent of GDP in today’s dollars. Cumulatively, the cost between 2025 and 2100 will be at least $744 billion.

He now argued that preventative measures could greatly reduce this cost. Making homes more resilient to climate change could save $186 billion, while preventing the construction of new properties in high-risk areas such as floodplains could save a further $54 billion.

He found that acting quickly would yield significant benefits. A five-year work program could prevent $38 billion in losses by the end of the century. However, extending this to 30 years would cost an additional $44 billion in losses.

The federal government should develop a climate resilience star rating system that potential buyers can use to identify homes at risk of climate-related damage, according to the commission.

All levels of government should work together on planning rules and ways to protect properties, including retrofitting existing properties.

The report stated, “Increasing our resilience to the effects of climate change in the coming years will reduce the costs to the economy, society and the environment. We need to establish the foundations of effective adaptation now.”

“The opportunity for action is greatest when new homes are being planned and built, allowing these benefits to be realized with fewer disruptions and, in many cases, possibly at a lower cost than renovating existing homes,” the report said.

It’s not just homes that are at risk. Oxford Economics Australia believes access to drinking water will come under greater pressure in the coming years.

Economist Dominic McNally said the country will likely experience a $23 billion desalination plant construction boom as a growing population, data center construction and climate change put pressure on drinking water supplies.

Last week, Melburnians were warned they could face water restrictions for the first time in a decade after Victoria experienced the lowest water flows on record between January and June.

In south-west WA, including Perth, rainfall has fallen by 20 per cent since the mid-1970s and streamflow has fallen by an average of 80 per cent. Perth already has two desalination plants and is in the process of building a third north of the city.

Oxford said construction of four desalination plants across the country is ongoing. By the end of the decade, this number will increase to 11.

“A boom in desalination construction is looming as water authorities see desalination plants as the solution to Australia’s looming water shortages,” he said.

The most expensive of these is likely to be a $5 billion facility to serve south-east Queensland; Expansion of existing facilities in Sydney ($920 million) and Melbourne ($840 million) is likely to be needed.

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