Ray White Group Chief Economist, Nerida Conisbee, has analysed recent price performance in suburbs identified as high-risk by the Climate Council and found that climate vulnerability is not yet significantly affecting buyer decisions.
“Of the 64 suburbs identified as having between 80 and 100 per cent of properties facing high climate risk exposure, 58 per cent recorded positive price growth over the past 12 months, with an average rise of 5.8 per cent,” Ms Conisbee said.
“This compares closely with national house price growth over the same period, indicating that high-risk suburbs are, at least for now, performing in line with the broader market rather than lagging it.”
The comprehensive government assessment examines potential impacts at various warming scenarios and warns of dramatic increases in heat-related deaths and coastal flooding, with more than 1.5 million people expected to face sea level rise impacts by mid-century.
Ms Conisbee said premium lifestyle locations continue to perform strongly despite their vulnerability.
“The strongest pattern emerges in premium lifestyle locations, particularly South Australia’s Adelaide Hills. Scenic bushland suburbs such as Stirling, Heathfield and Crafers West, where virtually all properties are at high climate risk, still achieved growth rates between 8 and 12.5 per cent with median values around $1.3 – 1.4 million,” she said.
While the majority of high-risk suburbs saw growth, Ms Conisbee said that 42 per cent experienced price declines.
“These included both lower-value coastal communities and high-value locations with medians above $1 million. Several New South Wales coastal and bushfire-prone suburbs recorded falls, suggesting parts of the prestige market may be beginning to weigh long-term climate viability,” she said.
According to Ms Conisbee, regional and rural markets show the most variable performance, with outcomes likely influenced by broader local economic drivers as much as climate risk.
“Proximity to major cities, lifestyle amenity and established market positioning currently appear to be stronger factors shaping demand than climate vulnerability assessments,” she said.
Despite the current market resilience, Ms Conisbee warned that risks for investors and buyers are beginning to accumulate.
“Insurance premiums in bushfire and flood-prone areas are already rising, eroding rental yields and household budgets. Some insurers are withdrawing cover altogether, effectively lowering the long-term liquidity of these assets,” she said.
“For owners, this raises the risk of holding stranded property – homes that may be difficult to insure, finance or resell. In addition, escalating premiums and out-of-pocket repair costs could eventually outweigh the lifestyle appeal that has so far driven demand.”
Looking ahead, Ms Conisbee identified several triggers that could accelerate a shift in buyer sentiment, including more frequent extreme weather events, stricter building codes, and potential tightening of lending criteria for vulnerable properties.
“For now, lifestyle continues to trump risk. But as financial pressures mount and climate impacts intensify, exposure to extreme weather may become the defining factor in Australian property markets,” she said.
