Reserve Bank Australia sounds alarm on house prices in 254 suburbs

PHOTO: Australia’s central bank has warned that climate change poses a real risk to house prices.

RBA finds 3.5 per cent of homes already ‘high risk’.
This doesn’t include all of the homes that haven’t yet had their values affected.
As many as 254 suburbs can be defined as climate sensitive by 2050.

Homes in coastal and agricultural regions could see a “material decline” in values due to climate change, Australia’s central bank has warned.

The Reserve Bank of Australia (RBA) on Thursday said insurers will start to back away from risky assets which will have a knock on effect on house prices in those areas.

The RBA described climate change as presenting “substantial” risks if Australia’s financial system fails to manage them.

That’s largely due to the potential for a small share of houses in extreme weather regions to experience sharp price falls, triggering cascading credit losses for banks.

While the RBA said the overall losses are “likely manageable” for lenders, specific Australian regions will face material declines in prices.

Some 3.5 per cent of dwellings across Australia are already considered at “high risk” from climate change, RBA economists Kellie Bellrose, Michelle Royters and David Norman said.

However, the key issue is property prices not yet reflecting future climate risk, the researchers added.