In a few short decades, climate change has gone from being an abstract environmental topic to something that influences money and risk in everyday property decisions across the country.
According to recent research from the Climate Council, millions of Australian homes are now at moderate to high risk from extreme weather associated with climate change. This includes flooding, bushfires, heat stress, coastal erosion and more – and most experts believe the situation is only going to get worse.
The insurance industry has been hit particularly hard. Over the past 30 years, insurers in Australia paid out an average of roughly $2.1 billion per year in claims from extreme weather events. More worrying, in the past five years alone, the annual figure has more than doubled to about $4.5 billion per year.
In response, insurance companies are recalculating their current and future risk, and trying to get ahead of the curve by applying Climate Risk Search tools. So instead of looking at historical data like whether a property has flooded before or what zoning applies, they’re gathering more information. Climate Risk Reports try to assess how future climate change may affect a property, both today and decades down the track.
In high-risk regions, premiums have doubled (or even tripled) over the past decade due to elevated disaster risk, making coverage unaffordable for many households. Analysis suggests hundreds of thousands of properties are already in zones where insurance burdens are high, and a growing number could become effectively uninsurable within the next decade under continued warming trends.
Climate Risk Considerations in Australian Conveyancing
As it currently stands, the legal system in Australia doesn’t explicitly mandate Climate Risk Searches for every property sale. But there are related obligations and evolving expectations, depending on the State and Territory. (Let’s take a quick look at what’s happening across the country).
Queensland
In Queensland, which has had more than its fair share of natural disasters in recent times, there’s what’s called a seller disclosure scheme (Form 2) that provides some protection for buyers. This requires the seller (via their conveyancer) to disclose flood and bushfire hazards and other environmental matters. If they don’t, buyers can terminate the contract before settlement.
New South Wales
In NSW, Climate Risk Search products like ‘ClimateIndex’ are being adopted by conveyancers for current hazards and forward projections. Local Councils also publish detailed flood and bushfire maps that feed into standard planning certificates and searches. (Note: ClimateIndex is currently not available for properties outside of NSW).
Victoria, South Australia, Tasmania & Others
Other states do environmental and hazard searches as part of conveyancing (ie, flood, bushfire overlays). At this stage, formal Climate Risk Searches are optional or specialist ‘add-ons’ rather than required standards.
Western Australia
Here in WA, there is currently no climate risk disclosure mandates. However, buyers can choose to be proactive. For instance, prospective buyers can check with their conveyancer about flood, bushfire, soil instability or coastal erosion maps in their local council planning schemes. While this doesn’t show future risk, it will show current vulnerability.
You can also talk with your insurer or mortgage broker early. Climate risk may affect whether you can get insurance or whether a lender will finance the property, especially in areas trending toward higher risk.
The WA Department of Water and Environmental Regulation offers official climate projection datasets for the state. These include future temperature and rainfall projections and are designed to support climate risk assessments and planning. You can download the data and summaries from Data WA.
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Here at C & R Settlements in Mandurah, we’re renown for our hard work, attention to detail, and going the extra mile for our clients. We’re Mandurah’s Number One independent settlement agent with over 80,000 settlements under our belt (and still going strong).
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