Source: Radio NZ news article (dated Dec. 14th, 2020) – This article highlights that at some point in the next five, 10, or 15 years, the penny will drop with buyers that low-lying coastal properties are long-term financial liabilities.
Insurers have already started charging more to insure some sea-rise and flood-threatened homes, and perhaps in as soon as 15 years may start withdrawing insurance from some entirely. Banks won’t lend on homes that can’t be insured fully. Many home loans are 30-year affairs now.
Belinda Storey, managing director at Climate Sigma, told insurers recently in an online seminar that the perception among most people was that they didn’t need to worry until the water reached their front door. But insurance could be lost decades before the water arrived at the front door, she said.
What worries insurers is the effect of storm surges on progressively higher sea-levels. For instance, one Sydney storm in 2016 took 50 metres of shore, Storey said.
There’s going to be at least 10 cm of sea level rise within the next 20 years, Storey said, and there might be 12cm.
Historically, New Zealand had very predictable tidal surges, and as a result we’ve “hugged our coast”, she said.
There are around 450,000 houses within 1km of the coast. They won’t all have to be abandoned, or put on the back of flat-back trucks and moved inland.
But by 2050, at least 10,000 homes in our biggest cities will be uninsurable. Long before that time, the price of insurance on them would have risen dramatically, and some elements of cover, such as flood cover, would have ceased to be available.
Just how long it is financially safe to continue owning a low-lying home will be specific to each house, and the mood and knowledge of the buying public.
But there will come a day when some of our homes are stranded assets – in otherwords – an asset that might not be as easy to sell in the future. .
Strategies to consider
- Think ahead
- Do your homework before buying
- Don’t get stuck with a stranded asset
Allow Geohazard Assessment Services to assist you in making that informed decision when thinking about purchasing a coastal property whether it be beach frontage or cliff-top.