Climate disclosure in property transactions is becoming increasingly important in Australia, as the country experiences more frequent and severe climate-related events. As a result, buyers and sellers need to be aware of the potential climate risks associated with a property, including flood, bushfire, and coastal erosion risks. In this article, we will explore the importance of climate disclosure in property transactions in Australia and provide guidance on how to navigate this complex issue.

Introduction to Climate Disclosure

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Climate disclosure refers to the process of providing information about the potential climate risks associated with a property. This information can include data on flood risk, bushfire risk, and coastal erosion risk, as well as other climate-related hazards. In Australia, climate disclosure is becoming increasingly important, as the country experiences more frequent and severe climate-related events. According to the Bureau of Meteorology (BOM), 2024 was Australia's 4th warmest year on record, with a temperature increase of +1.53C above the 1961-1990 average. This warming trend is expected to continue, with the BOM predicting that the country will experience more frequent and severe heatwaves, droughts, and extreme weather events in the coming years.

The importance of climate disclosure in property transactions cannot be overstated. Climate-related events can have a significant impact on the value and usability of a property, and buyers and sellers need to be aware of these risks in order to make informed decisions. For example, a property that is located in a flood-prone area may be more likely to experience damage or loss due to flooding, which can affect its value and insurability. Similarly, a property that is located in a bushfire-prone area may be more likely to experience damage or loss due to bushfires, which can also affect its value and insurability.

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Understanding Climate Risks in Australia

Australia is prone to a range of climate-related risks, including flood, bushfire, and coastal erosion. According to the CSIRO, the country has experienced a +1.08C increase in sea surface temperatures above the 20th century average in 2024. This has led to an increase in marine heatwave days, with 6x more marine heatwave days than in the 1980s. The Australian Bureau of Statistics (ABS) reports that 45% of NSW properties face material flood or bushfire risk, with 2.1M people exposed to flood-prone areas.

The climate risks associated with a property can vary depending on its location and other factors. For example, properties located in coastal areas may be more prone to coastal erosion and flooding, while properties located in bushfire-prone areas may be more prone to bushfires. Properties located in areas with high rainfall or storm activity may be more prone to flooding, while properties located in areas with high temperatures or drought may be more prone to heat-related damage.

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Flood Risk Assessment

Flood risk assessment is a critical component of climate disclosure in property transactions. According to the flood risk assessment data, NSW has experienced significant flood events in recent years, including the 2022 Lismore floods, which resulted in $5.6B in damages. The Insurance Council of Australia (ICA) reports that the average flood claim has increased by 35% since 2020, to $42,000. Buyers and sellers can use online tools, such as check your suburb, to assess the flood risk associated with a property.

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Flood risk assessment involves evaluating the likelihood and potential impact of flooding on a property. This can include assessing the property's location, elevation, and proximity to waterways, as well as the local flood history and flood mitigation measures in place. Buyers and sellers can use online tools to assess the flood risk associated with a property and take steps to mitigate this risk, such as purchasing flood insurance or implementing flood-proofing measures.

Bushfire Risk Assessment

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Bushfire risk assessment is also an essential component of climate disclosure in property transactions. According to the bushfire risk assessment data, NSW has experienced significant bushfire events in recent years, including the 2019-20 Black Summer fires. The BOM reports that the Forest Fire Danger Index has increased by 10-40% since the 1970s, with a 33% increase in days above 40C since 1960. Buyers and sellers can use online tools to assess the bushfire risk associated with a property and take steps to mitigate this risk.

Bushfire risk assessment involves evaluating the likelihood and potential impact of bushfires on a property. This can include assessing the property's location, vegetation, and proximity to bushfire-prone areas, as well as the local bushfire history and bushfire mitigation measures in place. Buyers and sellers can use online tools to assess the bushfire risk associated with a property and take steps to mitigate this risk, such as purchasing bushfire insurance or implementing bushfire-proofing measures.

Coastal Erosion Risk Assessment

Coastal erosion risk assessment is also an important component of climate disclosure in property transactions. According to the Geoscience Australia (GA) data, the Australian coastline has experienced a +3.5mm/year increase in sea levels since 1993. This has led to an increase in coastal erosion, with many properties at risk of damage or loss. Buyers and sellers can use online tools to assess the coastal erosion risk associated with a property and take steps to mitigate this risk.

Coastal erosion risk assessment involves evaluating the likelihood and potential impact of coastal erosion on a property. This can include assessing the property's location, elevation, and proximity to the coastline, as well as the local coastal erosion history and coastal erosion mitigation measures in place. Buyers and sellers can use online tools to assess the coastal erosion risk associated with a property and take steps to mitigate this risk, such as purchasing coastal erosion insurance or implementing coastal erosion-proofing measures.

Insurance Impact

Climate-related events can have a significant impact on insurance premiums and availability. According to the ICA, the average home insurance premium has increased by 28% nationally, with a +32% increase in NSW. The APRA reports that $7.6B in insured losses were experienced in 2024, with an estimated 1 in 8 Australian homes underinsured or uninsured. Buyers and sellers can use online tools, such as view pricing plans, to assess the insurance implications of a property transaction.

The insurance impact of climate-related events can vary depending on the type and severity of the event, as well as the location and value of the property. For example, properties located in high-risk areas may be more expensive to insure, while properties located in low-risk areas may be less expensive to insure. Buyers and sellers can use online tools to assess the insurance implications of a property transaction and take steps to mitigate this risk, such as purchasing insurance or implementing risk-reduction measures.

Conclusion

Climate disclosure is a critical component of property transactions in Australia, as the country experiences more frequent and severe climate-related events. Buyers and sellers need to be aware of the potential climate risks associated with a property, including flood, bushfire, and coastal erosion risks. By using online tools and assessing climate risks, buyers and sellers can make informed decisions and mitigate the risks associated with a property transaction.

It is essential for buyers and sellers to understand the climate risks associated with a property and take steps to mitigate these risks. This can include purchasing insurance, implementing risk-reduction measures, and assessing the climate risks associated with a property. By taking these steps, buyers and sellers can protect themselves and their properties from the impacts of climate-related events.