Land values fall - finally the penny is dropping on the Clarence Coast?

The Daily Examiner 24 November 2009

For literally decades now – with information and risk scenarios firming along with the science as the years pass – the NSW Northern Rivers generally and the Clarence Coast specifically have been aware that these regions will probably be on the front line of climate change impacts. Heatwaves, increased fire risk, more drought periods per decade, more extreme rainfall/wind/flash flooding events are predicted.

With parts of Yamba Hill likely to end up in the ocean when specific weather and seas conditions batter the cliff face, rising sea levels also likely to cause strong storm surges which will inundate streets within the town as far up as Lake Kolora, higher groundwater tables or sea water in the aquifers and, river flooding predicted to be less frequent but more destructive

So it has been a quiet wonder over these last ten years to find that house and land values had been holding firm or rising.

Not anymore though, as it appears that prospective buyers may now be more cautious when scoping out coastal property and are probably not as willing to shoulder the higher end of the coming financial risk:

A DROP in land values of up to $600,000 for properties in Yamba's prestigious hill precinct will see ratepayers fork out hundreds, and in some cases thousands, of dollars less in annual rates.
Figures obtained by The Daily Examiner show drops of up to 30% over the six-year period from 2004 for land in streets including Ocean St, Pacific Pde and Clarence St.
Despite this, increasing values in other areas of the Valley will still see the council's rate revenue for the 2011/2012 financial year rise by a projected 15%.
One Pacific Pde block, valued at $2.34 million in 2004, plummeted $600,000 to $1.64 million in the 2010 valuation.
The owners of one property on Ocean St will have to fork out around $1200 less in rates per year after the value of their land dropped by $350,000 to $1.2 million.
And the reduction in land values isn't just confined to residential properties.
The value of land occupied by the Blue Dolphin resort dropped $3 million, which will see council get around $13,000 less in annual rates from the holiday park.
Without knowing the specifics impacting on Yamba land values, a representative for the Valuer-General's Department said local issues could effect the movements of valuations up or down.
“The valuations are based on sales analysis. If the sales are moving up or down this could be a factor,” the representative said.
The Valuer-General's Department will investigate factors influencing land values and The Daily Examiner will report on the results……
[The Daily Examiner, 19 March 2011]

Well, the warnings were there weren't they?

Climate change has potentially profound effects for the property and development industry. Stakeholders in the industry must begin to consider the various ways that climate change will impact upon property prices and valuation methodologies. [2010]

Tens of thousands of properties along the coast of New South Wales could be left uninsured to the threats of rising sea levels, Gabby Greyem reports.
Sea level rise could cost Australians $150 billion in uninsured real estate, according to Insurance Australia Group.
As a result of global warming sea levels are predicted to rise up to 40 cm by 2050 and 90 cm by 2100. 46,000 properties between Newcastle and Wollongong are less than three metres above sea level and are uninsured for coastal erosion or landslip.
Director of Lonergan Edwards & Associates, Tony Coleman, said most insurance policies cover the house and contents, but not the land value, and often the land is a significant part of a waterfront property’s overall value.
“Even half a metre within 50 years is a lot of extra sea to keep out if you’re trying to stop waves.
“A lot of people are going to lose their property and they won’t be insured,” he said.
Mr Coleman believes there is a growing realisation about the costs of sea level rise, but it is being overshadowed by the high focus on the Carbon Pollution Reduction Scheme. [2009]

One general insurer has estimated that the value of coastal property in Australia at risk to rising sea levels and erosion is between $50 billion and $150 billion.
In a submission to a Federal Government inquiry, the insurer even suggests an insurance fund into which owners of low-lying land would pay a regular levy for compensation when sea levels cause their land to become permanently unusable. [2008]

Climate change has the potential to impact heavily both society at large and the global economy. It is also increasingly being understood as a business risk.
Issues of energy and environment have, for some time, been of key interest and relevance to the actuarial profession on a number of fronts. In particular, the effect of climate change on insurance and the contribution of electricity markets to greenhouse gas emissions.
Such concern on the part of the actuarial community is hardly surprising, given that they are experts at understanding and assessing the financial impact of future uncertain events. There can be no set of complex problems more amenable to, and more in need of, application of the actuarial skill set than those generated by climate change.
Weather and climate are "core business" for the insurance industry. At its most basic, insurers underwrite weather-related catastrophes by calculating, pricing and spreading the risk and then meeting claims when they arise. A changing, less predictable climate has the potential to reduce the capacity of insurers to calculate, price and spread this weather-related risk. Policyholders, shareholders and the community at large all have a stake. [2007]

Implications for property values & insurance in risky areas [2006]