Property: Climate should be part of your due diligence - and maybe not just for the obvious reasons

I couldn’t help but be amazed that we are still seeing the usual round of summer holiday news stories about skyrocketing coastal property demand and values. I thought that we were well past the age of denial of global warming but obviously not, or, do we simply still believe that it is a future issue?

Those rushing into the latest coastal property gold rush have not paid too much attention to the increasing ‘noise’ associated with the financial risks of buying or building (linked NZHerald article paywalled) in areas that will face coastal flooding. The water may not be flowing into the house today, but as the assessed flood risk rises, as it will do, possibly quicker than expected, those holding such property run the risk of finding that they own a ‘stranded asset”. Insurance premiums will rise or, the properties become deemed uninsurable, and then banks will withdraw funding all resulting in a collapse in values for affected properties.

A property may not be at risk of flooding but may be vulnerable to access being cut. On a recent drive out to the coast (in an EV) along a busy harbour side road, I could not help but think about how vulnerable part of the road were to periodic flooding. If access to your property becomes tide dependent or, worse, is completely cut off by storm damage, who will want to purchase it from you (at the price you paid)?

I live in a smaller but increasingly sprawling town in Northland. Apart from the absurdity of building houses on prime food producing land, building a house well away from the town services is also potentially risky.

While it is not a problem today to jump in the car for a 10-15km round trip to the supermarket to pick a few items for dinner, how long will it be before our use of internal combustion engined vehicles is restricted, perhaps severely? Are we all just going to be able to wander down to the local car dealer and purchase an electric vehicle? Try a Google search on “scarcity of electric vehicles” the results are not terribly reassuring. Then have a think about where all of the electricity is going to come from to fuel, not just the cars, but also the industrial processes that need to get off fossil fuels?

In our town there is no public transport and there will probably never be an effective service for these scattered subdivisions but at least they have good quality land that they can grow their own food on. There are always e-bikes that become less risky to ride on roads carrying fewer cars.

Pivot to a city such as Auckland where I used to live on the Hibiscus Coast. It was a collection of sleepy seaside settlements until the Northern motorway was extended in the late 1990's. Now previously rural areas west of Silverdale have sprouted million dollar house subdivisions but households are a long way from both the transport hubs and other services. The motorway extension to Warkworth is rapidly nearing completion which will open up even more remote areas for housing. Travelling south of the city, I note that Pokeno, on the other side of the Bombay hill, is also experiencing the same growth. For people who work from home, long commutes are not an issue but I don’t see any of these outlying urban households being able to grow their own food or even hop on a bike to commute the 60+km round trips into the city where their higher paid job is probably located. That desirable property of 2021 may not be such a great idea by 2030 unless of course councils start to plan for other than cars.

It all seems like a game of musical chairs and the value of all of our homes are not all guaranteed to keep heading towards the stratosphere. However, I am sure that I am exaggerating the risks and, anyway, technology will ensure that we are all winners - won’t it?