Estimating the risk of sea level rise to property

Property and property values are increasingly threatened by sea level rise impacts. The implications may not necessarily be immediate, but property stakeholders and property values will be affected on multiple levels. If no action is taken, the effect on property values will be through a variety of direct, indirect, immediate and long-term impacts, which may jeopardise our property markets and broader financial structures with the ultimate cost being paid by owners, occupiers and the community. Limited information, lack of full disclosure and transparency of implications of future effects inhibit property stakeholders to identify risks associated with sea level rise to actively respond to mitigate or adapt to potential risks and for this risk to be adequately reflected in values. Albeit sea level rise in many areas won’t necessarily cause full inundation. The sea level rise modelling relied upon at present by Australian governments assumes a ‘flat water’ scenario. Further, with modelling becoming more accurate increases to sea level height expectations grows. Subsequently, current estimates being relied upon grossly underestimates the implications of sea level rise, particularly in the consideration of the impact of new flood levels and storm surges. This paper uses a case study area of the City of Port Phillip, a municipality on the bay in Melbourne, Victoria, Australia. It uses a bathtub approach using GIS modelling to examine a range of sea level heights and then incorporates existing factors like flooding and storm surge. The initial analysis examines the distribution of all properties affected within the municipality and the exponential increase in affected properties. A hedonic model was then used to examine residential sales prices over 5 years to examine whether existing flooding overlays have an effect on prices and also tested to see whether potential ‘sea level rise’ height was having an effect on sales prices. This is an important consideration for the development of policy and regulations in relation to building development and ownership and occupation. The results highlight that property stakeholders are not considering the risk implications of sea level rise into their property based activities and are under prepared for the future challenges and implications sea level rise and the ancillary effects of future flooding, inundation and storm surge.