Real estate valuation practice: An Australian qualitative consideration of the impacts of climate change

Climate-related events cause catastrophic damage to individuals, communities, and property. Current trajectories and tipping points for minimising global warming suggest these events will exacerbate substantially in coming years in both severity and regularity. While impacts of actual events on property are broadly considered by the built environment professions, other professions, governments, industry, and individuals. There is an absence in the literature and industry resources of a direct consideration of the impacts of climate change risks (current and future) in valuation and property practices. This research investigated 30 Australian valuers in 2021 and 2022 through semi-structured interviews to explore valuers’ consideration of climate-related risks and climate change implications in valuations. The research found valuers engage with obvious and immediate physical risks; and seek to engage with searches and make other enquiries to identify the impact of past events. However, there appears to be a lack of consideration of the potential impacts from climate change, and its effects on extant risks. Constraints such as costs and client instructions, adversely impacted what is considered; how much past data is engaged with; and how such risks are reported. The risks specifically engaged with also depended upon property type. Where climate risks were reported, this was accompanied by disclaimers, and or statements, referring the client to seek specialist advice. It is suggested there may be a lack of appropriate consideration and acknowledgment of such risks by property stakeholders, and valuers; and a lack of appropriate education and support documents. There could be potential for substantial ramifications on property and finance markets if these risks are not acknowledged or properly considered. While not (yet) evidenced in court decisions, in the future these knowledge gaps could expose valuers to claims (and or findings) of negligence.