Key Highlights
- Valuers are considered in their approaches to undertaking valuations and the treatment of risk, and do so in a property-specific manner.
- Valuers are only able to engage with existing information and data about risks, including those specifically relevant to climate change.
- Valuers, and the property industry more broadly, understand the impacts of physical climate-related events, such as flooding and bushfires, but engage with these primarily in the context of past events and planning related information and mapping.
- Valuers and the property industry would benefit from better knowledge, and guidance, about the future impacts of climate change related risks and how this may affect extant climate-related risks.
- Valuers require more specific guidance as to how to incorporate a consideration of the future impacts of climate change into current valuation processes.
Authors
Assoc Prof Georgia Warren-Myers, The University of Melbourne, and Assoc Prof Lucy Cradduck, QUT Law School.
This Summary provides an overview of the research project findings; and recognises the issues that were identified during the research project. These issues will require attention and consideration by the Australian valuation profession specifically, and the property profession more broadly.
Climate-related events cause catastrophic damage to individuals, communities, and property. As commonly agreed, climate change will escalate many climate-related events in coming years in both severity and regularity. While property impacts of actual events 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.
Where there is consideration of these risks, this consideration is (it is suggested can only be) ‘backward looking’. That is the profession and industry relevant discussion engages with past events, and in doing so relies heavily on available government data. In the context of future impacts, as has been seen in the respective SEQ, NSW and VIC 2022 floods, much of the available information is not necessarily accurate, or forward-looking. It is noted, however, that governments are beginning to consider future impacts.
Common constraints on valuers, such as costs and client instructions, adversely impact on what is considered; how much past data can be, and is, engaged with; and how such risks are reported. The risks specifically engaged with also depend upon the property type. The use of disclaimers, and or statements referring the client to seek specialist advice regarding certain risks, was also noted.
Valuers engage with obvious and immediate risks; and seek to engage with searches and make other enquiries to identify the impact of past events to property. However, there appears to be a lack of consideration of the potential impacts from climate change to such events as to both increasing severity and increasing frequency. While the property industry and professional bodies have provided specific guidance documents, knowledge about those documents is low. Further, where these documents exist, they are not all easily accessible or understood, and thus not effective in supporting the professions.
In the context of the increasing impacts to industry practises from climate change related risk reporting obligations, the researchers have formed the view that, at present, there is a lack of appropriate consideration and acknowledgment of those risks by the property profession, and valuers more specifically. There is also a lack of appropriate support documents for use by valuers specifically. While not (yet) evidenced in court decisions, in the future these knowledge gaps could expose valuers to claims (and or findings) of negligence. These in turn could affect their Professional Indemnity insurance premiums, and those of the profession more broadly.
We would like to acknowledge the research assistance provided by Dr Monique Schmidt in regard to the literature review on climate risk reporting; and Laura Cutroni for the initial Nvivo coding analysis.
Media coverage
Article: Why climate related risks need to be specifically considered by valuers | Australian Property Journal
Article: Tackling the wicked challenge of climate change risks to property: are Australian valuers prepared? | Emerald
Other APREF Research
- Towards understanding the dynamics of the Regional Property markets of Australia
- Black Swan Events, Quantitative Easing, and the Australian Housing Market
- Big Visual Data Analysis using Artificial Intelligence for Mass Valuation of Residential Properties in Australia
- Urban densification through private land assembling in inner and middle suburbs for decentralised BTR development
- Towards more inclusive equality and diversity for the Australian valuation industry
- Ethnic Diversity and Housing Market Resilience after Natural Disasters in Australia
- Future Workforce for the Property Industry: Are We Ready for the Change?
- Industry-ready property graduates – A critical skills pulse check for Australian Universities
- Building trust: Exploring AI and ethical practices in the property profession
This research was funded by the Australian Property Research and Education Fund (APREF). Learn more about APREF here.
