Sea-level threat yet to erode demand for coastal property

We could be in deep water if we don’t dampen our enthusiasm for coastal real estate. Scientists predict our sea level will rise by 10cm or more in the next 20 years or so, which will increase the frequency and severity of coastal flooding in NZ and might even lead to more than 10,000 homes becoming uninsurable by 2050.

Despite that ominous warning - reiterated by Belinda Storey at the recent Deep South National Science Challenge - coastal property remains the “hottest of hot commodities”, according to Quotable Value general manager David Nagel, who expects it to remain that way for the foreseeable future.

“Kiwis love the ocean especially at this time of year. But we’ve failed to heed warnings for far too long. I don’t think the message is getting through. The odds of more extreme weather events are set to rise alongside the sea level.”

Yet of the more than 20 QV property consultants and valuers asked nationwide, nearly all named coastal areas as the places most likely to go up in value this year.

On the Coromandel, QV’s Jarrod Hedley says the threat of sea-level rise has not curbed demand for coastal property. “Residential values have continued to grow very strongly over the last six months - particularly on the eastern side of the Coromandel.

“Though we’ve seen the most growth at the lower end of the market, there remains strong demand for higher-value beach-front property.”

QV’s Derek Turnwald says demand for coastal property remains strong in Bay of Plenty. “Auctions and open homes continue to be well attended with homes generally selling well above seller expectations. Things may cool slightly when the LVRs take effect once more, but demand will likely remain high on the coast this year. People want to live near the water.”

Mr Nagel warned Kiwis to be more aware of the risks before they purchase. “Do your due diligence. Don’t adopt the classic Kiwi ‘she’ll be right’ mentality. Look very carefully at the risks, one of the biggest being the ability for coastal homeowners to get full insurance cover in future,” he said.

Insurance companies have already warned coastal properties may become uninsurable as climate change kicks in. The difficulty then becomes not just the risk of damage or loss to property, but without insurance, it’s unlikely a mainstream bank will lend funds to purchase coastal properties.

“That could significantly reduce the pool of buyers, causing a drastic price drop. It’s just a matter of time before the landscape changes, literally!”