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Never before have Australians been more aware of the threat of Sea Level Rise. But this awareness isn’t sparking widespread concern, because despite threats of a devastating 1m rise in sea levels over the coming century, the coastal property market continues to boom.

A recent study found that long before rising seas cause any significant damage, there are already three key reasons that the coastal property market may be left high and dry.

Property appreciation has long been considered one of the safest ways to make money. Last year Australia’s highest selling residential property, a Perth waterfront mansion sold for $57.5 million – the same block was bought in 1992 for a mere $400,000. However property appreciation is based on development and growth. What happens to the coastal property market when development is restricted?

In 2008 the Victorian Civil and Administrative Tribunal blocked the development of several coastal properties in the small coastal town of Toora, on the grounds of climate change induced flooding. A Toora real estate agent estimated that the affected properties lost 70% of their value overnight. Encouraged by this landmark case, many more coastal developments are likely to be knocked back on the grounds of potential sea level rise.

For areas where development is still approved, regulations are getting increasingly more complex. Raising floor heights, building relocatable structures or having non-living space on the ground floor can add tens of thousands of dollars to the cost of development.

It’s not just residential development that is being carefully scrutinised- long term public infrastructure such as sewer, water, roads and power will all need to be carefully considered. Cash strapped councils will have to justifying the expense of building or maintaining public infrastructure in areas that could potentially be at risk. This neglect may see coastal towns stagnate long before rising waters are felt.

Insurance companies are taking pre-emptive action to ensure they are not left footing the cost of sea level rise. Most insurance policies don’t cover damage to properties from salt water flooding. Of those that do, properties are hit with an added premium based on their perceived risk. Without adequate insurance banks will begin to refuse finance, leaving home owners well and truly unprotected.

Local government will also be looking to pass on the expense of repair and maintenance of infrastructure to rate payers. It may either come as a local government area wide increase, or be an additional tax to properties located just within the hazard zone. Some councils have already been approved to charge a ‘Sustainability Levy’, where additional rates money is taken from the residents and spent on reducing the impacts of climate change.

The Government has made is clear that it does not take any responsibility to safe guard properties against rising sea levels. The NSW Sea Level Rise Policy Statement states ‘Government does not have, nor does it accept specific future obligations to reduce the impact of coastal hazards and flooding caused by sea level rise on private property’. Without the government or insurance agencies taking responsibility for damage from sea level rise, it seems clear that the liability remains with the home owner. This will certainly have an impact on consumer confidence in the coastal property market.

Despite these reasons, it’s not yet bad news for coastal home owners. In a report prepared for the Australian National Sea Change Taskforce it was found that the coastal strip is surging ahead, despite a relatively subdued market nationally. The drive is the ’sea-change’ baby boomers, looking to retire to the coast.

The property market is driven by what people want today – seemingly with little regard for tomorrow. Home owners should get an assessment done on their block and be well informed of any potential risk to their asset. Unfortunately many Australian home owners will be eventually left with a property they can’t develop, occupy or resell.