Climate change and climate-related policies will make housing a lot more expensive going forward.
Costs will be manageable and climate-related risks can be absorbed by Dutch society at large, but it's a different story for the individuals and regions affected
For resilience to more extreme climate-related scenarios after 2100, it's imperative that we make plans and take measures now to ensure climate-proof living
The costs of making homes more sustainable and of post-damage remediation may, if nothing is done to address this issue, create a divide between have and have-not households
Prevention starts with reliable information at the level of the home. Compulsory uniform climate labels could better reflect climate-related risks in property values
These are the findings and conclusions of the Chief Economists at ING (
The researchers emphasise that major issues are afoot for homeowners, and that clearer standards and information should help everyone living in
Impact of climate change manageable but requires urgent action
The impact of rising sea levels on the Dutch housing market will be pricey until the end of this century, but still manageable. Based on the latest climate scenarios by the Dutch meteorological office KNMI, an acceptable level of investment should be able to protect the country against the effects of climate change. But
Climate change threatens to further fuel inequality in the housing market
'By far the biggest expense will be making our housing stock more energy-efficient, adding up to around 1% of GDP every year until 2050 (for all owner-occupied and rented homes collectively). For houses with poorer energy labels, you often recoup the investment through lower energy bills and a higher property value, but people find it hard to wrap their heads around this issue and all the hassle involved in improving their energy labels. And often, it's simply not viable to make a home completely energy-neutral,'
Depending on their location, property values may fall as the risks of damage are priced in, but they may also go up as a result of climate-adaptive construction. 'And this is where the spectre of climate inequality looms,'
What needs to happen
'Our teams have put together a range of recommendations drawing on our analysis and consultations with academics, policymakers and real-world experts,'
Buyer beware
Government, mortgage lenders, insurers and property appraisers must build and share information about climate-related costs and risks at the level of individual properties. This should help in designing a uniform climate label that potential home buyers can factor into their purchase decisions. Properties that come with major foundation risks will then fall in value, which can help buyers to finance repairs.
Expanding support for foundation repairs
It would be advisable to expand the Fonds Duurzaam Funderingsherstel ('Sustainable Foundation Repair Fund'), so that it covers the entire country as well as multiple types of costs and damage. This would be a source of assistance to homeowners in the event of climate damage, when needed.
Imposing standards rather than price-setting
Meanwhile, the government has the important task of imposing standards on how we can make new and current housing stock in
Author
Sandra Phlippen
Chief Economist
sandra.phlippen@nl.abnamro.com
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