Australia’s governments must work to improve the resilience of the nation’s housing stock to climate related factors, a new report says.

As part of a series of interim reports which is being released in the lead up to the Australian Government’s roundtable on productivity and economic reform, the Productivity Commission has released a new interim report on the nation’s energy and climate transition.

Overall, the report makes twelve recommendations.

These are aimed at reducing the cost of meeting emissions targets, speeding up approvals of new energy infrastructure and addressing barriers to private investment in adaption.

In relation to the last point, the Commission said that the resilience of the nation’s housing stock should be a key area of focus.

It says that actions to improve housing climate resilience should include:

• Establishment of a comprehensive database to cover all climate hazards across different part of the country.
• Development of a nationally consistent climate resilience rating system for housing.
• Agreement upon a plan and a series of actions over time.
• Giving the Climate Change Authority responsibility for monitoring, evaluation and learning regarding adaption policy.

According to the report, the importance of action should not be underestimated.

To be sure, the report notes that actions to reduce Australia’s emissions may help to limit the severity of climate impacts (although the effect will be minimal unless large global emitters such as China, India, Russia and the United State also limit their emissions).

However, it cautions that on the current trajectory, global temperatures are still expected to rise.

Citing evidence from the Bureau of Meteorology and the CSIRO, it says that this will lead to ‘more extremely hot days, longer fire seasons, more heavy rainfall events over short periods, ongoing sea level rise with more coastal flooding and fewer but more intense tropical cyclones’.

As a result, it stresses that adaption is critical.

Turning to the built environment, the Commission says that housing should be a special focus area.

Whereas owners of commercial buildings, public buildings and critical infrastructure are likely to have sufficient capacity to invest in climate resilience, the capacity of individual households to do likewise is limited.

As both a major asset class and an important determinant of individual wellbeing, meanwhile, the importance of housing should not be underestimated.

Pointing to various sources, moreover, the Commission notes that the impact of climate related events upon residential property could be severe.

For example:

• A 2025 report from the Climate Council and Climate Valuation found that the number of homes which are facing high climate risk could grow from 1 in 22 in 2025 to 1 in 20 by 2050.
• A COAG Energy Council report indicates that existing homes have an average energy efficiency rating of just 1.7 stars and are thus vulnerable to heat stress.
• Around two in three existing homes throughout Australia were constructed before mandatory energy efficiency standards were introduced and are therefore less likely to be prepared for extreme heat (CoreLogic and PowerHousing Australia 2022, p. 40).
• A 2020 analysis by the Bushfire Building Council of Australia indicated that only 10 percent of properties across a number of bushfire risk areas were constructed to bushfire planning or regulation standards

Action needed

In response, the Commission recommends several actions.

First, it says that the Australian Government should coordinate with relevant federal, state and territory organisations to support development of a central climate-risk information database to cover all climate hazards in different parts of Australia.

The database should enable various decision markers to obtain granular and accessible climate risk information. These include builders, developers, insurers, government planners, policymakers and the general public.

According to the report, providing households with a clear picture of the costs and likelihood of various hazards which may impact their property can help them to make better decisions about the means through which hazards should be addressed.

Meanwhile, clear information provision can improve housing market operation by enabling an accurate picture of climate risk to be incorporated into property prices and purchasing decisions.

As things stand, however, current publicly available information is inadequate and of limited use.

This is because much of the information which exists is either not available, of limited spatial granularity, fragmented, difficult to access and/or difficult to understand.

Despite flooding being one of the costliest and fastest-growing climate hazards, for example, many flood studies are not publicly available.

Next the Commission recommends that the Australian Government should lead the development of a nationally consistent rating system that would deliver a star rating for housing resilience.

The system would be outcome based and should reflect potential damages which may arise out of climate hazards.

It would account for location-specific hazards along with individual characteristics of each property.

It would be complemented with supporting material that would help to enable identification of upgrades that would improve a property’s resilience.

According to the report, the importance of clear information about the disaster risk profile of individual properties is critical.

Where a clear risk profile is provided, property owners and builders are more readily able to identify the highest priority actions which could deliver maximum benefits in terms of risk mitigation.

(Depending on the location, this could potentially involve cyclone-proofing, wet flood proofing, house raising or retrofitting for floods or bushfire.)

A clear rating system would also more readily enable prospective property purchasers to understand the risk profile of properties which they are considering for purchase.

In turn, this would provide a market-based incentive to undertake resilience enhancements as it would deliver a price premium for those properties with a lower risk profile.

Such a system could also provide a basis for insurance pricing that incentivises resilience investment.

As things stand, the Productivity Commission says that information which is publicly available can be difficult for some users to understand.

As a result, prospective homebuyers can find it difficult to make an accurate assessment of a property’s resilience to climate resilience.

Indeed, according to a Domain report published in 2024, as few as 29 percent of homeowners feel confident that they are aware of their home’s level of risk of being impacted by natural disaster.

Third, the Commission suggests that the Australian Government should lead work with the states, territories and local governments to agree on a series of actions that will improve the resilience of our housing stock over the coming decades.

Whist the report does not identify specific actions, it suggests that the focus should include actions which:

• improve households’ capacity to easily understand and use climate risk information
• facilitate resilience retrofits of the existing housing stock
• embed climate risk in planning and zoning decisions.

Actions should revolve around goals which are time specific and outcome focused in terms of improving housing resilience.

Actions should also be staged in line with the anticipated pace of climate change and should be coordinated with public investment to achieve measurable improvement at the precinct scale.

Older homes in high-risk areas would be a high priority.

Finally, the Commission suggests that The Australian Government should legislate for the Climate Change Authority to take responsibility for monitoring, evaluating and learning to inform governments and the public about progress in adapting to climate change, and whether policies are effective.

Progress reports should be published every two years and should include recommendations about how to improve adaptation policy.

Productivity Commission Commissioner Barry Sterland said that the importance of housing resilience should not be underestimated.

‘People’s experience of climate change will depend on the resilience of their home, but most lack the information they need to invest in upgrades,’ Sterland said.

‘As climate risks intensify, boosting our resilience can lower the costs of disaster recovery and create a healthier, safer and more productive Australia.’

Enjoying Sourceable articles? Subscribe for Free and receive daily updates of all articles which are published on our site

Want to grow your sales, reach more new clients and expand your client base across Australia’s design and construction sector?

Advertise on Sourceable and have your business seen by the thousands of architects, engineers, builders/construction contractors, subcontractors/trade contractors, property developers and building industry suppliers who read our stories across the civil, commercial and residential construction sector