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A study on the future of Australia’s housing market, has revealed that even well-intended housing market interventions could significantly worsen housing affordability and homelessness in the country due to the impacts of climate change.

The research, by Peyman Habibi-Moshfegh and from the ������ School of Project Management predicted that homelessness could be four times higher in a decade in a climate future with high levels of greenhouse gas emissions.

Home ownership affordability could be twice as expensive and rent would be less affordable, by up to 45 percent.

Even under a low-emissions future climate scenario, homelessness could still double in a decade compared to 2020 levels and rental affordability could still decline by 23 percent.

The researchers say the Government’s recent budget commitment  to invest in social housing  for young people at risk of homelessness, improving housing access for First Nations Australians, and support for renters is a step in the right direction in shifting the trajectory, as they address the increasing gap by climate change.

However there is a need to drastically expand these programs in the face of climate change.

The key is to establish a strong infrastructure to make sure vulnerable people do not fall back into the cycle of homelessness.

Climate change is already reshaping the housing market. In 2021 insurance premiums as suggested by Global Data, and according to by 2030 extreme weather events are expected to cause more than $571 billion in economic losses in the Australian housing market alone.

For example, policies that focus on insurance premiums or mortgage rates could deepen inequality if not carefully designed. Climate change will force up the costs of insurance for weather events and natural disasters, with higher impact on vulnerable households. It also disrupts construction supply chains, and shifts investment behaviours – all of which influence housing supply and demand.

“The pressure is already on for Australians in the housing market and we see worsening social inequities in the future. We need to design fairer housing policies or this is the trajectory we’re heading towards,” said Mr Habibi-Moshfegh who did the study as part of his PhD.

“Discussions on the housing crisis often neglect the impact of climate change. The numbers from our study show that future climate-shocks need to be factored in when developing new housing policies and plans.”

The study, published in the journal shows that affordability pressures could escalate even under optimistic climate scenarios unless governments adopt targeted, context‑specific policies.

Mr Habibi-Moshfegh said some housing policies could still backfire and deepen inequality, by shifting the financial pressure onto renters

“Housing policies are often generic and priorities need to shift to tailored support for segments of the market, such as low-income households, renters and people at the risk of experiencing homelessness. They are impacted disproportionately by climate change,” said Associate Professor Naderpajouh, Head of School of Project Management in the Faculty of Engineering.

The researchers used nearly two decades of public data to run simulations on how Australia’s future housing market responded to different climate and socioeconomic scenarios,  with high emissions or low emissions.

They used national housing, income and demographic data from the Australian Bureau of statistics, Household, Income and Labour Dynamics in Australia (HILDA) survey data on household income and affordability and the property price index to run simulations on how climate-driven shocks and policies interact to shape affordability, homelessness and rental pressures.

Their simulation suggest that generic policies create widespread tipping points in the housing market and pushed households into stress.

Under a high-emissions future, even a modest 0.5 percent annual rise in ownership costs could increase homelessness by 16 percent and cut rental affordability by 15 percent compared to the 2020 baseline.

If ownership costs rise by 3 percent a year, homelessness could jump by 69 percent , while rental affordability could fall by 36 percent.

“Our findings show that any new housing policies need to undergo climate-change simulations to make sure they don’t deepen inequality,” Mr Habibi-Moshfegh said.

“For local councils and government, the time is now to make sure our housing market can adapt by designing resilient policies to make sure no one, especially our most vulnerable, is left behind,” said Associate Professor Naderpajouh.

The researchers said policymakers need to make sure any new housing market interventions create resilience against the ups and downs of future climate shocks.

Declaration: The researchers declare no competing interests.