SYDNEY/LONDON - Only a year after losing their homes to floods in parts of Australia's north-eastern coast of Queensland, people are moving into new houses built on or near the same plots.
Banks appear to be taking a similar view, with long-term funding still widely available for new and existing housing, while insurers are more picky. They fear banks are building up portfolios of long-term loans against construction projects, infrastructure and real estate that are becoming uninsurable.
During the Townsville floods, the hit to banks was less marked and as insurers depart, new housing developments continue to spring up, backed by the country's major banks. While banks around the globe are starting to do more to understand the risks, the pace of change is slow. Australia is following the BoE's lead with plans to stress-test banks and insurers on climate risk, as regulators fret that rare natural disasters become commonplace.
The regulator issued a mandatory one-year moratorium on insurers failing to renew policies in wildfire disaster areas in December 2019. And to raise money to protect properties against climate risk, the state is planning to launch a resilience bond. BAD LOANS CALM A year on from the Townsville disaster, one reason banks are happy to lend is that while the proportion of customers who were more than 30 days behind on their mortgage rose from 2 per cent to 2.3 per cent after the floods, it soon dropped back to 1.9 per cent.
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