Coastal erosion, climate change, and the risk to banks

The city of my birth – Sydney, Australia – may well be the coastal real estate capital of the world.  Built on the Pacific Ocean and the world-famous Sydney Harbour, houses with water views routinely sell for millions more than equivalent abodes with outlooks dominated by concrete.  It’s common for realtor ads to mention “Harbour glimpses” – properties where a speck of blue can be seen if you stand on the toilet in the upstairs bathroom.  Follow the link and you won’t find the ocean in any interior shots, even though the drone footage is truly spectacular.

The scarcity of waterfront properties is obvious and supply cannot ever increase.  Over time, the value of Sydney Harbour properties has risen rapidly.  I’m sure this is partly (or mostly) due to speculation – the expectation that past price growth will be replicated in future, guaranteeing a tidy capital gain.  I’m also certain that living in such a location is very desirable, though I’ve never been able to see anything other than concrete and railway lines from every Sydney house I’ve ever called home (the third example of former Hughes hangouts is now a block of nondescript apartments).

My understanding is that the geography of Sydney Harbour does not make it especially prone to climate change-related destruction, though other parts of the Emerald City are at greater risk.