KUALA LUMPUR: Housing does not feature high on policymakers overall decarbonisation strategies, leading to differing effects of climate transition on the residential property sector across countries, Fitch ratings said.
Fitch ratings publishes credit ratings that are forward-looking opinions on the relative ability of an entity or obligation to meet financial commitments.
It does not view climate-driven policy as a material risk for outstanding residential mortgage-backed securities and covered bond programme ratings, but said that the the effects on sector dynamics and property values may grow over time.
Fitch ratings has classified the status of climate transition in different countries into four broad categories for comparison.
Transition is generally under way in Europe, due both to policy action and market-driven adaptations.
The EU's Energy Performance of Buildings Directive is likely to broaden the direct effects of climate-led policies beyond core European countries.
"We view transition as an 'Active' consideration for the residential property sector for 12 of the 33 countries in our report, all in western Europe," Fitch ratings said.
Four Central Eastern Europe countries – Hungary, Czechia, Poland and Slovakia – are among the nine 'Emergent' countries, as is Australia.
Fiitch ratings said residential property sector dynamics and prices are less likely to be affected by climate transition where transparent information around properties' climate adaptation and mitigation is not readily available.
It is also less likely to be affected where common standards are not applied within a country, making direct comparison between different properties more difficult.
For 'Contingent' status countries, climate transition may largely be reliant on incentives for home energy efficiency improvements (if available), in the absence of direct climate-driven policies to drive home transformations.
The US and Canada are both in this category.
The five countries where climate transition is an 'Inactive' consideration for the housing sector, due to an absence of market adaptation measures or targeted policies, and poor availability of home energy performance information, are all in Latin America, and include Brazil and Mexico.