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Climate change and residential real estate: what are the risks for the banking sector?
[Changement climatique et immobilier résidentiel : quels risques pour le secteur bancaire ?]

Author

Listed:
  • Thomas Allen
  • Jean Boissinot
  • Clara Calipel
  • Stéphane Dees
  • Céline Grislain-Letrémy
  • Anuschka Hilke
  • Romain Hubert
  • Lucas Vernet

Abstract

French residential real estate is already suffering the consequences of weather phenomena, particularly through the direct impact of natural disasters. This vulnerability is set to increase as climate change becomes more pronounced. Residential real estate is also a key sector in strategies for the transition to a low-carbon economy, which, if poorly anticipated or implemented in a sub-optimal way, can be a source of shocks for households or real estate values. Despite the exposure of residential real estate to climate risks, the transmission of these risks to banking institutions is not necessarily direct, notably because of the way credit is granted in France and the existence of risk pooling mechanisms. The purpose of this article is to clarify the exposure of French residential real estate to physical and transition risks and to characterise the channels through which these risks are passed on to the lending activities of the banking sector. L’immobilier résidentiel français subit déjà les conséquences des phénomènes climatiques, en particulier en raison de l’impact direct de catastrophes naturelles. Cette vulnérabilité devrait s’accroître à mesure que le changement climatique s’accentue. L’immobilier résidentiel est également un secteur clé des stratégies de transition vers une économie bas-carbone, qui peuvent, si elles sont mal anticipées ou mises en œuvre de manière sous-optimale, être une source de chocs pour les ménages ou la valeur des logements. Malgré l’exposition de l’immobilier résidentiel aux risques climatiques, la transmission de ces risques aux établissements bancaires n’est pas nécessairement directe, notamment en raison des modalités d’octroi de crédit en France et de l’existence de mécanismes de mutualisation des risques. Cet article vise à clarifier l’exposition de l’immobilier résidentiel en France aux risques physiques et de transition et à caractériser les canaux de transmission de ces risques aux activités de crédit du secteur bancaire.

Suggested Citation

  • Thomas Allen & Jean Boissinot & Clara Calipel & Stéphane Dees & Céline Grislain-Letrémy & Anuschka Hilke & Romain Hubert & Lucas Vernet, 2023. "Climate change and residential real estate: what are the risks for the banking sector? [Changement climatique et immobilier résidentiel : quels risques pour le secteur bancaire ?]," Bulletin de la Banque de France, Banque de France, issue 248.
    • Handle: RePEc:bfr:bullbf:2023:248:04
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    File URL: https://www.banque-france.fr/system/files/2023-12/823004_BDF248-4_EN_Climate%20change_Vfinale.pdf
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    File URL: https://www.banque-france.fr/system/files/2023-09/bdf248-4_climat_immobilier-residentiel.pdf
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    References listed on IDEAS

    as
    1. Jean-Charles Bricongne & Alessandro Turrini & Peter Pontuch, 2019. "Assessing House Prices: Insights from "Houselev", a Dataset of Price Level Estimates," European Economy - Discussion Papers 101, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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