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The impact of flood risk on the price of residential properties: the case of England

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  • Philippe Belanger
  • Michael Bourdeau-Brien

Abstract

This paper examines the impact of flood risk on the value of English residential properties. We find that a location within a flood zone significantly lowers property values even if we control for the proximity to a watercourse, the history of flooding and neighbourhoods effects. Although the flood risk discount is more compelling for waterfront properties, it is still highly significant for dwellings further from the water. The markdown arises around 2004–2005, which coincides with the publication of detailed flood maps by the UK Environment Agency and with a more risk-based pricing of flood insurance policies. As expected, the effect of flood risk on house prices is stronger in the months following major flood events but, interestingly, it almost disappears in a hot market when buyers have arguably less negotiating power.

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  • Philippe Belanger & Michael Bourdeau-Brien, 2018. "The impact of flood risk on the price of residential properties: the case of England," Housing Studies, Taylor & Francis Journals, vol. 33(6), pages 876-901, August.
    • Handle: RePEc:taf:chosxx:v:33:y:2018:i:6:p:876-901
    DOI: 10.1080/02673037.2017.1408781
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    Cited by:

    1. Seung Kyum Kim & Paul Joosse & Mia M. Bennett & Terry Gevelt, 2020. "Impacts of green infrastructure on flood risk perceptions in Hong Kong," Climatic Change, Springer, vol. 162(4), pages 2277-2299, October.
    2. Chloe H. Lucas & Kate I. Booth & Carolina Garcia, 2021. "Insuring homes against extreme weather events: a systematic review of the research," Climatic Change, Springer, vol. 165(3), pages 1-21, April.
    3. Garbarino, Nicola & Guin, Benjamin & Lee, Jonathan, 2022. "The Effects of Subsidized Flood Insurance on Real Estate Markets," Bank of England working papers 995, Bank of England.
    4. Marie Lautrup & Lasse Læbo Matthiesen & Jette Bredahl Jacobsen & Toke Emil Panduro, 2023. "Welfare Effects and the Immaterial Costs of Coastal Flooding," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(2), pages 415-441, June.
    5. Maha AbdelHalim & Jean Dubé & Nicolas Devaux, 2021. "The Spatial and Temporal Decomposition of the Effect of Floods on Single-Family House Prices: A Laval, Canada Case Study," Sustainability, MDPI, vol. 13(9), pages 1-18, May.

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