Exposure to Landslide Hazard and its Impact on Property Values - The Case of Saguenay, Quebec, Canada

In this research, we look at the impact that potential landslide hazard has on residential values in La Baie, an arrondissement of the City of Saguenay (formerly Chicoutimi), Quebec, Canada. La Baie was one of the neighbourhoods most affected by the Saguenay flood, the biggest overland flood in 20th-century Canadian history that hit the region on July 19 and 20, 1996. Following that natural disaster, municipal and provincial authorities worked together to improve resident security. More stringent land-use regulations were issued while landslide hazard maps were regularly updated and made public from 2004 onwards, with local authorities making sure that the information on potential landslide exposure was widely accessible to residents. In light of all these events, the question then arises as to whether, and to what extent, known potential exposure to landslide risk has affected the La Baie housing market, which includes some 8,100 housing units, 95% of which are principal residences. Experiencing a drop in one’s property value, being denied a mortgage loan or having to pay a higher insurance premium are all factors that could affect homebuyers’ perceptions and decisions. This study rests on applying hedonic price modelling on a representative sample of 1,078 single-family sales transacted in La Baie between 2009 (Q1) and 2016 (Q4). Out of these sales, 392 are located on land subject to various degrees of landslide hazard and therefore affected by building constraints over the protection buffer at either the top or the bottom of the slope, or both. On average, houses have a living area and lot area of 96 m2 and 839 m2, respectively, while their market value stands at 143,175 $ CAD. For affected properties, the average lot area subject to building constraints stands at 365 m2 for protection buffers and at 150 m2 for slopes. Findings suggest that potential exposure to landslide risk exerts a detrimental impact on values only where the area of the protection buffer and that of the slope exceeds 300 m2 and 320 m2, respectively. Beyond these thresholds, affected properties experience a value loss of roughly 6% when compared with unaffected ones. Finally, homebuyers seem to value house attributes that improve security of the premises: the height of a retaining wall yields a positive, and statistically significant,coefficient, with each additional meter raising house values by 1.4% to 1.7%.