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The impact of flooding on real estate transactions in densely populated areas: Evidence from the 2019 Typhoon Hagibis in Japan

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  • Aiba, Ikuto
  • Hasegawa, Daisuke

Abstract

This study examines the impact of flooding on real estate transactions in an urban area using the flooding caused by Typhoon Hagibis, which hit Japan in October 2019, as a natural experiment. Applying the difference-in-differences method, we find that the contract and offer prices of properties in flooded areas declined by about 6.0% and 5.5% on average, respectively. These price drops indicate an approximately 0.5 percentage point rise in the discount rate, which is defined as the percentage change from the offer to contract prices. Regarding apartment transactions, we show that the negative effects are significant for higher floors but insignificant for lower floors. This suggests the possibility that buyers have become more aware that higher floors are also vulnerable to flooding, given the flood-associated risks of power and water outages. The findings also reveal that the negative effects of flooding on detached houses are more serious and emerge more slowly than those on apartments.

Suggested Citation

  • Aiba, Ikuto & Hasegawa, Daisuke, 2025. "The impact of flooding on real estate transactions in densely populated areas: Evidence from the 2019 Typhoon Hagibis in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:jjieco:v:76:y:2025:i:c:s0889158325000127
    DOI: 10.1016/j.jjie.2025.101363
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    More about this item

    Keywords

    Flood; Typhoon; Real estate; Apartments; Bargaining power;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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