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Sinking Land, Sinking Prices: Land Subsidence and Property Prices in the Netherlands

Author

Listed:
  • Martijn Dröes
  • Marc Francke
  • Lukas Hofmann

Abstract

This paper examines the effect of land subsidence, the sinking of the land surface, on property values. Land subsidence can affect properties by damaging the foundation or increasing their exposure to flood risk. Based on detailed property transaction data from the Netherlands and high-quality geodata on current and future subsidence and flood risks, we find that property that is currently subsiding trades at a 0.8% discount if it is built on a foundation prone to damage. Flood-prone properties predicted to subside in the future trade at 1.5% lower prices. The estimates indicate that buyers underestimate foundation risk but overestimate flood risk. Furthermore, an increase in Google searches for subsidence by one standard deviation leads to an additional price discount of 0.8% for houses in subsiding areas. This discount is lower for the properties with the highest subsidence risk, further indicating that risk is not adequately priced.

Suggested Citation

  • Martijn Dröes & Marc Francke & Lukas Hofmann, 2025. "Sinking Land, Sinking Prices: Land Subsidence and Property Prices in the Netherlands," ERES eres2025_161, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2025_161
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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