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Inundation and Views in Coastal Residential Property Values. Does the Sale Price Reflect the Trade Off?

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This study proposes a modeling approach to disentangle the discount due to flooding in residential properties that are located in coastal areas. The study makes three contributions. The first is to incorporate a continuous measure of flood risk in a study of coastal areas, as earlier studies modeled flood risk using a binary variable. The second is to estimate a discount over a three dimensional amenities’ set (degrees of view of the ocean, proximity to the ocean and proximity to other waterways), in order to provide a valuation of the trade o↵ between ’views/proximity’ and flooding. And, finally it is the first study of its kind for Australia. Data for two coastal sites in the state of Queensland, Australia are used in the study. The results indicate that the identification of a significant discount due to inundation risk is highly dependent on views and proximity to ocean and waterways, but the study demonstrates the methodology proposed here is able to disentangle statistically significant discounts due to inundation risk.

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File URL: http://www.uq.edu.au/economics/abstract/536.pdf
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Paper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number 536.

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Date of creation: 11 Dec 2014
Handle: RePEc:qld:uq2004:536
Contact details of provider: Postal:
St. Lucia, Qld. 4072

Phone: +61 7 3365 6570
Fax: +61 7 3365 7299
Web page: http://www.uq.edu.au/economics/
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  1. Van Butsic & Ellen Hanak & Robert G. Valletta, 2011. "Climate Change and Housing Prices: Hedonic Estimates for Ski Resorts in Western North America," Land Economics, University of Wisconsin Press, vol. 87(1), pages 75-91.
  2. Alicia N. Rambaldi & Cameron S. Fletcher & Kerry Collins & Ryan R.J. McAllister, 2013. "Housing Shadow Prices in an Inundation-prone Suburb," Urban Studies, Urban Studies Journal Limited, vol. 50(9), pages 1889-1905, July.
  3. Carolyn Kousky, 2010. "Learning from Extreme Events: Risk Perceptions after the Flood," Land Economics, University of Wisconsin Press, vol. 86(3).
  4. Cheshire, Paul & Sheppard, Stephen, 1995. "On the Price of Land and the Value of Amenities," Economica, London School of Economics and Political Science, vol. 62(246), pages 247-267, May.
  5. Okmyung Bin & Thomas W. Crawford & Jamie B. Kruse & Craig E. Landry, 2008. "Viewscapes and Flood Hazard: Coastal Housing Market Response to Amenities and Risk," Land Economics, University of Wisconsin Press, vol. 84(3), pages 434-448.
  6. Okmyung Bin & Ben Poulter & Christopher F. Dumas & John C. Whitehead, 2011. "Measuring The Impact Of Sea‐Level Rise On Coastal Real Estate: A Hedonic Property Model Approach," Journal of Regional Science, Wiley Blackwell, vol. 51(4), pages 751-767, October.
  7. Craig E. Landry & Paul Hindsley, 2011. "Valuing Beach Quality with Hedonic Property Models," Land Economics, University of Wisconsin Press, vol. 87(1), pages 92-108.
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