City Research Online

Abstract

One in six properties in England is exposed to flood risk and around half of those affected properties can be characterised as high risk. In this paper we examine whether the probability of flooding is capitalised in England's property market prices. We use a unique property-level data from Rightmove, UK's no.1 property website and the property-level 〖FloodScore〗^(TM )by Twinn by Royal HaskoningDHV. The latter metric estimates the likelihood of an individual property being flooded due to rainfall, overflowing rivers and tidal surges. We find that properties at risk are sold at 8.14% discount compared to non-affected properties and that the price discount reaches 32.2% for very high risk properties. By 2080 the flood events are expected to become more frequent and the average flood risk is projected to increase by 8%. Our empirical model suggests that one percentage point increase in properties' flood risk is associated with a decline of 0.07% to 0.11% in both sold and asking property prices. The impact is higher for properties of which flood risk is expected to increase or for regions that have recently experienced a flood event.

Publication Type:	Monograph (Working Paper)
Publisher Keywords:	Climate change ; Flood Risk ; House Prices ; Flood Risk Discount; Flood Events
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences H Social Sciences > HG Finance
Departments:	Bayes Business School Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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