The influence of flooding on the value of real estate

Abstract

Price theory predicts that buyers will attempt to discount property prices for flood risk if they are aware of it. In practice, valuation experts use individual loadings or discounts based on their own experiences to consider the fact of flooding. Flooding itself, location in a floodplain area, or the risk of recurrent flood events affect the value of real estate. On the other hand, the positive effects of waterfront location have to be considered. There are several ways to include the influence of flooding in the real estate valuation process. These possibilities for adjustment are introduced in this paper and described in detail.