High water, high stakes: A global review of flood risk and housing price effects

Abstract

Flooding is becoming more frequent and severe in urban areas under climate change, with profound implications for the real estate markets. Understanding how flood risk is priced in housing markets—particularly how public hazard information influences buyer behavior—is essential for hazard risk management and has therefore gained increasing attention. This review synthesizes the global empirical research to conceptualize flood risk pricing dynamics. We identify five key risk signals affecting property values, distinguishing between institutional signals (e.g., regulatory maps, insurance premiums) and societal signals (e.g., past flood events, perceived security from protective measures, and fears linked to sea-level rise). While existing studies generally agree on the price effects of these risk signals, variations exist due to varying regulatory and market contexts across locations. These risk signals are also typically considered in isolation; however, we argue that these signals function as an interconnected system, where shifts in one can dynamically influence others and, in turn, market behavior. This review underscores the need to move beyond analyzing individual risk signals and instead consider their interplay within a systems-based approach, offering new insights into how institutional and societal signals can be leveraged for more effective flood risk management.