Measuring the impact of flooding on UK house prices

Abstract

Purpose -The purpose of this research is to show how the measurement of the effect of flooding on house value can be invaluable information for professional valuers and homeowners alike. In the UK, even for an event as devastating as the autumn 2000 flood, the number of properties affected in any one town is small and so robust estimation is problematic and methodology applied elsewhere needs modification. A new framework for analysing the effect of flooding on house value in the UK is presented. Design/methodology/approach -Data issues play a crucial role in determining the methodology employed in any analysis. A repeat sales methodology is proposed which allows for the tracking of effects through time. The analysis can be extended to multiple sites via a block design thereby increasing the sample size. Findings -Empirical analysis of one case study site demonstrates the inherent small sample problem and yet reveals patterns that fall in line with expected outcomes in many respects.Research limitations/implications -The case study results are illustrative only. A programme of further analysis is planned which includes comparison of the new framework with more traditional approaches. Originality/value -A novel methodology is developed tracking the temporal variability in flood effect. The minimisation of data requirements inherent in the model allows for transfer to multiple sites and easy updating of the analysis.

Urban floods and residential rental values nexus in Kumasi, Ghana

“…Understanding the empirical findings from this study does not only provide information on the dilemmas in the rental market but also and more importantly, calls for an urgent policy action in Ghana in general and Kumasi in particular where relatively high proportions of the dwelling units (38.0%) are occupied by tenants (GSS, 2010). In line with the previous research by Lamond and Proverb (2006) on the impact of flood on residential property values and on the basis of the evidence presented, the results support the thesis of the negative impact of flooding on residential rental values but rejects the postulations of Montz (1992) and Tobin and Montz (1994) Lamond et al, (2007) that, the swivel of rental value and its dynamics include the demand side elasticity and the supply side elasticity of a particular real estate space type. These findings are also in line with comments by Larsen (2010Larsen ( , 2012, that rental values depend on the demand and supply of a given property type.…”

“…Proponents of the first school of thought hold the view that there is an inverse relationship between flood impact and property values. This school of thought contend that housing properties located in flood prone areas attract lower prices than those located farther away (Eves, 2002;Samwinga et al, 2004;Environment Agency/DEFRA, 2004;Wordsworth and Bithel, 2004;Lamond et al, 2005;Lamond et al, 2007;Larsen, 2012). They contend further that in most cases, property values are discounted after major flood events.…”

“…The dynamics of rental values depend on the elasticity of both demand and supply of a particular rental space type (Geltner et al, 2006, Lamond et al, 2007Larsen, 2010Larsen, , 2012. The rental market is highly segmentedand tends to be local rather than national, and specialized around building usage categories (Geltner et al, 2006).…”

“…After selecting the residential blocks for the study, the study then adopted the repeated sales model to gauge the floods impact on the rental values of the different property types. According to Lamond et al (2007), all things being equal, in specifying the repeated sales model through the experimental block design to gauge the floods impact on property value, the price of property (i) at time period (t) can be expressed in a logarithmic form as:…”

“…To accomplish the objectives of the study, two methodological approaches were adopted: the experimental block design which allows for the selection of multiple sites and the repeated sales model proposed by Lamond et al (2007) which is used to track the impact of flooding through time. The former was used for the identification and selection of neighbourhoods of identical location attributes.…”