Does Flood Affect Property Values? A Hedonic Analysis of Residential Property Values in Peninsular Malaysia

Abstract

The hedonic pricing model (HPM) has been used to identify the values of residentialproperty due to flood impact. Most of the previous studies had been conducted usingflood frequency and flood depth to measure flood variables rather than flood duration.The hedonic pricing study presented here investigated the effect of flood duration onresidential property value in Peninsular Malaysia. We measured the housing attributesinvolving location, structural, and neighborhood attributes. We also developed theinteraction variable between flood and structural attributes to determine whether theeffect of flood duration on residential property value differs across house age, size ofland area, and number of bedroom. The results suggest that the sale price of residentialproperty is significantly decreased by 0.015 percent due to flood.