Abstract
To quantify the flood risk awareness of real estate market participants and residents, previous studies analyzed the effect of flood risks on residential property values. However, most studies focused on the impact of recent flood events and the publication of new flood risk information; the behavior in flood-prone regions in which repeated damages occurred and lessons learned consequently has not been the focus of analysis. Moreover, there is a growing national concern in Japan about an increase in future flood risks due to climate change, although their effect on property values has not been discussed. In this study, we analyzed residential property values in Nagoya City (Aichi Prefecture, Japan), a megacity that has experienced significant flood damage in major historical and recent floods. The main objective of this study is to determine the effects of past and recent flood experiences and the increasing concerns about flood risks on recent residential property values. The results revealed that historical flood damage had the largest impact on residential property values in Nagoya City, and devaluation increased due to growing concerns about natural disasters in Japan. The disclosure of flood risk information also had an impact on property values, increasing devaluation after disclosure. On the contrary, the occurrence of recent floods did not have an impact on property values, suggesting that flood risk awareness had already been strong in the target area. These findings are different from those of many previous studies. The observed trends in residential property values in the target area are likely a characteristic response in flood-prone regions, where flood risk awareness is enhanced due to repeated flood damage.
Highlights
Global warming has increased the frequency and intensity of heavy rainfall and associated flooding events, which cause significant damage to property and will continue to increase the flood risk in the future (IPCC, 2013)
Because most previous studies, including Inoue and Komori (2017), have only focused on recent flood events that occurred during the analysis period, the influence of historic flood events on residential property values and flood risk awareness remains to be investigated
Three types of events that likely influenced residential property values were analyzed in this study: historical flood events that occurred before 1995 when the analysis period started, a major flood in 2000 that occurred during the analysis period, and the publication of flood risk maps in 2010 during the analysis period
Summary
Global warming has increased the frequency and intensity of heavy rainfall and associated flooding events, which cause significant damage to property and will continue to increase the flood risk in the future (IPCC, 2013). To mitigate future damage and protect the lives and assets of residents, governments are proactively sharing flood risk-related information as flood risk maps and flood history maps in addition to constructing flood prevention facilities such as dams, levees, and retarding basins. Several studies have analyzed real estate property values, mostly residential property transaction prices, to quantify the flood risk awareness of homebuyers and residents based on hedonic pricing models (Rosen, 1974). The relationship between real estate property values and flood risk has been analyzed under the assumption that properties with flood risk are valued low only when the risk is considered by market participants and residents
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