Rising waters and falling prices: The effects of flood risk on the Irish housing market
January 30 @ 1:00 pm - 2:00 pm
Speaker(s): Tom Gillespie
Organised by: Whitaker Institute for Innovation and Societal Change, NUI Galway
This seminar explores the relationship between flood risk and housing market outcomes. It uses the case of Ireland, 2006-2017, combining a dataset of 135,000 property listings in areas at risk of flooding and detailed official data relating to flood risk, previous flood events, and completed flood defences. The identification strategy exploits not only a rich set of controls but also the timing of flood events, of the construction of defences, and of the release of flood risk information to the public. There are four main findings. Firstly, information matters. Housing prices responded dramatically to the release of flood risk maps in 2011, with the emergence of a 15% price discount for properties deemed at 1% risk. Secondly, flood defences work. The discount for flood risk disappears after the construction of defences. Thirdly, flood risk is borne unequally. Properties in the lowest quartile of value suffer a 20% discount, compared to a 5% discount for those in the upper half of the distribution. Lastly, the market’s memory of flood events is short: a 15% price discount for being within a flood event disappears after two years. Our findings have important policy implications for flood risk management, insurance and flood defences, as well as for projections of future flood losses in a world of increasing flood risk.
This is one of a series of seminars in the Whitaker Ideas Forum. Tom will be representing the SEMRU cluster.