A new study reveals that more extreme flood predictions significantly impact real estate demand in the UK, particularly along the coast.
The paper , published in Risk Analysis, calls for better ways to inform flood risk, as most people tend to respond to extreme flood predictions. This has a negative effect on property prices.
Researchers are concerned that property devaluation, especially in flood-prone coastal areas - like Chichester and Portsmouth - could have long-term economic impacts on homeowners, investors, and the broader economy. They warn flood risk management requires urgent and careful consideration at both national and global levels.
Flooding is becoming increasingly common globally and its intensity is likely to increase under future climate projections. In the UK, the average annual damage to business premises from coastal flooding alone exceeds £120 million.
Our study shows that flood predictions, despite their uncertainties, are the primary factor influencing people's willingness to pay for properties.
Dr Scott Mahadeo, Senior Lecturer in the Faculty of Business and Law at the University of Portsmouth
The research highlights a shift in consumer behaviour, where prospective homeowners and renters are prioritising risk-averse locations, with flood prediction information dominating real estate decisions over personal preferences like location aesthetics.
Flood models - an essential tool for managing flood risks - are not without their uncertainties. These models often include simplifying assumptions and data limitations, which can lead to discrepancies in predictions.
While these uncertainties are well-known among experts, the public's lack of awareness can lead to unintended consequences in the housing market.
As more flood prediction data becomes accessible online, property values and investment decisions are being influenced by a perception of increased risk, even when the actual uncertainty in the flood models is not fully understood.
Dr Scott Mahadeo , Senior Lecturer in the Faculty of Business and Law at the University of Portsmouth , said: "Our study shows that flood predictions, despite their uncertainties, are the primary factor influencing people's willingness to pay for properties. When flood prediction data is available, people are more likely to shy away from properties in areas predicted to be at risk of flooding, even if the predictions themselves are uncertain or conflicting."
When flood prediction data is available, people are more likely to shy away from properties in areas predicted to be at risk of flooding, even if the predictions themselves are uncertain or conflicting.
Dr Scott Mahadeo, University of Portsmouth
The study utilised an interdisciplinary approach, combining flood modelling, surveys of 731 UK residents, and geospatial analysis. The findings showed that when confronted with flood prediction maps, respondents demonstrated a clear preference for safer, lower-risk locations, even if those areas were less aesthetically appealing or farther from the coast.
Researchers highlighted significant real estate risks linked to access to multiple flood prediction sources. Survey respondents were willing to pay more for properties outside flood-prone areas - even if these locations didn't match their personal preferences - showing that flood risk information can drive risk-averse real estate decisions.
Dr Mahadeo added: "There is a lack of consideration for flood model uncertainty in real estate decision-making. People are making decisions based on extreme flood predictions, and they're not factoring in the potential errors or variability in the data. This suggests that we need to focus more on effectively communicating the uncertainties in flood predictions to the public to avoid unintended economic consequences."
The research also underlines the need for better communication of flood risks and their uncertainties to the public, particularly as flood maps become more widely available.
The paper's authors are calling for action to refine how flood risk is communicated and to manage the societal impacts of uncertain flood predictions. As climate change accelerates, the frequency and intensity of flooding are expected to rise, increasing the urgency of these findings.
The paper was a collaboration between the University of Portsmouth, University of Oxford and Coventry University.
