Journal article
Pricing climate risk: Are flooding and sea level rise risk capitalised in Australian residential property?
F Fuerst, G Warren-Myers
Climate Risk Management | Published : 2021
Abstract
This research tests if contemporary house prices reflect the flood vulnerability of properties. In particular, future sea level rise is likely to expose properties to flood risk that are currently considered safe from these adverse events. Using a comprehensive dataset comprising of statutory rating valuation information and sales transactions, a hedonic framework is applied to estimate the potential price effects of current flood risk and future sea level rise. A valuation discount effect is identified for properties in known flooded areas while sea level rise has no detectable effect on valuations or sales data. The lack of a sea level rise discount in this analysis may be due to the absen..
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Funding Acknowledgements
The authors would like to acknowledge the funding provided through a research development grant provided by the Faculty of Architecture, Building and Planning at the University of Melbourne allowing purchasing of data from the Australian Property Monitor, and the provision of data from the Valuer General of Victoria and the City of Port Phillip. Further, the authors would like to acknowledge the assistance provided by Dr Andy Krause, Dr Gideon Aschwanden and Dr Matt Palm, in the mapping and connecting of the datasets utilised in this project. Franz Fuerst is grateful to the Cambridge University Land Society for continuous support of his research.