Homeowners in the Netherlands tend to underestimate the risks of foundation damage caused by land subsidence, while at the same time overestimating the danger of flooding. This is the finding of new research from the Amsterdam Business School at the University of Amsterdam (UvA) on the relationship between climate risks and housing prices in the Netherlands.
A significant portion of the Dutch housing stock is affected by land subsidence: approximately 17% of owner-occupied homes suffer from substantial subsidence due to soil compaction. Until now, little was known about the effect of subsidence on property values. UvA researchers Lukas Hofmann, Martijn Dröes en Marc Francke are changing that: they combined data from 1.5 million home sales in the Netherlands (from 2010 to 2021) with detailed information on land subsidence and flood risks.
Severe underestimation
The analysis shows that homes affected by land subsidence or located in flood-prone areas tend to sell for less on average than those without these risks. However, homeowners appear to significantly underestimate the risk of foundation damage from subsidence.
Property prices decrease by only 0.8% for homes experiencing relatively high subsidence (more than 3.3 mm per year). “Given the average home price in the Netherlands of €190,000 during the 2010–2021 period, that amounts to just €2,300 per property, which is only a fraction of the potential damage cost. Repairing foundation damage can easily cost €100,000 or more,” explains Dröes. “Home buyers and sellers not only misjudge the risks but also barely factor them into their purchase decisions.”
Once every 100 to 100,000 Years
When it comes to flooding, homeowners tend to overestimate the risks. Dröes: “People living in flood-prone areas estimate that their homes will flood every 70 years. However, this doesn’t align with the official flood statistics from the government. Severe flooding due to the failure of primary flood defenses is expected to occur far less frequently — only once every 100 to 100,000 years.”
The researchers also examined the combined impact of land subsidence and flood risks. Homes located in flood-prone areas and expected to experience more than 10 cm of subsidence by 2050 sell for 1.5% less.
Call for transparency
The findings align with the growing societal and political debate about climate risks in the housing market. The research by Dröes and his colleagues highlights the urgent need for greater transparency around the risks of foundation issues, flooding, and heat stress. “Just like with energy labels, clear climate labels could help raise awareness among homeowners and reduce damage,” Dröes concludes.
Publication details
Lukas Hofmann, Martijn Dröes en Marc Francke: Sinking Land, Sinking Prices? Land Subsidence, Flood Risk, and Property Prices (TI 2025-040/IV, discussion paper, June 26, 2025)
The study uses transaction data (2010–2021) from the Dutch Association of Real Estate Agents, provided by Brainbay.
The research was funded by the Research Centre for Sustainable Investment & Insurance, a collaboration between the University of Amsterdam and insurance group ASR.
This is a translation of a news article by the University of Amsterdam