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.<\/p>\n\n\n\n
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<\/a>, Martijn Dr\u00f6es<\/a> en Marc Francke<\/a> 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.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n Property prices decrease by only 0.8% for homes experiencing relatively high subsidence (more than 3.3 mm per year). \u201cGiven the average home price in the Netherlands of \u20ac190,000 during the 2010\u20132021 period, that amounts to just \u20ac2,300 per property, which is only a fraction of the potential damage cost. Repairing foundation damage can easily cost \u20ac100,000 or more,\u201d explains Dr\u00f6es. \u201cHome buyers and sellers not only misjudge the risks but also barely factor them into their purchase decisions.\u201d<\/p>\n\n\n\n When it comes to flooding, homeowners tend to overestimate the risks. Dr\u00f6es: \u201cPeople living in flood-prone areas estimate that their homes will flood every 70 years. However, this doesn\u2019t 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 \u2014 only once every 100 to 100,000 years.\u201d<\/p>\n\n\n\n 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.<\/p>\n\n\n\n The findings align with the growing societal and political debate about climate risks in the housing market. The research by Dr\u00f6es and his colleagues highlights the urgent need for greater transparency around the risks of foundation issues, flooding, and heat stress. \u201cJust like with energy labels, clear climate labels could help raise awareness among homeowners and reduce damage,\u201d Dr\u00f6es concludes.<\/p>\n\n\n\n Lukas Hofmann, Martijn Dr\u00f6es en Marc Francke: Sinking Land, Sinking Prices? Land Subsidence, Flood Risk, and Property Prices<\/a> (TI 2025-040\/IV, discussion paper, June 26, 2025)<\/p>\n\n\n\n The study uses transaction data (2010\u20132021) from the Dutch Association of Real Estate Agents, provided by Brainbay.<\/p>\n\n\n\n The research was funded by the Research Centre for Sustainable Investment & Insurance, a collaboration between the University of Amsterdam and insurance group ASR. <\/p>\n\n\n\nSevere underestimation<\/strong><\/h3>\n\n\n\n
Once every 100 to 100,000 Years<\/strong><\/h3>\n\n\n\n
Call for transparency<\/strong><\/h3>\n\n\n\n
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